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Brokers being used to commit mortgage fraud

Organised fraudsters are using intermediaries to carry out mortgage fraud, according to a report from the Credit Industry Fraud Avoidance System.

According to the report, called Fraudscape and published today, CIFAS, the UK’s fraud prevention service, says intermediaries are assisting fraudsters to help them buy low and sell high.

CIFAS says that the figures do not necessarily relate to the value of the property, involving valuers, but also brokers, when verifying the borrower’s identity, and corrupt solicitors, where the funds are released and then pocketed by the criminal.

Overall mortgage fraud rose slightly, according to the report, by 0.20 per cent in 2009, but the biggest increases are identity fraud and misuse of facility fraud, which increased by 75 and 95 per cent respectively.

The report shows that application fraud decreased by 5.21 per cent in 2009 from the year before, which CIFAS suggests is because fraudsters are still hesitant about over-stretching themselves in the current climate.

The most common type of mortgage application fraud committed in 2009 was the supply of false documentation, accounting for 33 per cent of fraud cases. This was followed by attempts to hide adverse credit information by failing to disclose an address, accounting for 30 per cent of fraud cases.

CIFAS Chief Executive Peter Hurst 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.

“The findings presented in Fraudscape, however, clearly demonstrate the benefits that mutual collaboration brings. By sharing knowledge and pooling resources, CIFAS Members have prevented millions of pounds of fraud year after year and also increased the knowledge of the methods used to defraud businesses, consumers and society equally. This approach can only bring further benefits if further cooperation and responsible data-sharing takes place across all sections of society.”

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Comments

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  1. CIFAS claims about the amount of fraud going on needs close scrutiny.

    How they lump everything together as ‘Fraud’ is very suspicious is a clear case of an organisation knowing deploying misleading statistics – not too far off the fraud they themselves are condemning.

    On most application forms presented to consumers there is only space for two boxes to fill in past address details and there there is rarely any prominent warning about the need to disclose every address.

    Considering that a generation of people under the age of 35 now have to rent – and can have six to ten addresses in a five year period its no wonder why some addresses get missed off.

    The matter is further complicated by people who use there parents address for their bank account – to prevent cards being sent to shared letter boxes. Someone who had taken this sensible precaution would be flagged up as a fraudster by CIFAS.

    CIFAS has mutated to an out of control extra-judiciary body that need to be brought under proper regulated control.

    The FSA need to intervene as they are causing a large amount of consumer detriment.

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