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Research reveals rise in mortgage fraud in the UK

Fraudulent applications on mortgages have increased by 5% in the first half of 2019 with research showing that 13% of British adults believe it is ‘reasonable’ to exaggerate income on a mortgage application.

The study from Cifas, the UK’s leading fraud prevention service, also shows that there has been a 16% rise in those aged 31 to 40 making fraudulent mortgage applications compared to the last six months of 2018.

These figures are being released as part of the Cifas ‘Faces of Fraud’ campaign, which aims to highlight the fact that what some view as a victimless crime, is both illegal and could have serious consequences for those involved.

Mortgage application fraud occurs when either false or altered documents are provided in support of a mortgage application. Indeed, fraud by production of a false document increased by 14% and fraud by submitting altered documents increased by 32%. Such applicants often provide false or altered bank statements and proof of income as a way to validate their income for mortgage applications.

Almost half of those caught committing application fraud, some 45%, were aged between 31 and 40 years old, a 16% increase compared to the last six months of 2018. They were closely followed by those aged between 41 to 50 years old who saw a 6% increase.

The research carried out by Cifas and WPI Economics also revealed that people in the 35 to 44 age category were more likely to think that exaggerating their income on their mortgage application was ‘reasonable’ than any other age group.

In terms of regional breakdowns, the West Midlands saw the highest increase in fraudulent mortgage applications at 43%, whereas cases in the North East rose by a third.

Cifas is urging people to stop, think and consider the serious consequences of making false claims in mortgage applications. It says that taking out a mortgage based on a false income could result in home owners being unable to repay the debt later on. Other consequences could include blacklisting against future product purchases, or possibly being reported to the police for investigation – potentially leading to a criminal conviction and a prison sentence.

‘It’s easy to assume that making exaggerations to improve the chances of your mortgage being approved is harmless, but the reality is that this is fraud and the consequences can be very serious,’ said Mike Haley, chief executive officer of Cifas.

‘Mortgage providers carry out rigorous checks, and so exaggerating your income or withholding any change of circumstances could result in it being harder to obtain financial products in the future such as mortgages and loans. In more serious cases, this kind of fraud could result in a hefty fine or a prison sentence, or the possibility of losing your home,’ he explained.

James O’Sullivan, policy manager for the Building Societies Association, pointed out that a mortgage is a significant financial commitment and it is essential that applicants are honest about their personal circumstances.

‘There are many risks inherent in being less than honest, not least that the borrower finds themselves unable to pay because a realistic affordability assessment was not possible or that, when caught, offenders struggle to get future credit. It is far from being a victimless crime and is something that lenders take rigorous action on,’ he said.