In recent times lenders have increased systems and security, however it’s always the case that a small minority of people will try to undermine systems for personal gain.
Mortgage fraud is like all other fraud and it’s an ongoing battle where lenders have to be continually vigilant, often against new types of fraud.
In recent times a Scottish boxing promoter was jailed for 43 months for a £1.2m mortgage fraud, and an English solicitor who fled abroad has been sentenced to six years in prison after acting as a facilitator and collaborator with a dishonest mortgage broker and his client in a fraudulent property deal.
Britain’s biggest known mortgage fraud involved the defrauding of banks and building societies of a staggering £49m, and centered on a chartered surveyor providing false valuations in the Birmingham area. Using inflated valuations, loans were obtained for £49,287,000 against properties which were bought for £5,688,125.
Three men have recently been jailed in Northern Ireland for their part in a multi-million pound mortgage fraud and money laundering scheme. One was a bank manager, one a solicitor and the other an estate agent, a powerful conspiracy combination.
As seen in the examples above, mortgage fraud can be committed by any link in the mortgage chain, or as in some of the more serious cases, a combination of links. A lender needs to have the best possible data security in place to minimise the risk of fraud, with high levels of data security and strong third party oversight of exactly who the people are that you are lending through/to.
The Irish case shows the value of having robust data security, as loans were applied for using bogus identities or the names of individuals who had no knowledge of the applications. Technology systems can assist to detect fraudulent patterns like this and also the dramatic overvaluation as seen in the Birmingham case.
With human intuition and the correct software, technology can be excellent at drawing attention to anomalies which may be fraudulent. Lenders need to take as many precautions as possible to minimise fraud and to enable to mortgage process to run smoothly.
Mark Blackwell is managing director of xit2
