How brokers tackle mortgage fraud: ‘There is no greater detective than a crinkly, grey haired adviser’
The report also showed that during the year, the sector had seen an 18 per cent decline in mortgage application fraud to 2,386 cases so while the problem seemed to ease, the amount of money lost makes it an issue that continually needs tackling.
In an effort to further combat this, Paradigm Mortgage Services recently put together an e-book for brokers, aiming to educate them on how to identify fraudulent practices among clients.
With all the experience, existing knowledge and training already in the industry, what resources do brokers find the most useful for combating fraud and how do they employ those skills?
Martin Stewart, founder and director of London Money, said: “Any form of education whether it is for a client or for a broker can only be a good thing for the wider industry.
“No one is infallible against a well-orchestrated fraud and we all need to remain vigilant to the threat,” Stewart added.
Stephen J Douglas, adviser at SJD Financial recalls his firsthand experience of a client who he discovered was lying to him when he spotted fake bank statements and pay slips.
“I called him [the client] out on it and he just kicked off out the office.”
Asad Khan, consultant mortgage broker at Mortgages for Business, shares his own encounter, saying he has had scenarios where he entered a client’s details into the Post Office’s certification system which flagged up past convictions and discrepancies.
However, he adds that with all the checks and balances within the trade, it’s usually something that gets picked up before it goes too far.
“Lenders are really smart anyway they’ve got their own internal barriers before you even get to that point,” he said.
Falling back on experience
With 37 years in the trade under his belt, Douglas puts his due diligence to use when he comes across anything that may be suspicious. “I’m quite fortunate, my daughter designs security for passports and money all around the world so I know about that stuff.”
He also makes use of the technology available to him, in the form of a fraud checker installed on his computer as he adds: “I just search and print a Financial Conduct Authority (FCA) file on every single person I deal with, so I get a full report.”
Khan also makes use of the software available to him as he runs all client information through an internal anti-money laundering (AML) checker, which he says gives his company “an extra level of due diligence”.
A wealth of resources
Preferring face-to-face interactions over written information, Khan says: “When you’ve got a document – brokers and compliance don’t really go together – it’s just one of those things that if you can, you tend to ignore.”
Philip Clark, owner of Philip Clark Financial Services, believes that any information available is bound to help, “if it means that we’re all as aware as we would like to be, articles and pointers are very helpful.”
London Money’s Stewart adds: “Fortunately, there is plenty of information available to us all on the internet be that LinkedIn, Companies House or the myriad of social media platforms which allow a diligent broker to investigate the evidence placed before them.”
Personally, he makes sure to attend training sessions held by lenders to keep on top of new fraud trends, but he also adds: “There is also no greater detective than a crinkly, grey haired adviser who has more years of experience than he cares to admit.”
Paradigm warns of mortgage fraudsters’ tactics in ebook for brokers
The ebook provides advisers with information on how to recognise the potential perpetration of fraud and how to prepare the business and staff to combat this.
It warns brokers to look out for implausible income changes, potential assistance or co-ordination with family members or businesses, and questionable payslip details.
And it highlights the risks of so-called property hijacking of unencumbered properties by rogue tenants.
The ebook covers:
- The most common types of fraud in the mortgage marketplace;
- The typical characteristics shown by customers who may be committing fraud;
- What to look out for on documentation provided by the fraudster – payslips and bank statements;
- Other areas of fraud in the financial services industry;
- Prevention – available tools that can help firms combat fraud without too much expense.
Firms must be vigilant
Paradigm Mortgage Services mortgages technical director Christine Newell (pictured) noted that the large sums of money involved in mortgages mean that the market is an ongoing target for criminals.
She added that better education, greater knowledge levels and a commitment to using technology and sharing information between organisations, could help keep fraud to a minimum.
“While the number of, what we might call, intermediary fraud ‘successes’ are very low, such attempts are constantly being made and there is no indication that fraudsters are going to stop trying to commit these crimes,” Newell said.
“It is therefore vitally important that advisory firms are constantly vigilant about the ways and means fraudsters use, how they can recognise potential fraud, and what they can do to combat it.”
She added: “The ebook provides a wealth of information on fraudulent activity and how to stop it from having a major negative impact on your firm, your client base and the industry.
The ebook can be downloaded for free from the Paradigm website by following this link.
File review service
The firm is additionally launching a new Fraud File Review Service for £500 which will review a selected number of files a firm may consider to be at risk, or where they may have received a decline letter from a lender due to inconsistencies.
Paradigm will then be able to identify any inconsistencies which may potentially assist the firm in dealing, and communicating, with the client and the lender following the outcome of the file review.
It added that this could potentially play a part in helping the firm form an appeal against any removal from a lender panel.
Convicted mortgage fraudster ordered to surrender properties worth £315k
After an investigation by West Yorkshire Police, Malcolm Leslie Forsyth from Huddersfield was found to have profited by £465,554 from his crimes and will face a further four years in jail if he does not surrender the properties within three months.
Forsyth claimed one of the properties was owned by his uncle, but in fact both were owned under false identities.
He was convicted in November 2016 of 15 fraud offences by creating false identities to get mortgages, open bank accounts and claim benefits.
Compensation orders were granted at Leeds Crown Court earlier this week, meaning that a proportion of the £315,000 will be used to compensate the victims in this case.
Forsyth contested the hearing and West Yorkshire Police said he had tried to block their investigations.
‘Unpick his lies’
Ramona Senior, head of the economic crime unit and north east regional asset recovery team, said: “At every stage, Forsyth has tried to hamper our enquiries but thanks to the thorough investigation carried out by the team we have been able to unpick his lies and ensure that he is made to pay for his crimes.
“The available assets consists of two properties, which were both owned under false identities.
“The uncle was ordered to attend court to provide evidence to support this. His Honour Judge Batiste found he has mislead the court and rejected his evidence in its entirety.”
False documents biggest source of mortgage fraud
The report tracked mortgage frauds across the categories of application fraud, facility takeover, identify fraud and misuse of facility.
Application fraud fell by 18 per cent to 2,386 cases, driving the overall picture on mortgage fraud. Use of false or stolen documents replaced declared level of income as the most common application fraud
Misuse of facility frauds fell by 17 per cent to 58, compared to an unusually high number of instances in 2017.
Facility takeover frauds recorded the biggest drop, down 33 per cent to six cases in 2018. Identify fraud in mortgage products was flat at 45 cases.
The new report, Fraudscape, analysed recorded cases of fraud from 470 UK organisations including major brands.
The research covered banking including mortgages, insurance, credit cards and online retail.
Overall, the number of UK fraud cases increased by six per cent 323,660.
The number of cases of identify fraud in the UK rose by 18 per cent to 189,108 in 2018, with younger and older people more likely to be hit.
Identify fraud against the under-21s rose by 26 per cent and for those over 60 it climbed 34 per cent.
Fraud prevention member organisation Cifas introduced Fraudscape to provide a trackable perspective on UK fraud over time.
Mortgage fraud prevention hub launched by PMS
The hub includes guidance on issues such as the different types of fraud brokers need to be aware of, good practice when working with introducers and advice for dealing with buy-to-let business and portfolio landlords.
In addition, the hub will provide links to organisations such as the National Crime Agency and Action Fraud, so that brokers can report suspicious activity, as well as include insights from lenders on the latest issues and threats in the market.
Alongside the hub, PMS and sister business Bankhall will be providing access to tailored support for intermediaries who want to review their current processes and safeguards to identify ways to strengthen them against fraud attempts.
Jane Benjamin, director of mortgages at PMS Mortgage Club, noted that tackling financial crime had been flagged up as a priority area by the FCA, and with techniques used by the fraudsters constantly evolving it was crucial for advisers to stay vigilant.
Benjamin added: “We’re working closely with our members and lender partners to share information, best practice and practical guidance on how to deal with this threat. Our new hub will keep advisers informed and updated on the latest developments, with new PMS and lender content added on a regular basis as new threats emerge.
In the event that advisers have suspicions on a case then we’re also making it easier for them to take the appropriate action.”
Conman pretended to be mortgage adviser to defraud nurses of £100k
Johnson Umax told his victims he was a mortgage adviser and would be able to buy a house for them, but never fulfilled his promise or returned their deposit money.
The married 32-year-old from Chelmsford built romantic relationships with two of the victims, even telling one they would move in together in the property.
Each of his victims had loaned him money, believing he would use it to help them get a mortgage. However, it appears that the victims have lost all the cash Umax took.
Essex Police confirmed to Mortgage Solutions that he had no assets to seize and therefore no Proceeds of Crime hearing will take place.
Umax started a relationship with the first victim in February 2013 after they met through an online dating site.
When she told him she wanted to buy a house, he claimed he had a mortgage company and she agreed to give him a deposit, eventually taking a total of £30,000.
He met the second victim in November 2013 and they later began a relationship.
When she told him she wanted to buy a property, he claimed he would buy a house for her and sell it at auction for a profit, then use the money to buy another house for them to live in together.
Umax also convinced her to finance a car for him.
However, the victim then discovered that, alongside taking the money from her and not buying a house at auction as promised, he was also married.
Umax promised to repay the £40,054 he had taken from her but never did.
Before discovering his deception, the second victim had recommended Umax to one of her colleagues, who was also looking to get a mortgage.
He took more than £40,000 from her between July 2014 and August 2015, but never repaid it and lied that he had bought a property on her behalf.
When interviewed by police, Umax claimed he had not obtained the money fraudulently, but that he had been in relationships with the three victims and they had offered to help him financially because he was in debt.
But the court heard this was not true, and he was never in a relationship with the third victim.
As a result he was convicted of three counts of fraud by false representation yesterday following a two-week trial at Chelmsford Crown Court, and was remanded in custody before sentencing on 24 May.
Detective Constable Chris Sedgwick, of Braintree, CID, said Umax was a confidence trickster and fraudster who manipulated his victims with promises and lies.
“He claimed he could help them get a mortgage, but had no ability to do this, and he had no regard for their personal circumstances,” he said.
“He lied and cheated in a calculated way to extract as much money from his victims, all of whom are hard-working nurses.
“He has shown no remorse for stealing their entire savings and putting them into further debt.
“Hopefully this conviction will show him and others that if you commit crime we will continue to pursue you to get justice for the victims,” he added.
SFO reclaims £1.5m from Birmingham fugitive linked to £49m mortgage frauds
The forfeited money came from the sale of two properties in Birmingham which Nisar Afzal originally bought with the funds from a series of long-term frauds.
Afzal, who fled Britain for Pakistan in the mid-2000s, was also implicated in a series of mortgage frauds worth almost £50m.
His brother, Saghir Afzal, was convicted and jailed in 2011 for 13 years for the crimes but Afzal has stayed in Pakistan since and an international arrest warrant for him remains in force.
Westminster Magistrates’ Court ordered the forfeiture of all the funds held in Afzal’s frozen bank account last week.
The total forfeiture order is £1,522,756.72, the total available funds resulting from the sale of two properties in which Afzal had an interest.
Fugitive from justice
The SFO said the development is believed to be one of the largest seizures of its kind in the UK and was the body’s first use of this enforcement tool.
Serious Fraud Office chief operating officer Mark Thompson said: “Nisar Afzal decided to become a fugitive from justice instead of remaining in the UK to answer for his activities.
“Our actions send a clear message to anyone involved in fraud, bribery or corruption – that we will work tirelessly to get back the proceeds of your crimes.”
The money recovered will be returned to the Treasury and invested in public projects.
Couple convicted of committing £500k-plus mortgage fraud
Premsaran Patel and Smurti Amin were issued combined jail terms totalling almost six years, according to Wales Online.
Patel and Amin used fake payslips, P60s and other documents to claim they earned salaries of £40,000 and £70,000 respectively to build their property portfolio.
In fact, Amin was earning just £20,000 from her job at Hounslow Council.
Patel, 42 from Roath in Cardiff, was jailed for four-and-a-half years after being found guilty of fraud, perverting the course of justice, and three charges of obtaining a money transfer by deception.
Amin, 43 was given a 16-month sentence suspended for two years after obtaining a money transfer by deception and two convictions for converting criminal property.
She will have to undertake 200 hours of community work.
Aided by solicitor
The pair were supported by solicitor Stephen Oakley who was fined for failing to comply with money laundering regulations and not informing the bank of one fraud.
They started in 2003 using a property management firm as a front to support their mortgage applications.
In total they obtained £230,000 from Staffordshire Building Society, which is now part of Nationwide Building Society, £109,000 in capital from a remortgage with an unnamed lender, and in 2010 £210,000 from NatWest Bank.
The loan from NatWest was obtained based on fake leases from potential tenants of the property being purchased.
The £109,000 released capital which was used to purchase further properties for their portfolio.
Mortgage fraudster found guilty after trying to blame broker
Fredi Shima of Marston in Oxford obtained three mortgages for almost £450,000 between 2006 and 2009 by grossly misrepresenting his income.
The trial heard that Shima had overstated his employment by claiming to be a hotel manager earning £17,000 when he had actually been working either in a fast food burger chain or in a pub.
He also stated he had been receiving more than £20,000 in rental and overtime income a year.
The Oxford Times reported that during the trial Shima’s defence accused his then broker of falsifying the details to ensure he was paid his commission.
The adviser, who has more than 20 years’ experience, denied this and said he would have only entered the information given by his client.
Shima bought two properties in 2006 using mortgages from Birmingham Midshires and then purchased a further property in 2009.
The mortgages were for £140,250 and £177,000 in 2006 and for £131,250 in 2009.
Jail an option
Shima, 44, was found unanimously guilty of fraud, and guilty by majority on the two deception charges, the Oxford Mail reported.
He will be sentenced on March 12 with Judge Ian Pringle QC noting that a prison sentence was “very much an option”.
‘Pathologically dishonest’ million-pound mortgage fraudster jailed for eight years
The fake burglary conducted by surgeon Anthony McGrath at a rented property shared with his wife in the grand Luton Hoo Estate led police to uncover three counts of mortgage fraud totalling more than £1m.
False tax returns in the couple’s name had been sent to the bank and copies were discovered in their study, with Anthony McGrath’s finger prints on them, Bedfordshire Police revealed.
Following a trial which lasted 18 weeks at Luton Crown Court, Anthony McGrath was found guilty of fraud by false representation and committing acts with intent to pervert the course of justice.
His wife, Anne-Louise McGrath, was found not guilty of all charges.
Stolen items tracked
Anthony McGrath, 46, from St Albans, conducted the fake burglary in 2015 as an attempt to swindle his insurance company out of £180,000 to try to clear the couple’s mounting debts.
He claimed almost 100 items had been stolen, including a Persian rug worth £35,000, valuable antiques and clocks, and a 19th century red marble rococo fire surround, with ormolu inserts.
However, McGrath’s attempt to ship some of the items he claimed were stolen to his family home in Ireland failed as he used a hired van that he did not realise was fitted with a tracker.
‘Dishonest and arrogant’
The court also heard how Anthony McGrath compulsively lied in an audacious bid to con as much money as possible out of a number of different people.
Her Honour Judge Barbara Mensah, presiding, said: “The offences were sophisticated, detailed, well-planned and carried out over a long period of time.
“McGrath has demonstrated pathological levels of dishonesty and arrogance, and took every opportunity to attack and defraud his insurance company.”
His lies included:
- trying to get a better price for the sale of antiques by telling the dealer he had given his time, and thousands of pounds, to a Syrian children’s refugee charity,
- faking a salary report from a hospital he had stopped working at three months earlier,
- and lying to a potential buyer of a holiday home saying that the contract was late because he was working in Jordan for a French medical charity.
‘Conniving and deceitful’
Bedfordshire Police detective constable Dave Brecknock noted it was an incredibly complex three-year investigation and a lengthy court process, with the trial lasting more than four months.
“Despite the complexities of the case, the motive was simple – this conniving and deceitful man intentionally broke the law in order to gain hundreds of thousands of pounds,” he said.
“But this goes to show that no matter who you are, how clever you think you might be, you cannot get away with breaking the law.
“If you commit crime for your financial gain then you will naturally leave some kind of evidential trail behind you, as was the case with McGrath, and this result proves just how determined and thorough we will be in the pursuit of justice,” he added.