In 2013 lending institutions were conned out of £1 billion by mortgage fraudsters. In essence, mortgage fraud has long been seen as an easy fraud to perpetrate and a difficult one to detect. After all, who is going to complain so long as the mortgage keeps on getting paid on time and the lender gets their money (plus interest) back?
Gathering Intelligence regarding Mortgage Fraud
Specialist economic crime units within local police forces and dedicated agencies such as the National Crime Agency are operating independently, in the absence of complaints from lenders, in an attempt to ‘clean up’ the property market and root out individuals, brokers, solicitors and accountants involved in fraudulent activity.
Every person who has inflated their income, brokered a dodgy deal, massaged the figures in a profit and loss account or submitted a false document in support of an application could be arrested and charged with offences.
Declarations in the mortgage application form itself are usually scrutinised carefully by investigators. A ‘straightforward’ case might involve the applicant providing false or misleading information on the form. The false information does not necessarily have to be a lie about income – it could be about previous convictions or monthly loan repayments or marital status. If the false information affects the lending decision then a criminal case can be instigated.
In the simple example above, to convict the applicant the prosecution must prove beyond a reasonable doubt that the applicant was dishonest, intending to make a gain for themselves, or responsible for the false statement made.
Daunting and complex issues are therefore intertwined in what appeared to be an unassuming case.
What about an honest mistake when filling in the form?
What if a mortgage broker completed the application and used the wrong details?
What if an applicant thought they could include a bonus from work in their salary calculation?
What if a broker was dishonest and falsified the information but the applicant didn’t realise?
What if an applicant signed a form their partner had completed without reading it?
Not guilty verdicts are achievable, but the path to that verdict can be difficult to navigate. All the more difficult if, as is commonplace, the ex-partner blames the applicant, the broker hides the evidence and the authorities restrain the bank accounts.
Taking advantage of specialist legal advice at the police station, the Magistrates Court and the Crown Court is essential. Even if the explanation is straight-forward, tempting as it is to answer questions unaided, obtaining legal assistance early in an investigation is the mark of someone who is conscientious, not someone who is guilty. Free, confidential advice at the police station is a right under English law.
Know your rights and exercise them!
While it is important to know your rights, it is more important to exercise them.
Routinely the more sophisticated cases of fraud involve deliberate over-valuing of properties by dodgy surveyors, 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.
In complex cases, lenders are often deceived into unwittingly paying money straight into bank accounts controlled by criminals. Mortgage frauds of this type will often be detected relatively rapidly by the lenders and the criminals will need to launder the money swiftly.
The criminal syndicate must provide a veneer of credibility to their operation and that necessitates the use of legitimate businesses and individuals to disguise the origin of the funds. Back-to-back sales, high-value investments, payments to professionals for services, purchases of expensive vehicles and offshore movements of money are common methods of converting the bogus mortgage funds into apparently legitimate business activities.
Establishing guilt in these types of cases requires the prosecution to prove that the recipients and transmitters of funds involved either knew or suspected that the money and people they dealt with had their origins in criminal activity. If you fall under suspicion for dealing with dirty funds, how do you prove you didn’t know about the crime behind the money?
There are innocent people bound up within the dishonest activities of others in almost all cases where mortgage fraud is alleged. Knowing how to unlock mortgage fraud cases requires specialist knowledge not only of the law but the mortgage application process, the roles of brokers and advisers and crucially the disclosure process of the specialist law enforcement agencies set up to detect the criminality.
Having to pick your way through complex and adversarial litigation is not a task to take on alone.
Investigations of mortgage fraud and financial crime are a specialist area and require specialist tailored advice.
If you think you are being investigated or you are connected in some way to someone who is being investigated, you must seek legal advice early. Get in touch with our team of mortgage fraud barristers.