Increasing numbers committing mortgage fraud by lying about their finances as lenders get tough

| August 22, 2012 | 0 Comments

  • The 23 per cent rise in mortgage fraud comes as lenders have tightened their borrowing criteria, making it harder for prospective homeowners to get a loan

By
Daily Mail Reporter

18:49 EST, 21 August 2012


|

01:47 EST, 22 August 2012

Increasing numbers are lying about their finances in an attempt to secure a mortgage, a study has found.

The 23 per cent rise in mortgage fraud comes as lenders have tightened their borrowing criteria, making it harder for prospective homeowners to get a loan.

Finance firm Experian said 39 in every 10,000 mortgage applications made in the second quarter of the year were found to be fraudulent, representing an increase of almost a quarter compared with the previous year.

Tighter times: The 23 per cent rise in mortgage fraud comes as lenders have tightened their borrowing criteria, making it harder for prospective homeowners to get a loan

Tighter times: The 23 per cent rise in mortgage fraud comes as lenders have tightened their borrowing criteria, making it harder for prospective homeowners to get a loan

While there have been signs of increased competition to attract mortgage customers in recent weeks, much of this has been aimed at those with larger deposits.

James Jones, head of consumer affairs at Experian, said: “The increase certainly reflects the fact that many households are increasingly cash-strapped and resorting to ever more desperate measures.

‘Nearly a quarter of mortgage fraud is due to people inflating their incomes.’

More than a million home owners saw
their mortgage rates increase in May, with banks blaming the increased
cost of funding a mortgage and concerns were raised that people will
find it harder to switch to another deal due to lenders’ toughened
criteria.

Experian said
the majority of attempted mortgage frauds were due to people lying
about their own circumstances. Just under a quarter of them were made by
people trying to hide a bad credit history and one in five attempts
were due to people giving misleading employment information.

Wanting to buy: Experian said the majority of attempted mortgage frauds were due to people lying about their own circumstances

Wanting to buy: Experian said the majority of attempted mortgage frauds were due to people lying about their own circumstances

The study also noted an increase in cases where people gave wrong information about the use of the property, such as saying they intended to live in it themselves when in reality they planned to rent it out.
Interest among landlords in the buy-to-let market has picked up as rents have soared due to a high numbers of tenants who are unable to get on the property ladder in the tough economy.

Nick Mothershaw, director of identity and fraud services at Experian, said:

‘Over the course of the last year, we have seen mortgages continue to be targeted at a high rate, with more people trying to misrepresent their personal, employment and credit information on applications to get properties out of their reach.

‘At the same time, we have also seen an increase in the number of properties where the use of the property is misdeclared, such as applying for a regular residential mortgage on a buy-to-let property.’

Meanwhile, attempted savings account fraud rates more than doubled, with 13 fraudulent applications in every 10,000 detected, up from six in every 10,000 a year ago.

The study said that third party identity fraudsters were responsible for the vast majority (88%) of attempted savings account frauds. It said this type of fraud is often perpetrated by criminals involved in money laundering.

Fraudsters often try to use savings accounts as a platform from which they can target more lucrative credit products.

Current account fraud continues to be the most targeted financial product, with 43 in every 10,000 applications found to be fraudulent, a 2% increase on a year ago.

Over the last year, current account fraud has been driven by “financially stressed” people lying about the state of their own finances, Experian has said.

However, current account fraud fell back slightly from the first quarter of this year, when it accounted for 44 in 10,000 applications, representing its highest rate in at least three years since Experian’s records began.

Fraud attempts fell by 3% year-on-year on average across financial services products, with automotive finance fraud, which includes car insurance as well as financing arrangements to buy cars, falling by nearly a third.

The automotive finance industry saw a 32% drop in its fraud rates compared with a year ago. Some 16 in every 10,000 applications were found to be fraudulent in the second quarter of this year, with attempts at hiding a poor credit history being the most common method.

Attempted insurance fraud also fell by 16% year-on-year, to 10 in every 10,000 applications. Most of this type of fraud was committed by people giving wrong information about their own circumstances.

Experian’s fraud index is based on information from fraud prevention systems National Hunter and Insurance Hunter, which Experian manages on behalf of its clients.

Here’s what other readers have said. Why not add your thoughts,
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Its fine, dont worry if you lied to borrow money and cant pay it back just knock on daves door and ask him to bail you out . I mean he can hardly say no can he when he makes YOU bail out all the gangsters that run the banks TO THE TUNE OF BILLIONS. Whats a couple of hundred grand. Have a good look too because you will also see the bank didnt have the money it lent you in the first place.

No big deal. Hundreds of thousands mortgage lenders=borrowers have already committed indisputable crime in Liar Loan deals in the past 15 years, which served as the basis of this now collapsing unprecedented UK Housing Ponzi bubble. If the police acts strictly according to the book, dozens of new prisons will have to be constructed across the land.

If you tell the truth at this moment in time, hardly anyone would get a mortgage.
Anyway, it was the lenders pushing the boundaries on mortgage applications, now it’s gone pear shaped they pull back on lending.
They caused this mess in the first place.

Fraud lol. You mean that thing bankers do daily

Seems ok for the banks to overstate their liquidity so why shouldn’t everyone else.

Yep…banks getting tough! Can we have our bailout money back please?

and when they cant pay it back they’ll go crying about how it’s EVERYONE elses fault right?!

You mean they didn’t before?!

The mortgage fraud from 2005 onwards was there for all to see but nobody wanted to because banks, mortgage lenders, builders were all making a fortune. However, you could have gone to any pub and any taxi-driver would have told you it would end in tears but what was the so-called experts saying?
Ah but its different this time!!!!! No more boom and bust!!!!
Why do we pay such idiots so much money?

39 in every 10,000 is only 0.39% of all mortgage application. Or to put it another way, less that 1 out of every 250 applications are “fraudulent”. I see that as a pretty insignificant number of people lying on their application, not to mention many of these seem to be simply inflating their salary a little. By how much? A few hundred quid? A grand? I think lenders should be concentrating harder on how they lied about the true Libor rate and the upcoming imposed introduction of additional-charge bank accounts. We haven’t forgotten about those, you know.

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