Mortgage fraud: £700m a year
Bradford & Bingley, the buy-to-let mortgage lender, admitted earlier this year that it had been forced to take an £18 million impairment charge to cover borrowing by criminal gangs and other fraudsters.
Estimates vary, but one by the Association of Chief Police Officers puts mortgage fraud in the UK at £700 million a year.
KPMG’s Fraud Barometer says: “There were nine cases of mortgage fraud worth over £20m in the first half of this year, compared to just 10 cases at £3.7m for the whole of 2007.”
Official figures suggest that complaints against solicitors resulting from instances of mortgage fraud have risen significantly in recent years, from 85 in 2004 to 293 last year.
Last July, lloyds.com talked to Mark Casady, a specialist underwriter in solicitor’s PI at Lloyd’s insurer QBE, who said at the time: “Organised mortgage fraud is potentially very expensive and one case can cost a firm and its insurers millions. And I think that we are only just beginning to see the emergence of what will be a widespread issue.”
The buy-to-let market is particularly vulnerable to mortgage fraud, whether it is through new build apartment complexes or large scale renovation projects.
“Mortgage fraud has become a serious issue for underwriters over the last few years,” says Nigel Dorning, PI underwriter for Lloyd’s insurer Amlin. “During this time we have witnessed claims arising from the development of specialised mortgage products such as buy-to-let. Those professionals involved with high-risk lending sectors will be experiencing increased premium rates.”
The problem is not confined to the UK. Between March and June 2008, the FBI’s Operation Malicious Mortgage identified 144 mortgage fraud cases and charged 406 people.
