The FSA is investigating nine brokers for suspected mortgage fraud, according to a freedom of information request.
This follows a notice to lend-ers from the regulator last week, which warns that some brokers are “gaming” lenders’ systems to push through self-certification customers’ buy-to-let deals as more stringent income checks have left these borrowers unable to get a mortgage.
Enness Private Clients partner Islay Robinson says a lot of fraud cases coming to light now are the result of fraudulent activity when the mortgage market was at its peak.
He says: “Current mortgage fraud cases have mainly come from 2007 and 2008. Lenders were lending recklessly and brokers were doing anything to try and get their commission. It really was boom time. Lenders and the FSA are continuing to try to clean up the industry, which is what needs to happen.”
John Charcol senior technical manager Ray Boulger says the brokers under investigation are likely to be smaller firms. He says: “It tends to be smaller firms because they are often contr-olled by one person, so they do not have the same disciplines and controls as bigger firms.”
First Action Finance head of communications Jonathan Cornell says: “If you look at it, there are probably around 9,000 mortgage brokers trading at the moment, so if the FSA is investigating nine, it is not that many.
“In any industry, you get bad apples and it is better for all of us if the FSA finds these people and puts them out of business.”
Your Mortgage Decisions director Martin Wade says: “The continual improvement of the standards for mortgage brokers is to be welcomed.”