The buy-to-let sector is where most of the fraudulent activity in the mortgage market is occurring, according to John Malone, executive chairman of PMS.
Speaking at the Mortgage Business Expo in Manchester last week, Malone, who is also brokers’ representative on the National Fraud Authority’s Mortgage Fraud Forum, told delegates: “There is a big problem with buy-to-let and this is where most of the fraudulent activity is taking place.”
He says the level of fraud has remained relatively static in the past 12 months but some sectors are more prone to fraudulent activity than others.
Malone explained that these sectors generally involve so-called dabbler brokers and were more likely to be areas such as buy-to-let, equity release and bridging finance.
He also suggested that lenders have admitted to him that they had more of a problem with fraud within their branches than they had through intermediary business.
Malone added: “In some respects, they have taken their eye off the ball with regard to their own branches and call centres.
“However, it is so difficult to judge what is a genuine document and what is a fake.”
He recounted a recent conversation with a lender about the scale of the problem they faced.
Malone told the audience: “I met a lender that gets 1,500 applications a week and believes 12% to 15% are fraudulent. Most of them are in the buy-to-let market.”