In addition, 28% of brokers said they had not witnessed any mortgage fraud, while 9% said they may have done.
“If a broker has suspicions that someone they know is committing fraud they need to report it to the money laundering office, where a record of it will be kept,” said Richard Adams, managing director at Stonebridge Group.
“However, some brokers are put off from reporting fraud because they will have difficulty remaining anonymous when informing the regulator.”
He added: “When a broker reports a crime and it’s looked into by the regulator, 95% of the time that investigation goes nowhere. Not only is this demoralising for the broker, but the fraudster walks free.”
A spokesman for the Financial Services Authority, said: “We take tip-offs from brokers very seriously and follow up all the information we receive.
“If there is not enough anecdotal evidence against the accused, that does not mean the investigation ends. We still keep a hold of all the details submitted.”
Adams said that the most common fraud witnessed by brokers is the falsification of employment income.
He said: “Income verification is a difficult process and it does not get any easier when a borrower inflates their income to get a mortgage loan.
“Unfortunately, not all borrowers who falsely declare their income are caught. However, this does not save them from the long-term effects of falsifying this important information.”