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Mortgage fraud up 8% in 2011

Fraudulent applications for mortgages increased by 8% in 2011, according to Experian.

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

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

The overall rate of fraud at point of application across the UK’s financial services sector increased by 4% in 2011, to just over 17 in every 10,000 applications.

In addition to record mortgage fraud figures, this overall increase was also driven by growth in insurance and current account fraud.

Around 93% of attempted mortgage fraud in 2011 was down to individuals misrepresenting their personal information on applications.

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

Experian’s demographic insight revealed that young, poorly educated individuals living in small towns and middle aged, middle and skilled working class individuals were both responsible for around 15% of first party mortgage fraud cases in 2011.

The young, well educated professionals of the Liberal Opinions were also prone to attempting first party mortgage fraud, being responsible for 13% of cases.

Nick Mothershaw, UK&I director of identity & fraud at Experian, says: “About 70% of financial services application fraud in the UK fraud is down to first parties misrepresenting their circumstances, and the products such as mortgages and insurance that have seen fraud soar over the last year have a significant first party fraud element to them. This kind of fraud tends to originate from financially stressed segments of society.”

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  • Glen McKeown 20th April 2012 at 7:54 am

    The word Fraud makes for an exciting headline, but does it actually describe what is going on.
    Fraud is the process of extracting money with the intention of never repaying it. What is being discussed is the process of “enhancing” one’s position in order to obtain a higher mortgage than would otherwise be available, but, in the majority of cases, then repaying that mortgage in a normal fashion.
    Whilst this can affect the perceived risk rating of the mortgage application, most facts on an application form are verifiable, if the lender does its job properly.
    There may be fraud going on, but it strikes me that if excess attention and resources are concentrated on the trivia covered by this report, there is less attention and resource available to concentrate on genuine levels of fraud.
    And should we not applaud that fact that in a financially challenging environment 99.83% of application are honest.

  • Doctor S P 18th April 2012 at 3:24 pm

    If Experian think that a fraud rate of 0.34% across the industry is correct it shows just how out of touch they are (and why nobody uses them for fraud tools anymore..)

    Increase that figure by a factor of ten and you might be getting close to the truth.

  • Anon 18th April 2012 at 2:28 pm

    Mortgage Fraud is not ‘up’ 8% the number of applicationS being checked is ‘up’ 8%, had they actually been checking more than 17 in every 10,000 5 years ago, they would have found this figure very different. Mis-information like this does not help the industry, there is no way that with fewer brokers, writing fewer cases and even direct lending being reduced, that with all the tightened crietria and better checks now in force, that fraud can possibly be ‘up’ on last year. #UTTERTOSH

  • Kevin 18th April 2012 at 1:43 pm

    Any advances on percentage from Equifax