Mortgage fraud has nearly quadrupled in value during the first six months of 2010, according to KPMG’s Fraud Barometer.
Some 21 cases with a value of £96m were reported – compared to the same period during 2009, where there were 18 cases worth just £24m.
The whole of 2009 only saw mortgage fraud totalling £77m.
Mortgage fraud accounted for over half of all fraud committed against the financial sector in this period.
One of the biggest cases was worth £50m, involving two solicitors who were charged with commercial mortgage fraud in relation to obtaining a money transfer by deception and dishonesty, while an estate agent was jailed for six years after attempting to pull off a £2m mortgage fraud after stealing the identities of two homeowners.
Hitesh Patel, partner at KPMG Forensic, says: “The fact that increasing amounts of mortgage fraud are being prosecuted is cold comfort for the financial services industry. Clearly, more of it is coming to light and more will follow. It is highly probable that the issue is far bigger than our figures demonstrate.
“This is a legacy issue for the banks from the pre-recession boom years when house prices inflated, providing the opportunity for fraud. Banks will be hoping that they have uncovered most of their fraudulent loans. But the trend remains upwards and it could be some time before we see the peak.”
Overall, the Fraud Barometer, which considers serious cases of fraud with charges in excess of £100,000 in the UK courts, found 166 cases of serious fraud in the first half of this year – the highest number of cases in a six month period in the Barometer’s 22 year history.
It says managers in companies inflicted far greater fraud damage than their employees.
One example was of a Birmingham finance boss who manipulated the profits of a steel supply firm to ensure a bonus by falsifying the company’s accounting records. He spent over £100,000 at a local lap dancing club, and by doing so 11 redundancies had to be made at the firm, which was nearly brought to its knees as a result of his actions.