City of London Police believed to be probing 450 fraud cases

eddie goldsmith
Eddie Goldsmith: Identities are being hijacked

The City of London Police is reported to be investigating 450 cases of suspected fraud, 21 of which are mortgage frauds.

Last week at the Council of Mortgage Lender’s fraud detection seminar in London, a detective from the City of London Police revealed that it has 21 suspected mortgage fraud cases in the pipeline, predominantly relating to professional mortgage fraudsters.

Eddie Goldsmith, senior partner at Goldsmith Williams, attended the seminar and says the detective gave one example of a professional fraudster who bought a firm of solicitors to turn into a fraudulent practice.

He says: “One of the messages from the seminar was that there is no magic solution to combating fraud. Virtually every fraud has a professional enabler that is helping the applicant commit fraud.”

Goldsmith says a lot of the fraud taking place comes from people hijacking identities.

But he adds that there is a reluctance among some lenders, solicitors and mortgage firms to share information.

Last week figures from Experian showed mortgage application fraud increased by 8% in 2011.

This was the fifth year in a row in which the rate of mortgage fraud rose.

Around 34 in every 10,000 applications for mortgages were found to be fraudulent in 2011, compared with just 15 in every 10,000 in 2006.

Around 93% of attempted mortgage fraud in 2011 were carried out by individuals misrepresenting personal information on their applications.

Typically these first party frauds involved falsifying employment status or financial information, and – most commonly – attempting to hide an adverse credit history.

Experian says that young, poorlyeducated individuals living in small towns and middle-aged and skilled working class individuals were both responsible for around 15% of first party mortgage fraud cases last year.

Meanwhile, young, well educated professionals of a liberal persuasion were also prone to attempting first party mortgage fraud, being responsible for 13% of cases.

Nick Mothershaw, director of identity and fraud at Experian, says: “About 70% of financial services application fraud is down to first parties misrepresenting their circumstances.

“Products such as mortgages and insurance that have seen fraud soar over the past year have a significant first party fraud element to them. This kind of fraud tends to originate from financially stressed segments of society.”