Sub-prime slump may have been a factor in 2010's 14% rise in fraud
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The decline of the sub-prime market has been partially blamed for an increase in mortgage fraud.
Experian’s latest fraud report shows 32 in every 10,000 applications in 2010 were fraudulent, an increase of 14% on 2009.
Attempted mortgage frauds typically involved individuals inflating the prospects or status of their employment and personal finances, not disclosing previous addresses or attempting to conceal an adverse credit history.
Jason Lewis, head of property finance at law firm Howard Kennedy, says: “It is of concern that despite the restriction in mortgage lending and the tightening of len-ding criteria mortgage fraud is on the increase. Part of this rise could be due to the lack of non-status mortgages.”
He says that previously borrowers may not have needed to conceal their bad credit history to get a mortgage, but now many have to lie on applications just to be considered for a mortgage.
Experian suggests that lower take-home pay, wage freezes and un-employment have contributed to the rise in fraud.
Nick Mothershaw, director of identity and fraud at Experian, says: “Fraud in the UK is a growing billion-pound business with fraud-sters resorting to innovation and inventiveness, targeting any per-ceived weaknesses in the system.
“Fuelled by the recession’s after-math, it is likely that financial services providers could see fraud attempts rise during 2011.”
Overall, fraud attempts against financial services providers increased by 11% in 2010.
Meanwhile, research from City law firm Reynolds Porter Chamberlain last week revealed the Financial Services Authority dished out almost £100m in fines in 2010, of which a large chunk was for fraud.
The regulator trebled the value of fines it collected from financial services businesses in just one year from £33.1m to £96.7m.
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