Mortgages -
Banks warned of mortgage scam - 05/03/2008
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Criminals have been defrauding British banks out of £700 in mortgage fraud according to a police report released today.
An intelligence report by the Association of Chief police Officers (ACPO) has said that the fraud is motivated by a desire to generate income and launder money from their operations, often involving drugs, human trafficking and prostitution.
Fraudsters can do this in a number of ways, the first involves using corrupt surveyers to carry out false vaulations on the property. This allows them to apply for a loan that is larger than the property's true value. They will usually then go further by applying under a false name, supported by false documentation. This enables them to default on repayments without being traced.
Alternativly, solicitors are assisting criminals, often with the incentive of a bribe, to obtain mortgages illegally. This has left the buy-to-let market particularly vulnerable, as the amount required can be easier to hide. Any vaulaution that appears intially high could be perfectly explained as going towards necessary renevation work.
Mike Bowron, Comissioner of the City of London Police and leading the ACPO
investigation said: "Organised mortgage fraud can take many forms and while difficult to measure accurately, remains a signficant element of the UK's annual fraud losses."
To combat this growth area in mortgage fraud the FSA is considering issuing fines to more than 70 mortgage brokers. Over 200 have been referred to organisation in the last 18 months over suspicious activity.
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