Last week, Chelsea set aside £41m for buy-to-let and self-cert fraud while B&B made fraud provisions of £270.8m earlier this month.
Chelsea says the frauds took place on buy-to-let loans, where property value was falsely inflated through collu- sion between mortgage professionals and valuers and also on self-cert loans, where the borrower’s income was inflated.
Chelsea’s chief executive officer and finance director as well as its chairman and deputy chairman have all left in the last two months although the society says the board changes are not connected to its losses.
Daniel Berke, a partner with Lewis Hymanson Small, a Manchester lawyer which specialises in fraud cases, says: “The entire system was based on greed and the banks are as guilty as anybody. They lent buy-to-let loans irresponsibly and they should have known that people did not have the resources to buy what they wanted. There is no way that Chelsea are the only victims of fraud. This is just the tip of the iceberg.”
BDO Stoy Hayward head of fraud Simon Bevan says many more cases are likely to be uncovered by lenders.
He says: “If you take into account commercial mortgage fraud, losses could run into the billions. The very big frauds are yet to come.”