Mis-sold Mortgage Claims > Mortgage News
Different Kinds of Mortgage Fraud
Thu, 10 Nov 2011
There has been an increase in prosecution of mortgage fraudsters after the credit crunch.

There have been many schemes which hoped to bank on an expanding property market .

When the mortgage market collapsed and property values fell the banks found out that a lot of money lent during the boom years was not as firmly secured as they had considered to be the case, particularly in the buy to let market .

The scale of mortgage fraud is immense; in 2010 the accountancy firm BDO Stoy Hayward highlighted that mortgage fraud represents 20 per cent of all known UK fraud cases.

Essentially there are three different types of mortgage fraud.

The first kind involves lying on the application form in a limited manner, for example, a potential buyer of a home lies about his or her income or address to mask a bad credit rating .

Secondly, you have hidden incentives fraud. Some years ago it was common practice for the seller of a property to offer cash-back or a discount off the price to seal the deal. The mortgage would be obtained by the buyer using the original, non-discounted, price.

This was widely practised in the new-build sector with developers offering various kinds of incentives to prospective buyers. The Royal Institute of Chartered Surveyors directed its members from September 2009 to request vendors/developers to disclose any incentives.

A third kind of fraud involves over valuation. This needs the co-operation of professionals such as property solicitors and valuers.
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