Mortgage Fraud

Below is a list of several types of mortgage fraud:

• 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. This is usually done 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.

• False Documents

Providing false documents 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.

• Undisclosed Transactions

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, cash back or other incentive offered by the seller to the buyer of a property. All of these things can be regarded as a reduction of 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.

• 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.