Mortgage Fraud

[Timm]

From the Sunday Times:

http://business.timesonline.co.uk/tol/busi...icle2283035.ece

"Four mortgage firms could see an estimated £40m wiped out after lending to bogus borrowers on off-plan apartments in Thamesmead, south London, built by Persimmon, the listed property company. The firms involved are believed to be Alliance & Leicester, one of the country’s top ten lenders; GMAC-RFC, part of the American giant; Platform, the sub-prime arm of Britannia building society; and Rooftop, part of Bear Stearns, which has already been hit hard by the failure of two of its hedge funds. The Metropolitan Police is investigating the fraud and has made 11 arrests, but the lenders do not expect to get all their money back.

Alliance & Leicester (A&L) has since reined in its lending on all new-build developments across Britain amid fears that the fraud could be the tip of the iceberg."

[DoctorJ]

A spokesman for Persimmon admitted selling to Atrex, but said it had made the necessary checks.

Oh yeah I'm sure you made all the checks.

just get the damn things off the books fast - thats what they were thinking and sod the money lenders. happy days

[DrBob]

And this is where globalisation fails...

Any lender who actually knew the area would have viewed Thamesmead properties with deep suspicion. Thamesmead is the estate where parts of Stanley Kubrick's A Clockwork Orange were filmed. It's a marvel of failed 1960's architecture and social engineering. Because the whole estate is built on flood-prone marshes, there is no accommodation at ground level, just a maze of theft-prone car parks. The homes are all raised on stilts which means the 'streets' are joined by narrow raised concrete walkways. It's a muggers' paradise. Having worked there for a couple of months I found it scary even during the day!

[Madman]

Thamesmead is the estate where parts of Stanley Kubrick's A Clockwork Orange were filmed.

But house prices always go up....

[Rare Bear]

I see that it has made the Ilford Recorder today. Sorry, cant't find a link in the on line version.

[interestrateripoff]

I like the term "could be tip of the iceberg".

Do they expect more fraud to be uncovered shock horror?

[abharrisson]

I'd be interessted to see what the nature of this fraud was..... at one level lets say the borrowers were not who they said they were and didn't earn what they said they earnt etc etc...... the lenders lent on the value estimated by the valuer and noted their interest on the title deeds.

Now we all know without any fraudulent activity that these new builds could still be down 60% now vs what they bought for but the lender would still have the security of a charge on the title deeds.... the property could not have been sold etc etc.... now in these cases they would have appointed the valuer and they would have appointed someone with PI insurance... so if the value was wrong then the lender woudl have recourse against those valuers insurance policies.

I wonder quite what went on here therefore to make the loss radically worse than a lender just lending on a new build property... as long as these lenders used their own valuers ( which most normally did) and as long as they secured a charge on the title ( which all did) then they shouldn't be worse hit..... unless the valuers were seperately corrupted and/or the lawyers were corrupted in which case the lender will still have a case against the various firms insurers at the time.

[skomer]

From the Sunday Times:

http://business.timesonline.co.uk/tol/busi...icle2283035.ece

"Four mortgage firms could see an estimated ?40m wiped out after lending to bogus borrowers on off-plan apartments in Thamesmead, south London, built by Persimmon, the listed property company. The firms involved are believed to be Alliance & Leicester, one of the country?s top ten lenders; GMAC-RFC, part of the American giant; Platform, the sub-prime arm of Britannia building society; and Rooftop, part of Bear Stearns, which has already been hit hard by the failure of two of its hedge funds. The Metropolitan Police is investigating the fraud and has made 11 arrests, but the lenders do not expect to get all their money back."

But Lagos and Abuja got some nice new build McMansions out of it

[Rare Bear]

Don't forget to look at the date of the op

But apparantly only getting to courts now.