The fraudsters have included employees of banks, mortgage advisers and individuals, while the motivation has ranged from earning a bonus to secretly accumulating millions of pounds.
Meanwhile, law enforcement agencies have been fighting back through awareness campaigns and anti-fraud checks.
Based on how often they were shared as well as their significance, here are Mortgage Solutions’ top ten fraud stories of 2012.
Fraud is on the rise. In 2011, fraudulent applications for mortgages increased to 3431, 2.2 times higher than the figure for 2006 and the fifth year in a row that mortgage fraud increased.
This soar in fraudulent mortgage applications will continue into 2013, according to the predictions of credit ratings agency Experian, which also suggested the increase would mainly come from first party fraud.
However, a number of high profile cases this year suggest desperation alone does not drive the deception. In January, the accountancy firm BDO warned that banks, while focusing on external threats, were ignoring the “greatest risk” – their own staff.
A Cheltenham and Gloucester mortgage advisor admitted false accounting in January as part of a mortgage fraud case. She had stood to gain thousands of pounds in bonus by waving through fraudulent mortgage applications from two brothers.
And the risk of bank employees committing fraud was underlined by the jailing in September of Jessica Harper, who paid herself £2.5m through false and doctored invoices while working as head of fraud and security for digital banking at Lloyds Banking Group.
Mortgage advisers were not exempt from the wall of shame. The FSA has banned a mortgage adviser following his role in a multi-million pound plot to apply for mortgages using the stolen identities of wealthy homeowners.
As the buy-to-let market grows in importance, so does the risk of fraud. In June, a regulatory law expert warned of the risk of encountering fictitious purchasers and borrowers, and applicants deliberately inflated property values in order to take out a larger loan.
The FSA also highlighted the risk that homeowners desperate to sell could be lured into fraudulent agreements with the buyer where the sale was at a discount but officially reported to be selling at full market value.
This year also saw the effort to crack down on fraud ramped up – working with HM Revenue and Customs, the Scottish police proposed to add a layer of anti-fraud checks to mortgage applications via an additional fee.
Finally, 2012 proved mortgage advisers don’t have to be involved in fraud to be behaving badly. In May a mortgage adviser was jailed for running a brothel with 15 prostitutes in Wigan.
