Mortgage Fraud

If you’ve found yourself caught up in mortgage fraud, our team of expert fraud barristers are here to help. Mortgage fraud lawyers at St Pauls Chambers have a wealth of experience representing and advising in mortgage fraud cases.

What is Mortgage Fraud?

Mortgage fraud is a serious type of fraud and a criminal act. Put simply, mortgage fraud refers to any situation where an individual or group of individuals (say an organised crime group) misleads and defrauds a mortgage lender. This includes, but is not limited to, providing false information about:

• your income;
• your debt history;
• your employment; or
• the value of your property.

Mortgage fraud cases are typically divided into two overarching categories – opportunistic and large-scale.

Opportunistic: This type of mortgage fraud is typically committed by an individual to acquire ownership of a property. For example, they may overstate their income in an attempt to borrow more money.

Large-scale: This type of mortgage fraud is typically committed by (or in collaboration with) individuals with knowledge of the industry to steal cash from lenders or homeowners. For example, criminals might resell a property at an inflated price immediately after completing the purchase – this is known as flipping. Organised crime groups may also use proceeds of crime to secure a deposit and commit mortgage fraud as a means to launder money.

It’s worth familiarising yourself with mortgage fraud law and the types of mortgage frauds in the UK.

Types of Mortgage Loan Frauds

Below is a list of several types of mortgage loan frauds:

1. False Information on Mortgage Applications

Most mortgage applicants in the UK are likely to only ever apply for a mortgage on their own home. An individual who fits into this category will probably re-mortgage or move home at least once during their lifetime and will, therefore, apply for residential mortgages on several different occasions.

The most likely of the above activities that this type of borrower will undertake is exaggerating their income on the mortgage application form. In 2019, the UK’s leading fraud prevention service – Cifas – reported that 13% of British adults believe it is ‘reasonable’ to exaggerate income on a mortgage application.

Individuals typically overstate their income to increase the amount they are entitled to borrow. While this may seem harmless if the borrower believes they can meet their monthly mortgage repayments, and therefore avoid defaulting on their home loan, it is still considered mortgage fraud.

Additionally, providing false information to the lender on any other part of the mortgage application form will also be considered mortgage fraud.

2. False Documents

Providing false documents, such as false or altered bank statements, to mortgage lenders is another example within mortgage fraud cases. This type of mortgage fraud has become more common in recent years and usually involves submitting false documents as evidence of income or identification. Such documents are widely available through a growing number of suppliers who advertise their businesses on the internet.

Providing a UK mortgage lender with false documentation is a serious form of mortgage fraud and a criminal offence.

3. Undisclosed Transactions

According to mortgage fraud law, it is also fraudulent to withhold information from lenders related to property transactions.

For example, UK mortgage lenders expect to be told if there is a gifted deposit, discount, cashback or other incentive offered by the seller to the buyer of a property. All of these things can be regarded as a reduction in the property’s value.

UK mortgage lenders will want to know the true market value of the property being transacted as they will be securing a mortgage on it. It is, therefore, necessary to inform the lender of all details involved in property transactions. Withholding relevant information can be regarded as mortgage fraud.

4. Exaggerated Valuations

Finally, a new and highly sophisticated type of mortgage fraud has become widespread in recent years. The scam involves property professionals working together to obtain mortgages on properties that are overvalued.

This can include dodgy surveyors deliberately over-valuing the property, manipulation of the property market, false paper trails laid by complicit solicitors and the salting away of the resultant mortgage advances for the benefit of an organised criminal group.

Criminals may also sell a property several times within a group of off-shore, related companies in order to inflate the value. They then seek an inflated mortgage from a lender.

What is Mortgage Broker Fraud?

Mortgage broker fraud involves cases where mortgage brokers fail to recognise their client’s fraudulent activity or collude with their clients to enable them to commit mortgage fraud.

If you are a mortgage broker whose under investigation for mortgage broker fraud, it’s important to seek expert mortgage fraud lawyer advice for the best chance of upholding your reputation.

Consequences of Mortgage Loan Frauds

• Mortgage fraud cases involving exaggerated income can result in a failure to repay the debt in the future, and having your property repossessed.
• Blacklisting against future purchases.
• Police investigation and potential prosecution.
• If you receive benefits, overstating your income or the value of your property can affect your benefit payments.
• Being served a fine or prison sentence, or both, and having a criminal record.

Breaching mortgage fraud law can result in serious consequences for both the buyer and the seller. Many of these repercussions have long-term, damaging effects so it’s vital that you seek out a specialist mortgage fraud lawyer for expert advice.

Mortgage Fraud Investigation Process

If you are suspected of mortgage fraud, you will be placed under investigation by your lender or the police. They may interview you, obtain a search warrant and obtain access to your personal records, including phone records, email records and social media records.

If you are found guilty, you will be required to repay the lender. But, if you’re unable to do so, your property may be repossessed. Depending on the severity of your mortgage fraud and its ramifications, you may be handed a suspended sentence or fine.

Taking advantage of specialist legal advice at the police station, the Magistrates Court and the Crown Court is essential. Even if the explanation is straightforward, obtaining legal assistance early in the mortgage fraud investigations is advised.

Your mortgage fraud lawyer should accompany you during any interview and help you navigate the complexities of the investigation process for the best chance of success.

Mortgage Fraud Sentencing

Mortgage fraud offences are sentenced under the Fraud Act 2006.

If you are found guilty for mortgage fraud, your sentence will be dependent on a number of contributing factors. These can include the level of harm inflicted, culpability, your plea, level of remorse, aggravating factors, previous convictions, and more.

Mortgage Fraud Lawyer Advice

For advice on mortgage loan frauds, mortgage broker fraud or support with mortgage fraud cases, contact an expert mortgage fraud lawyer at St Paul’s Chambers for representation and advice with your case.