We must beware the enemy within.
Posted on February 9th 2009
Mortgage fraud has come to the fore in the press over the last couple of weeks. According to a report by KPMG, £36m of fraud cases were brought in front of UK courts in 2008, up nearly tenfold on 2007. There is no surprise that in times of rising unemployment the incentive for individuals to commit fraud is increased; mortgage professionals whether that be brokers, IFAs, banks or building societies will need to have processes in place to protect themselves from either becoming unwitting accomplices or victims.
In my recent experience the £36m reported is massively under-cooked, over the next couple of years this figure will be substantially higher. Exact has completed due diligence work on over £2.5bn of mortgages over the last 8 months and there is no doubt that mortgage fraud is an area of concern. Whilst the figure is a very small percentage of the total, mortgage fraud hurts every single person in the industry. Those with mortgages on balance sheet or considering purchasing assets are especially vulnerable and it is important that they root out fraud and put prevention at the top of the priority list. When most people think of mortgage fraud they think of borrowers lying about income or hiding addresses with adverse credit information, but there is also professional fraud. This is perpetrated by organised gangs with collusion from professionals working in the mortgage industry, this can and does include solicitors, valuers, developers as well as brokers and advisers.
The FSA has definitely strengthened its position on these professionals but there is still significant work to be done to protect the industry from further attack.
