The Association of Mortgage Intermediaries has poured cold water on credit rating agency Experian’s claim that the UK will see the highest levels of mortgage fraud on record in 2013.
Experian published its latest Fraud Index last week which revealed that attempted mortgage fraud rose six per cent in the third quarter, compared with the same period in 2011, rose from 36 to 38 in every 10,000 mortgage applications which are identified as fraudulent.
And it predicts the number of fraudulent mortgage applications will rise 13 per cent next year to represent 43 out of every 10,000.
Experian head of PR Bruno Rost says: “Our research is not survey-based nor a small sample. We are looking at applications for mortgages and there are fairly consistent numbers going back three or four years.”
Rost says that a struggling economy and historical patterns of fraud attempts are contributing factors in arriving at the estimates, as is the tightening of affordability measures resulting from the MMR implementation in April 2014.
He says: “Over the past few quarters, we have seen the virtual disappearance of self-cert mortgages and it is far more difficult for people to obtain the mortgages they were in the past. A significant proportion of the fraud is perpetrated by first party individuals, hiding their means.
“All of that is going to be far more difficult to do as affordability measures get more stringent so the incentive to exaggerate will increase.”
But at the Mortgage Business Expo in November PMS executive chairman John Malone, who sits on the National Fraud Authority’s mortgage fraud forum, told delegates that the mortgage market’s effort to stamp out fraud has seen the loss to the industry from fraud shrink to a 10th of what it was four years ago.
And Ami chief executive Robert Sinclair has dismissed Experian’s claims and says that the 6 per cent increase for the third quarter was not necessarily significant and could be a case of firms under reporting in one quarter and playing catch up in the next.
He says: “Credits are so tight now that we are not lending at 90 per cent LTV much as everybody is at 60 per cent prime and therefore it is much harder for fraudsters to work in that area as they need to put that much money into a property.”
Sinclair adds that individual fraud has just about been killed off because borrowers now have evidenced income and the industry is smarter on the identification required for individuals.
He adds: “We have shut down self-cert so that area is all but gone.
“Organised crime is a different issue and there are significant risks around that but this normally requires a corrupt solicitor or surveyor so it is not the MMR that will cause that to blip.”