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Trio sentenced for £4.6m mortgage fraud

Three people, including a former police financial investigator were sentenced yesterday to almost ten years imprisonment in total for defrauding mortgage providers of £4.6m.

Charles Overend, a former police financial investigator, defrauded mortgage providers by hiding discounts he had received on the price of residential properties, tricking the lenders into providing loans that were proportionally much larger than normal for buy-to-rent houses.

He was assisted by Carrol Thompson and Jonathan Overend, his brother.

Stephen Rowland, reviewing lawyer for the CPS Central Fraud Group, says: “The sheer scale and effectiveness of this fraud were remarkable.

“Charles Overend and his associates bought 32 properties across the country between them, using £4.6m obtained dishonestly through mortgages. Lenders were eager to make the most of the property boom and Overend knew how to exploit them to turn himself into a property millionaire.

“This trio did not have the cash to get heavily involved in property, so they decided deception was the answer.”

Overend received a sentence of five years and six months for the mortgage fraud, plus a consecutive three month sentence for possessing a false identity document. His brother, Jonathan, was sentenced to one year of imprisonment.

Thompson was given a suspended sentence of 150 weeks and 200 hours of unpaid labour.

Rowland explained that the scam relied on Overend securing a substantial discount on the asking price of properties – one example was a discount of £89,900 in total on two properties in Wigan.

He then applied for mortgages for the asking price instead of the price actually agreed. Thompson, who was employed as a clerk for various solicitors’ firms as the fraud went on, assisted Overend by supplying false information to lenders or their agents on the agreed price for the properties.

Mortgages for buy-to-let properties were readily available at the time as lenders anticipated the interest due would be paid by the rent, but they would only loan up to 85% of the property’s value for its purchase. The undisclosed discounts allowed the defendants to secure loans worth more than 85% of the value of each property. A mortgage for properties in Harrogate was actually worth 107% of the agreed purchase price.

All three defendants pleaded guilty on 7 July 2010 at Southwark Crown Court. Their trial was scheduled to begin on 12 July.

Overend pleaded guilty to six counts of obtaining a money transfer by deception, the mortgage in relation to the purchase of properties in:

  •          Hadleigh, Essex
  •          Ossett, Yorkshire
  •          Standish, Wigan
  •          Chertsey, Surrey
  •          Mayfair Court, Wakefield
  •          Regent House, Harrogate

Thompson admitted three counts of conspiracy to defraud in relation to the purchase of properties in:

  •          Regent House, Harrogate
  •          St Andrews Road, Lytham St Annes
  •          Whipcord Lane, Chester

Overend pleaded guilty to one count of obtaining a money transfer by deception for properties in Regent House, Harrogate.

Overend also pleaded guilty on 24 March 2010 to possession of a false identity document, which was found when he was arrested and his home searched on 11 March 2008.

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  • philip adkins 25th October 2011 at 10:35 am

    if you are obtaining any mortgage ,let the advisor and valuer earn there money ,give them precise details of your income,and leave it to them,do not completeany written applications yourself,,then you have no chance of being accused of deception simple as that,regards philip

  • astounded broker 30th November 2010 at 5:12 pm

    “any lender that I have been a mortgage underwriter for always insisted on a 6 months period between remortgages” ….. have you only just joined the mortgage industry? Between 2006 and 2008 there were thousands upon thousands of properties bought on ‘day one’ remo deals. Unless you are qualified, and I mean experienced, to talk, don’t bother – no wonder you were ‘anonymous’.

  • Damien Brassneck 1st November 2010 at 11:37 am

    As this practice was common place in the BTL market amongst professional landlords I’m guessing there are a fair few nervous people out there right now.

  • anonymouse Mike 29th October 2010 at 9:18 pm

    Anthony is right. At the time he was arrested there were indeed same day remortgages available, legally through Mortgage Express. The 6 month thing is the minimum here since the credit crunch

  • anthony 13th August 2010 at 9:12 am

    i think you may find that Mortgage Express allowed buyers to remortgage the day after they bought a property. my buyers bought new build poperty in this way after receiving builders discounts. the initial purchases were cash / bridging loan. off course this story is much more sinister and there must have been a whole chain of people including a dodgy surveyor. with brokers no longer able to instruct valuations at least inflated prices are a thing of the past, we are now at the other extreme with down valuations left right and centre!

    the fake ID is a concern. i applaud my network who have introduced an id verification system linked to credit agencies. no pass, no application, simple.

  • anthony 12th August 2010 at 4:08 pm

    i was thinking of Mortgage Express specifically. They allowed investors to remortgage the next day off a cash purchase or a bridging loan so many BTL investors bought new build property in that way quite legitamately. obviously what these guys were doing was much more sophisticated and intricate than that and there were a whole chain of people involved. i wasnt in the industry then but I believe brokers could instruct surveyors directly and the crooked ones could easily skew the valuation figures. thats one good change in the industry.

    the fake ID is worrying. i applaud my mortgage network for introducing a ID verification system linked to credit reference agencies. no application can be submitted without a successul verification now. its espcially useful when you havent met the clients face to face.

  • Sandra McWhirter 11th August 2010 at 8:35 pm

    Well Anthony, any lender that I have been a mortgage underwriter for has always insisted on a 6 months period between remortgages (in fact it is law that these need to be investigated)!
    Yes the BTL would be on the search but as by that time the mortgage would have drawn down so would only take into account rental covering mortgage payment and size of property portfolio not assessing another lenders mortgage!
    As a lender you can only assess the case in front of you and the fact is that both the broker and the solicitor lied about price and therefore commited fraud!

  • anthony 10th August 2010 at 5:42 pm

    well if the same buyer is purchasing numerous properties with various different lenders that would still show up on a credit search. how about asking for deposit proof? at the time i seem to remember lenders allowing day one remortgages, he could have bought all these properties quite legitimately if he went to a decent broker!!

  • Sandra McWhirter 10th August 2010 at 4:38 pm

    It is only classed as fraud after the event. If lenders pick this up before the funds are released then it is only attempted fraud and that is more difficult to prove.
    These also went through different lenders therefore making things more difficult to pick up on as lenders ask for property portfolio worth and debt outstanding not price (for existing BTL’s).
    Also the lenders rely on the solicitor to independantly verify the price on the COT’s but the brother covered this up by giving false prices!
    What more do you want lenders to do Anthony?

  • anthony 10th August 2010 at 12:17 pm

    these stories all seem to appear after mass fraud has already taken place. they only seem to come to light when the loans go belly up. you would think lenders had better detection structures set up by now.

  • anthony 10th August 2010 at 12:17 pm

    these stories all seem to appear after mass fraud has already taken place. they only seem to come to light when the loans go belly up. you would think lenders had better detection structures set up by now.