Valuers fuelling mortgage fraud increase

1 March 2010 | By Natalie Thomas

Its report - Fraudscape, shows a 0.20% increase in mortgage fraud in 2009, which it says indicates that serious organised fraudsters are seeing a recovering housing market as an attractive proposition.

In turn, they are making more attempts to profit by using deception to purchase a property and then sell it on at a higher price.

It says: “A very real problem is that this is with the assistance of intermediaries like valuers to help make sure that they buy low and sell high.

“There are elements of organised mortgage fraud that are not specifically related to the value of the property being mortgaged. These frauds can involve the use of corrupt solicitors, and revolve around the mortgage lender releasing the funds, which are then pocketed by the criminal.”

Its says the most opportunistic mortgage fraudsters tell lies on their application to make themselves seem capable of repaying a mortgage that they may not be able to afford - but with the intention of repaying the mortgage and keeping the property.

Misuse of facility fraud increased 95%, up from 82 in 2008 to 160 in 2009, with identity fraud also increasing 75% up from 92 cases in 2008 to 161 in 2009.

The increase in the number of misuse of facility cases indicates that making mortgage payments has become a struggle for more people. The most common offence relating to misuse of facility fraud is the paying in of cheques that they know will bounce and electronic payments that they know will be recalled.

Mortgage application fraud decreased by 5.21% in 2009, down from 2,824 in 2008, to 2,677.

When application fraud was identified for an all-in-one product, the fraudster was most frequently attempting to hide adverse credit information (by failing to disclose an address that they were required to provide).

In 2008, this accounted for 65% of application frauds whereas in 2009 this has increased to over 74%. This increase is probably a reflection of the indebtedness of the UK population as well as the economic climate.

Overall, total frauds increased by nearly 10% in 2009 compared with 2008.

Peter Hurst, chief executive of CIFAS, says: “At a time when every responsible member of society feels the strain of current economic conditions, the findings presented in Fraudscape not only reveal the true nature of the frauds identified but also reveal many of the problems and challenges ahead.

“This, however, is only the tip of the iceberg. Over and above the frauds recorded by CIFAS Members, there is an additional and unquantifiable volume of fraud that, due to tighter lending criteria, never got as far as the fraud department.”