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January 12, 2010

Lenders face “tidal wave” of mortgage fraud

by Gill Montia

Story link: Lenders face “tidal wave” of mortgage fraud

Accountancy firm, BDO, has come up with some alarming figures on mortgage fraud, against a backdrop of soaring UK losses to fraud in 2009 (over £2 billion) across all sectors.

In 2009, mortgage fraud accounted for 18% of all reported fraud and 27% of fraud in the UK finance and insurance sector.

BDO spokesman, Simon Bevan, comments: “It may have become more difficult for the person on the street to secure a mortgage in the UK, but the mortgage fraud industry is booming!”

He explains that this type of fraud often works through a large loan being taken out on an overvalued property with a corrupt buyer, valuer and/or lawyer working in collusion.

The same team will then apply itself to a succession of properties, meaning that the fraud can be large.

Mr Bevan warns of “a tidal wave” of fraudulent borrowing that has only just started to appear, particularly through the use of over-valued properties as security for loans.

Worryingly, he suggests many of these frauds are yet to be recognised by the banks, which still have them classified as non-performing loans.

According to BDO: “It is only when specialist recovery departments start thorough investigations and eventually litigating against alleged dishonest borrowers and their complicit advisors that the true nature of these potentially horrendous fraud losses will come to light.”

 

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