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False and altered documents drive increase in mortgage fraud

  • 24/09/2019
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False and altered documents drive increase in mortgage fraud
Fraudulent mortgage applications increased by five per cent in the first half of 2019 compared to the final six months of last year, according to Cifas.


The fraud prevention service revealed a particularly alarming rise in the use of false or altered documentation to support fraudulent applications.

It found a 14 per cent increase in fraud using a false document and a 32 per cent leap in fraud by submitting altered documents – with applicants often providing false or altered bank statements and proof of income.

Overall fraudulent cases rose 1,195 in January to June, up from 1,140 in July to December 2018.

Application fraud rose from 1,082 to 1,145, while identity fraud dipped from 34 to 25 and the misuse of facility held steady at 21 cases from 20.


Exaggerating income is ‘reasonable’

Research carried out by Cifas and WPI Economics revealed that people aged 35 to 44 were more likely to think exaggerating income on their mortgage application was ‘reasonable’ than any other age group.

Perhaps coincidentally, Cifas noted, 45 per cent of those caught committing application fraud were aged between 31 and 40, up 16 per cent compared to the last six months of 2018.

This was closely followed by those aged between 41 and 50 years old that saw a six per cent increase.


Consequences of lying

Mike Haley, chief executive officer of Cifas, warned about the consequences of lying on mortgage applications.

“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,” he said.

“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.”

Building Societies Association policy manager James O’Sullivan added that there were many risks inherent in being less than honest.

He continued: “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.”


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