Fraud prevention service Credit Industry Fraud Avoidance System says 69 per cent of all mortgage fraud cases were introduced by mortgage brokers in 2010.
In its latest report, CIFAS says it is not surprising that brokers introduce the majority of fraudulent cases because most of their work is carried out over long distances and therefore makes it difficult to identify fraudulent applications.
It also says some brokers may have turned to fraudulent activities, such as changing the details of clients’ income in order to obtain a mortgage, because they are under financial pressure and are struggling to keep their companies afloat.
Mortgage fraud increased by 18 per cent from 3,004 cases in 2009 to 3,542 cases in 2010. CIFAS says the increase was largely driven by a 27 per cent increase in the number of application frauds, from 2,677 in 2009 to 3,391.
The not-for-profit organisation says application fraud now makes up 96 per cent of all fraud cases.
In 2010, the most common form of mortgage application fraud was an attempt to hide adverse credit information linked to an undisclosed address – 43 per cent compared with 30 per cent of cases in 2009 – followed by 22 per cent of cases of applicants not disclosing a bad credit history. There was another increase in those providing false employment details – 8 per cent compared with 5 per cent in 2009.