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Secret landlord fraudsters jump 40% in 2012

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  • 06/03/2013
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Secret landlord fraudsters jump 40% in 2012
A rise in borrowers misusing their mortgage drove a 5% increase in mortgage fraud last year, the UK’s fraud prevention service CIFAS has revealed.

Cases where someone with a residential mortgage rented out their property without informing their mortgage provider rose by 41% in 2012.

The report suggested the rise indicated borrowers were trying to take advantage of the present rental market but did not notify their mortgage lender: “This exposes the mortgage lender to greater financial risk, and presents another challenge to organisations in terms of their need and responsibility to educate customers in what constitutes fraud”

Mortgage application fraud also rose by 5%, reversing a 2011 decline. Hiding adverse credit information featured in nearly half of cases.

“While this finding flies in the face of the reported decrease in average household debt, it may have been that some considered that 2012 was the year to get on the housing ladder, or that it was time to move home,” the report stated.

“In a year where total mortgage lending was marginally up from levels recorded in 2011, but where house prices in some areas of the country were still beyond the reach of many potential buyers, this increase probably indicated the desire of many to try to take advantage of an opportunity rather than a reflection of a greater number of people with adverse credit information against them.”

In contrast with first-party fraud, mortgage-related identity fraud fell by 13% and unauthorised account takeovers halved.

However the report noted a rise in identity fraud related to guarantor loan products, where the guarantor was impersonated. In almost 1,000 cases the lender identified the person who would be responsible in the event of non-repayment had not agreed to take on that role.

Across all first-party fraud, the report found fraudsters were overwhelmingly likely to be men under the age of 40. At the same time, the older a fraudster was, the more likely they were to be involved in application fraud.

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