With the downturn in the economy and the slowing of the property market, the time is ripe for the latest rise in mortgage fraud. Here is a reminder of some of the more usual examples of mortgage fraud to look out for:

  • An overstatement of income to secure the loan
  • An omission of previous addresses which might show up a bad credit record
  • A mortgage granted over a property which is to be built but which never transpires
  • Commercial properties which are said to be subject to leases at market rent or above when the leases, or parties to it, don't actually exist
  • Remortgage of properties very recently acquired at a discount where the remortgage is at the full market value
  • Back-to-back sales where the mortgage is not registered against the first purchase and so not redeemed when the property is then immediately sold on
  • Identity theft

Things to consider

Make sure that the systems and controls in place to identify and reduce fraud are up to date, understood and implemented. Be aware of the tell-tale signs of the same broker, valuer, or solicitors being used on a number of loans that have all defaulted. Consider undertaking investigations to ascertain whether this is mere coincidence or something more sinister. Early action can be vital to protect your position and show you have sought to mitigate loss prior to bringing negligence claims against your professional advisers.