Maria Michaela (also known as Bruna Louise) had around 1,000 forged identity documents, including passports, in order to pose as a rich South African heiress in her ploy to defraud HBOS of £10.5 million. She was convicted and imprisoned in 2012 on several counts of fraud. Her accomplice, an estate agent - also convicted - was bribed by Michaela with money and luxury items to provide false valuation reports. On the back of these reports Michaela would apply to the bank for a mortgage, which usually exceeded the actual market price by two or three times. The bank believed it would get back its money when the property sold, not, of course knowing its real market value.
The case raises a number of issues regarding the validity of mortgage applications. One growing area of concern is joint owners. What happens when one person has applied for a mortgage advance, but the couple then split up, or one loses mental capacity? What if someone is acting under pressure to agree to a loan and the other makes off with the money? Can the victim, family member, beneficiary, or attorney, do anything to help? The mortgage company will say 'no' you're stuck with the charge. But the courts may not always agree. I am dealing with a case where a family member procured a power of attorney from her elderly parents and then took out a mortgage on their property, taking the cash for her own use. The Court held that it could not get rid of the charge but ordered that the Defendant pay the parents back the mortgage advance. The Defendant had acquired her own property and my clients were able to obtain a charge against that and an order for sale in order to release their money. Compensation in this example is not limited to the capital sum only; it is also possible to reclaim the money spent on mortgage instalments, or interest on the capital sum.
When it comes to challenging a mortgage the Courts tend to impose liability on the person who applied for or dealt with the loan. The mortgagee will rarely have its charge voided and so legal redress will be against the applicant, like Michaela, the solicitor, or in some cases the surveyor who valued the property.