Mortgage lenders report fraud on the rise

Published 13th Jul 2009

A rush for cut-price property by bargain-hunting buyers has led to an increase in fraudulent mortgage applications, with the number of inflated salary claims soaring.

The Council of Mortgage Lenders (CML) told The Times that its members had reported the increase in the face of scarce loans and stricter lending rules.

Sue Anderson, of the CML, said: “This is to do with fewer mortgage products, tighter criteria and an increase in demand. Lenders have become a lot more vigilant.”

Abbey, one of Britain’s biggest mortgage lenders, said: “There has been an increase in fraud across the board as a result of borrowers finding themselves in more difficult financial circumstances. There are particularly more instances of borrowers giving wrong salary details.”

Examples of mortgage-application fraud include the failure to declare a credit card balance or car loan that would affect the assessment of applicant’s ability to afford the loan.

Banks and building societies can uncover an undisclosed credit obligation by searching a borrower’s credit file or by using an agency to check for discrepancies between information provided and records held elsewhere.

However, there are also concerns that some legitimate applicants are falling foul of checks for innocent reasons.

The CML said that applicants might not know why their application had been unsuccessful because lenders usually cited failure to meet credit-scoring requirements as the reason for a rejection. Banks now require deposits of about 25 per cent for their best deals and have grown increasingly wary of borrowers with any missed payments on their credit files.

Self-employed people, who were once able to secure a 100 per cent mortgage by submitting their estimate for projected income, could now find a remortgage application rejected by their existing lender.

Apacs, the payment industry body, said that an increase in attempts to defraud during an economic downturn was to be expected.

Source: ' Times '

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