UK mortgage fraud is on the increase

According to Experian's latest Fraud Index, attempted Mortgage fraud increased significantly in the three months to the end of September 2011.

In fact as many as 49 in every 10,000 mortgage applications were discovered to be fraudulent. This is a 77 per cent increase on the same period in 2010 and a 53 per cent increase on the second quarter of 2011.

Nick Mothershaw, Director of Identity & Fraud at Experian UK & Ireland, comments: “More than 90 per cent of mortgage fraud tends to originate from genuine individuals misrepresenting their financial situations attempting to buy property that would ordinarily be out of reach".

Experian’s Fraud Index uses data from the National Hunter and Insurance Hunter fraud prevention systems. These systems allow financial companies to analyse new applications alongside previous applications and highlight inconsistencies which may be indicative of fraud.

Mortgage fraud by individuals who lie about their income, is an attempt to lead the lender to part with money on a higher risk basis than the lender is led to believe exists. A higher risk should attract a higher interest rate or more possibly lead to a decline to lend. Those individuals found engaging in mortgage fraud could find themselves in serious trouble, such fraudulent actions can lead to criminal charges and a CIFAS note on their credit report.

The City of London police have said allegations of mortgage fraud are on the rise, and the number of investigations is expected to increase over the coming year as frauds come to light and lenders try to recover their losses.