Mortgage Fraud

[US Citizen]

Fraud is one of the few crimes which practically everyone tries to brush under the carpet, especially the Police. It is very difficult if ever to secure a conviction, let alone expensive.

Mortgage fraud is even harder to prosecute against. We have all heard of Liar Loans (thanks to Eric Pebble). How many people have commited mortgage fraud, 1000 or 100,000 even more. How many prosecutions have their been, practically none.

If house prices increase as predicted by the popular, and the property market starts to move again. The many of these fraudsters will profit from their crimes and dissapear completely undetected.

Right now you probably thinking, so what. What have they done wrong really. Who cares.

This is the reason why fraud is an acceptable crime in the UK, we just dont take it seriously enough and so it is prolific.

[Mr Punter]

I suppose that someone who gives false or misleading information on a mortgage application, but subsequently keeps up the payments, has not actually caused a loss to anyone, so I cannot see why anyone would seek to prosecute.

If the intent was to walk away with the money and never make a payment, it would be considered more serious.

[Fishbone Glover]

Yes, fraud seems to be something that doesn't really get taken too seriously in the UK. Contrast our approach with that of America - they take it extremely seriously, investigate it thoroughly and give out reasonable jail terms. I can't remember exactly how long those associated with the Enron case got, but the Natwest 3 got 3 years for their part in it.

That is what should happen, but when the ones 'in charge' are committing fraud on a regular basis, how can it be taken seriously?

[US Citizen]

Yes, fraud seems to be something that doesn't really get taken too seriously in the UK. Contrast our approach with that of America - they take it extremely seriously, investigate it thoroughly and give out reasonable jail terms. I can't remember exactly how long those associated with the Enron case got, but the Natwest 3 got 3 years for their part in it.

That is what should happen, but when the ones 'in charge' are committing fraud on a regular basis, how can it be taken seriously?

very true

[Prof]

I suppose that someone who gives false or misleading information on a mortgage application, but subsequently keeps up the payments, has not actually caused a loss to anyone, so I cannot see why anyone would seek to prosecute.

If the intent was to walk away with the money and never make a payment, it would be considered more serious.

I would want to prosecute if I had put in an offer on the property that was bought by the "liar", on the basis that they we able to outbid my offer, which was based on my honest mortgage application. Of course, it would be nearly impossible to find out that you were gazumped by a fraudster. In my opinion, it isn`t a case of "well, they are keeping up with the repayments, so that`s ok". I would think there is a fair chance that a certain amount of house price inflation can be attributed to less than honest borrowing, and that has a knock-on effect for many people.

[Bloo Loo]

I suppose that someone who gives false or misleading information on a mortgage application, but subsequently keeps up the payments, has not actually caused a loss to anyone, so I cannot see why anyone would seek to prosecute.

If the intent was to walk away with the money and never make a payment, it would be considered more serious.

Absolutely correct.

I like to drink 6 pints of Watneys Red Barrel every night and drive home.

Never killed anyone...so why pick on me?

[Bloo Loo]

Yes, fraud seems to be something that doesn't really get taken too seriously in the UK. Contrast our approach with that of America - they take it extremely seriously, investigate it thoroughly and give out reasonable jail terms. I can't remember exactly how long those associated with the Enron case got, but the Natwest 3 got 3 years for their part in it.

That is what should happen, but when the ones 'in charge' are committing fraud on a regular basis, how can it be taken seriously?

unless you are a banker with powerful friends.

Enron was known about for years before, it wasnt until it became embarrassing that prosecutions were started.

same with Madeoff and the English multi Billionaire, whatever his name was.

[Prof]

Absolutely correct.

I like to drink 6 pints of Watneys Red Barrel every night and drive home.

Never killed anyone...so why pick on me?

Spot on.

[corevalue]

I suppose that someone who gives false or misleading information on a mortgage application, but subsequently keeps up the payments, has not actually caused a loss to anyone, so I cannot see why anyone would seek to prosecute.

If the intent was to walk away with the money and never make a payment, it would be considered more serious.

Seen that done, and also the same perp forging signatures to make cash withdrawals from at least two other persons bank accounts. The police wouldn't even give me the time of day when I took the evidence to them. As far as they are concerned, the bank has to make the complaint, not a 3rd party , not even the person whose account has been defrauded.

The banks don't like to admit they've been diddled. They like to give the illusion our deposits are safe with them.

[Stars]

I would want to prosecute if I had put in an offer on the property that was bought by the "liar", on the basis that they we able to outbid my offer, which was based on my honest mortgage application.

Would you also want to prosecute someone who outbid you on a car because they got credit by misrepresenting their wages?

Here is the actual problem - buying and owning real estate inflicts external costs for others. In fact the way people profit by real estate speculation is by collecting the extra costs they have inflicted on others. The political problem here is that few want to face this, because many people want to be allowed to make freebie money by inflicting costs on others through the real estate market rather than being productive. So people invent a lot of illogical notions like 'predatory lending' and that people somehow magicaly hurt them by taking out loans 'they shouldn't have'

[Bloo Loo]

Would you also want to prosecute someone who outbid you on a car because they got credit by misrepresenting their wages?

Here is the actual problem - buying and owning real estate inflicts external costs for others. In fact the way people profit by real estate speculation is by collecting the extra costs they have inflicted on others. The political problem here is that few want to face this, because many people want to be allowed to make freebie money by inflicting costs on others through the real estate market rather than being productive. So people invent a lot of illogical notions like 'predatory lending' and that people somehow magicaly hurt them by taking out loans 'they shouldn't have'

one offs...thats for individuals...but a systemic liar culture....as FILMED by the BBC in 2003....and it just got worse....

[Stars]

one offs...thats for individuals...but a systemic liar culture....as FILMED by the BBC in 2003....and it just got worse....

The liar culture is CAUSED by the fact that not owning real estate leaves you with costs which the owners of real estate then collect. Owning real estate becomes a gargantuan society-wide prisoner's dilemma

There is no way such a dishonest system can be dealt with honestly and it is silly to pretend it can.

[Prof]

Would you also want to prosecute someone who outbid you on a car because they got credit by misrepresenting their wages?

My answer is yes. If I found out about it, and I knew there was a good chance I`d win the case, yes. I would like to see anyone who commits any type of fraud being held to account. It may seem like a little lie to get a loan/mortgage/job has very little consequence, but there is usually someone who is losing out. In the case of fraudulent mortgage applications, I think it may well have caused quite a few honest people to lose out over the past few years. How big was the problem ? Well, there were one or two undercover documentaries shown on TV in the past few years, and both revealed that the practice of "liar loans" was fairly widespread. Let`s face it, the problem was kind of ignored, and the longer it has been ignored, the more people would have had to obtain a "liar loan" to be able to buy a property.

www.duplicatepayslips.co.uk/

I wonder why anyone would want to use a website like that ? Lost a payslip ? Can`t your employer supply a duplicate ?

[The Ayatollah Buggeri]

I suppose that someone who gives false or misleading information on a mortgage application, but subsequently keeps up the payments, has not actually caused a loss to anyone, so I cannot see why anyone would seek to prosecute.

You could argue that the same thing applies to an uninsured driver who 'gets away with it' without causing an accident.

In the case of mortgage fraud, the counterargument would be that the fraudsters' actions have driven up HPI and if a critical mass of bad loans develops, that'll push up the cost of borrowing for all of us; just as the industry fund to compensate the victims of uninsured drivers pushes up insurance premiums for honest motorists.

[Stars]

My answer is yes. If I found out about it, and I knew there was a good chance I`d win the case, yes.

You wouldn't win the case - similarly, you wouldn't be able to press damages on somebody who stole a car you wanted to buy.

I would like to see anyone who commits any type of fraud being held to account.

It's a matter for the bank they defrauded..right?

It may seem like a little lie to get a loan/mortgage/job has very little consequence, but there is usually someone who is losing out. In the case of fraudulent mortgage applications, I think it may well have caused quite a few honest people to lose out over the past few years.

That's because real estate ownership inflicts heavy external costs. This is also the reason real estate becomes the focus for lies in the first place .See how tyhis is circular? - people lie to avoid the costs which you are now highlighting. People have not lied like crazy to buy cars on credit and created an economic disaster because car ownership doesn't confer the same type of exclusive, excluding, cost inflicting privilege

[Mr Punter]

I like to drink 6 pints of Watneys Red Barrel every night and drive home.

Never killed anyone...so why pick on me?

Mortgage fraud does not cause death. You should get picked on for drinking crap beer.

You could argue that the same thing applies to an uninsured driver who 'gets away with it' without causing an accident.

No I couldn't. Clearly neither could you.

My point is that nobody will pursue these people if they keep up the payments. Lets suppose that someone took out a mortgage five years ago, overstated their income by 30%, has never missed a payment and their current income has since doubled. I cannot see how or why the Crown or the lender would attempt to prosecute.

[The Ayatollah Buggeri]

My point is that nobody will pursue these people if they keep up the payments. Lets suppose that someone took out a mortgage five years ago, overstated their income by 30%, has never missed a payment and their current income has since doubled. I cannot see how or why the Crown or the lender would attempt to prosecute.

And mine is that no-one will prosecute an uninsured driver if s/he makes a journey from A to B without causing an accident and without being stopped for some other reason.

[huw]

My point is that nobody will pursue these people if they keep up the payments. Lets suppose that someone took out a mortgage five years ago, overstated their income by 30%, has never missed a payment and their current income has since doubled. I cannot see how or why the Crown or the lender would attempt to prosecute.

It's about risk. Exposing someone to risk has a cost, even if the risk doesn't materialise in that particular case.

Since you're rejecting the driving example because it involves death, how about I pinch 10 grand off you, take it down the local casino, win 20 grand and return the 10 grand before you've noticed? Would you be okay with that, once you'd found out? Would you take steps to deter me/others from pulling the same stunt again?

[Mr Punter]

It's about risk. Exposing someone to risk has a cost, even if the risk doesn't materialise in that particular case.

Since you're rejecting the driving example because it involves death, how about I pinch 10 grand off you, take it down the local casino, win 20 grand and return the 10 grand before you've noticed? Would you be okay with that, once you'd found out? Would you take steps to deter me/others from pulling the same stunt again?

Wrong. In terms of the current housing market, you borrow the £10k, leave me collateral of 15k. The risk I take is balanced by the risk you have are exposed to in losing your collateral / equity.

[Hip to be bear]

I suppose that someone who gives false or misleading information on a mortgage application, but subsequently keeps up the payments, has not actually caused a loss to anyone, so I cannot see why anyone would seek to prosecute.

If the intent was to walk away with the money and never make a payment, it would be considered more serious.

By giving false information about his income he is probably gaining a mortgage that would otherwise not be available to him and at a more favourable interest rate than someone who doesn't lie. He is therefore defrauding the mortgage company as well as increasing the risk of his default which is not good for the company and is likely to lead to higher rates for other borrowers too.

Furthermore, the mass proliferation of such activity has added to the upward pressure on house prices, helping to create a generation of debt slaves and making house ownership unaffordable for many. The prosecution of a few of these liars, making a real example of them would be a good thing in my mind....... as well as throwing a few of the mortgage brokers in jail too.....'pour encourager les autres!'

[Hip to be bear]

Mortgage fraud does not cause death. You should get picked on for drinking crap beer.

No I couldn't. Clearly neither could you.

My point is that nobody will pursue these people if they keep up the payments. Lets suppose that someone took out a mortgage five years ago, overstated their income by 30%, has never missed a payment and their current income has since doubled. I cannot see how or why the Crown or the lender would attempt to prosecute.

The lender wouldn't.....they are benefiting from larger loans across the market as long as they get paid. The crown should prosecute a few borrowers as well as the complicit mortgage brokers.....just to put a stop to it in the future.

[huw]

Wrong. In terms of the current housing market, you borrow the £10k, leave me collateral of 15k. The risk I take is balanced by the risk you have are exposed to in losing your collateral / equity.

No, the fraudulent borrower is exposing the lender to undisclosed risk; that can never be right.

Your opinion of the current/future value of the collateral is irrelevant, just like the opinions of those who bought fraudulently two or three years ago.

Edited January 11, 2010 by huw

[Stars]

By giving false information about his income he is probably gaining a mortgage that would otherwise not be available to him and at a more favourable interest rate than someone who doesn't lie. He is therefore defrauding the mortgage company as well as increasing the risk of his default which is not good for the company and is likely to lead to higher rates for other borrowers too.

This is between him and the bank

Furthermore, the mass proliferation of such activity has added to the upward pressure on house prices, helping to create a generation of debt slaves and making house ownership unaffordable for many.

yes - buying and owning real estate creates external costs. But the next question might be, if buying real estate inflicts costs on you, why let anyone do it to you?

Edited January 11, 2010 by Stars

[Hip to be bear]

ame='Hip to be bear' date='11 January 2010 - 09:30 PM' timestamp='1263245414' post='2340897']

By giving false information about his income he is probably gaining a mortgage that would otherwise not be available to him and at a more favourable interest rate than someone who doesn't lie. He is therefore defrauding the mortgage company as well as increasing the risk of his default which is not good for the company and is likely to lead to higher rates for other borrowers too.

This is between him and the bank

yes - buying and oning real estate creat external costs

The law says otherwise.

[kingsgate]

For me, I am not bothered by so-called "mortgage fraud".

I have but one life, and I have goals, and things that I want and need.

I would rather always tell the truth, but if telling the truth puts me at a disadvantage to others, or prevents me from achieving my objectives, then I will lie as necessary to achieve my objectives.

That's all.