Dishonest Borrowers Increase Mortgage Fraud By 5% In 2019

Mortgage fraud has increased by 5% in the opening half of 2019 when compared with the second half of 2018 because of dishonest borrowers lying on their mortgage applications.

According to figures from Cifas, the UK’s leading fraud prevention service, 13% of all adults in the UK believe it is ‘reasonable’ to manipulate household income on a mortgage application to ensure the credit is approved by lenders.

Worryingly, this trend is particularly prevalent amongst older mortgage borrowers with 16% of those aged between 31 and 40 making fraudulent mortgage applications.

Providing false or altered documents increased significantly in the opening half of this year. The number of mortgage applicants altering their bank statements and proof of income skyrocketed by a third (32%) in half one of 2019.

Similarly, those producing false documents to provide more favourable affordability assessments rose by 14% when compared with the final half of 2018.

The majority of those committing application fraud were aged between 31 and 50 years old. 45% were aged between 31 and 40, representing a 16% rise from the figures in 2018 whilst 41-50 year olds committing application fraud also climbed by 6%.

In the most part, people committing mortgage fraud view the crime as ‘victimless’ with the borrower successfully acquiring property and the lender making money from the mortgage. However, Cifas and their ‘Faces of Fraud’ campaign are urging dishonest borrowers of the inherent dangers of overreaching and over committing to a mortgage.

Mike Haley, chief executive officer of Cifas , said:

“It’s easy to assume that making exaggerations to improve the chances of your mortgage being approved is harmless, but the reality is that this is fraud and the consequences can be very serious.

“Mortgage providers carry out rigorous checks, and so exaggerating your income or withholding any change of circumstances could result in it being harder to obtain financial products in the future such as mortgages and loans. In more serious cases, this kind of fraud could result in a hefty fine or a prison sentence, or the possibility of losing your home.”

James O’Sullivan, policy manager for the Building Societies Association, commented:

“There are many risks inherent in being less than honest, not least that the borrower finds themselves unable to pay because a realistic affordability assessment was not possible or that, when caught, offenders struggle to get future credit.

“It is far from being a victimless crime and is something that lenders take rigorous action on.”

How significant is this type of fraud to the property sector?

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