After reading that mortgage fraud nearly quadrupled in value in the first six months of 2010 I noticed a comment on Mortgage Strategy Online stating that the fact one case was worth £50m distorted the statistics.
How does it matter whether these figures are based on number of cases or value?
No matter what part you play, be it lender, broker or customer, fraud is fraud.
Yes, we are seeing the tip of the iceberg but why do we seem so surprised that problems continue to emerge?
Should we really be surprised at the rise in prosecutions?
I can remember lenders designing schemes and incentives to suit certain brokers and even allocating special tranches of funds simply to generate high-volume business.
I remember lenders’ BDMs who would fix anything to get a case through. I remember underwriters being regularly wined and dined by introducers. And I also recall lenders designing and promoting products that allowed and assisted borrowers to transgress all sensible limits.
And then of course we had brokers who were only too delighted to use these facilities and direct business to lenders, often after purporting to have researched the whole market. In the case of Northern Rock they would even get paid an enticement of £500.
I remember when underwriters were regularly wined and dined by introducers, and lenders promoted deals that went beyond sensible limits
Then there were valuation benefits such as the so-called 10% discretionary margin, which I don’t recall ever being applied downwards.
This sort of stuff was rife so why are we surprised at the results? It’s time the Financial Services Authority stopped concentrating on self-promotion and got to grips with the backlog of rogues who have slipped through the net but are potentially the facilitators of future fraud.
I personally submitted a written report on such activities by a packager more than two years ago regarding a situation worse than some I have read about in Mortgage Strategy but I’ve yet to see anything happen.
Third party witnesses have not even been interviewed so I can only assume that it is not publicity-worthy enough for the regulator.
I recently found out that someone else has made a report about the same firm and is also puzzled at the lack of action.
So yes, I’m disillusioned, but I will persevere in an industry that has provided me with a good living for many years.
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