MORTGAGE FRAUD RISE Monday, 1st March 2010

Rise in mortgage fraud
The incidence of attempted mortgage frauds increased in 2009, compared to the figures for 2008, despite the continued slowdown in mortgage lending.

According to a report published by CIFAS, the UK’s fraud prevention service, fraudulent activity in the mortgage sector had been declining in line with the number of mortgage transactions for a couple of years, but ticked upwards sharply last year, increasing by 10% during 2009.

The report, entitled Fraudscape, which details the frauds recorded by the 265 members of CIFAS during last year, says:

“The last few years have seen a steady decline in the number of mortgage fraud cases that have been identified. This coincided with the decline in the housing market, one of the most prominent features of the recession.

“Declining house prices had the effect of deterring serious fraudsters from attempting to obtain property for profit and those individual fraudsters attempting to obtain a mortgage that they may not be able to afford (fraud for property).

“2009, however, has seen an increase in the number of mortgage frauds attempted. Notably, the increases are in identity fraud and misuse of facility fraud, while application fraud continues to decline.”

The report records a 32% increase in identity fraud, where a fraudster applies in the name of an innocent party or an entirely fictitious name. Application fraud has fallen by 25%, but the indications are that it could rise again.

CIFAS reckons the decline in application fraud is down to property opportunists being loath to overstretch themselves in the current uncertain economic climate, but its figures show that fraudsters’ confidence is increasing as confidence in the market itself recovers.

Peter Hurst, CIFAS chief executive, says:

"At a time when every responsible member of society feels the strain of current economic conditions, the findings presented in Fraudscape not only reveal the true nature of the frauds identified but also reveal many of the problems and challenges ahead.

“This, however, is only the tip of the iceberg. Over and above the frauds recorded by CIFAS members, there is an additional and unquantifiable volume of fraud that, due to tighter lending criteria, never got as far as the fraud department.”