The regulator says nine current cases against brokers have an element of mortgage fraud involved and it could take enforcement action against these individuals.
John Malone, who represents brokers on the National Fraud Authority’s Mortgage Fraud Forum, says the investigations probably relate to business done in 2007 and 2008.
He says: “Considering gross lending totalled £362bn in 2007 and £254bn in 2008 and brokers did around 60% of business, nine investigations for fraud is relatively low.”
Nick Baxter, director of Mortgage Promotions, says the number shows there is only a small amount of fraud perpetrated by brokers.
He says: “It is only a small number of brokers but it tarnishes the industry. Lenders and regulators have to ensure they don¹t tar all brokers with the same brush.”
Last week the FSA published its Mortgage Lenders’ Round-Up newsletter in which it claimed that brokers are abusing buy-to-let mortgages to help self-cert clients.
David Geale, manager of retail intermediaries and the mortgage sector at the FSA, says brokers are using some buy-to-let and let-to-buy deals to circumvent stringent income and affordability checks on regulated residential mortgages.
“He says: ³This is particularly the case where lenders are offering buy-to-let products to first-time buyers and where affordability is based on
projected rental income only.
“We believe lenders with weak systems and controls are likely to be exploited by intermediaries still looking for self-cert mortgages.”
Malone says he knows of several lenders that have been approached by brokers with buy-to-let deals that are clearly for self-cert clients, but it is a small number.
But David Whittaker, managing director of Mortgages for Business, says the FSA is focussing on a small issue to justify buy-to-let regulation.
He says: “It is trying to build a case to regulate the buy-to-let sector so is using anecdotal evidence as an example of why regulation is needed.”