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Charliemouse

Mortgage Fraud

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Radio 4 at ten to seven this morning, ran a report on the extent and damage of mortgage fraud in the UK.

Over one million home buyers have been encouraged to lie about their income on mortgage forms through-out England. The chap that they interviewed had borrowed 8 times his income by talking up his take home pay and exaggerating claims about overtime, non existent bonus payments, and other income outside of working hours.

The FSA have no idea which home owners have lied on self certificate mortgages and people are reluctant to admit to it, because it is against the law. Most of these fraudulent mortgage claimants are expected to default or be repossessed in the near future.

Their has been no regulation of these aggressive lending companies and their tactics of over stretching clients. One lender encouraged applicants to pencil in income claims so that they could be altered buy the lender at a later date.

OMG, what have they done?. This has been one of the forces behind HPI and it is blatant fraud and law breaking by both sides. It will IMO be one of the forces behind the coming house price crash.

It is all such a mess out there on so many levels and I'm so relieved that i wasn't talked into breaking the law by these cowboy lenders.

Were you? and how much did you pump up your income on your mortgage documents by?

Edited to add this link to the Radio 4 broadcast this morning. http://news.bbc.co.uk/player/nol/newsid_70...sb=1&news=1

Edited by charliemouse

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Talking of fraud.

The system is a right old mess. Hidden BTL is a minefield for the unwary.

http://www.mortgageintroducer.com/mortgage...ake-up_call.htm

A wake-up call

1 September 2007

By Emma Lunn is a freelance journalist

Emma Lunn looks at the re-emergence of high level fraud within the mortgage market

The past couple of weeks have seen a couple of shocking fraud stories appearing in the mortgage press, prompting fears that financial crime is on the increase.

First up was a story of how a gang in the West Midlands used Land Registry information to access information on home owners before remortgaging their properties without their knowledge.

Then the Metropolitan Police confirmed that it had made several arrests in its investigation into suspected large-scale mortgage fraud on 84 new build properties in Thamesmead, South East London.

Not the first time

The first story prompted many in the industry to criticise the Land Registry for the ease at which personal information can be obtained.

For £10, a registered user with the Land Registry’s website can obtain a copy of the lease, giving anyone, including potential fraudsters, a wide range of information on a property, including the owner’s signature.

In this case it was thought the gang posed as potential buyers for the property and gained information of its title and registration through the sales process. The fraudsters then pulled out of the deal at the last minute, having applied for a mortgage on the property. They then converted the mortgage money into gold bullion.

Jonathon Barnett, director of broker All Mortgage Matters, says it is not the first time this kind of thing has happened and he lays the blame firmly at the door of the Land Registry.

“This happened to a client of mine a couple of years ago. She had an unencumbered property and was letting the property out to tenants. She wanted to raise some capital on the property for business purposes and applied for a mortgage. But when her solicitor checked the Land Registry, he found the deeds were no longer in her name and there was a £150,000 loan on the property.”

Kent police got involved and found that the same thing had happened with six properties in adjacent roads with a total of £2 million in loans against them – none of them taken out by the rightful owners.

Barnett says: “My client’s tenant was being evicted at the time and there appeared to be a link between the tenant and the fraudsters – and the police also believe a dodgy solicitor was involved.”

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whilst 8% of mortgage applicants may have been encouraged to lie about their earnings, the only thing that matters is how many actually have and by how much. I know it says the FSA have no idea but it must be possible to estimate somehow.

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whilst 8% of mortgage applicants may have been encouraged to lie about their earnings, the only thing that matters is how many actually have and by how much. I know it says the FSA have no idea but it must be possible to estimate somehow.

I don't think anyone has cared until now. While the profits and commission were rolling in, everyone was happy but soon, the greatest crash in the history of house prices will drag many businesses and borrowers down into bankruptcy with it.

Then i would think that the FSA will be going through everyones books with a fine toothed comb, trying to find someone els to load the blame onto.

Its going to be a financial blood bath (not that I'm being sensationalist you understand).

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I notice it's the most read story on BBC News so there must be a lot of people out there thinking 'I did that'.

I actually did it in 2004 so if it was easy back then, just think how easy it has been the last couple of years.

Scary times are indeed not far away.

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I don't think anyone has cared until now. While the profits and commission were rolling in, everyone was happy but soon, the greatest crash in the history of house prices will drag many businesses and borrowers down into bankruptcy with it.

Then i would think that the FSA will be going through everyones books with a fine toothed comb, trying to find someone els to load the blame onto.

Its going to be a financial blood bath (not that I'm being sensationalist you understand).

hmmm...it could be a problem, no-one knows if it is and how much of a problem it is, but that just makes it good bear food? Shame, because this endless speculation without the facts discredits a lot of useful information that gets burried in the constant stream of sensational stories.

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The fraudsters then pulled out of the deal at the last minute, having applied for a mortgage on the property. They then converted the mortgage money into gold bullion.

How on earth did they do that? Surely the mortgage has to be used to buy a house? Sounds like a licence to do your own carry trades to me! - ah hang on, this is remortgaging, where nobody gives a ****** what you spend it on - or is it? Oh I dunno! My criminal mind has deserted me ....

Edited by Sledgehead

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This is re mortgaging, where nobody gives a ****** what you spend it on

You could be right about that. I remember when you had to give a good reason to even get an unsecured loan, the lender would want to know exactly what the money was for but not now, now it's loans for any purpose, or no purpose.

Perhaps mortgages were about to go down the same route and it's only the recent credit crunch that has nipped it in the bud.

Apologies for the speculation but it wouldn't surprise me if that was being considered... Mortgages for any purpose?.

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whilst 8% of mortgage applicants may have been encouraged to lie about their earnings, the only thing that matters is how many actually have and by how much. I know it says the FSA have no idea but it must be possible to estimate somehow.

8%!!!!! More like 68%!!!!!

Below - was in 2003!

----------------------------

Mortgage customers 'urged to lie'

Housebuyers are being encouraged to break the law in order to obtain huge mortgages, the BBC has discovered.

http://news.bbc.co.uk/1/hi/business/3222053.stm

The Money Programme uncovers massive mortgage fraud

BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages.

And it shows how the illicit cash raised by this method has been pouring into the housing market, boosting prices and leaving many people risking financial ruin.

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

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8%!!!!! More like 68%!!!!!

Below - was in 2003!

----------------------------

Mortgage customers 'urged to lie'

Housebuyers are being encouraged to break the law in order to obtain huge mortgages, the BBC has discovered.

http://news.bbc.co.uk/1/hi/business/3222053.stm

The Money Programme uncovers massive mortgage fraud

BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages.

And it shows how the illicit cash raised by this method has been pouring into the housing market, boosting prices and leaving many people risking financial ruin.

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

Good links Eric,

Surely fraud is fraud and should be punished, it seems that the law has turned a blind eye to bank's/lender's fraudulent activity and not just one or two cases but over a million cases. How dare they allow mortgage advisors to flout the law like that?. Are they above the law? and how could the FSA stand by and watch it happen?.

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8%!!!!! More like 68%!!!!!

Below - was in 2003!

----------------------------

Mortgage customers 'urged to lie'

Housebuyers are being encouraged to break the law in order to obtain huge mortgages, the BBC has discovered.

http://news.bbc.co.uk/1/hi/business/3222053.stm

The Money Programme uncovers massive mortgage fraud

BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages.

And it shows how the illicit cash raised by this method has been pouring into the housing market, boosting prices and leaving many people risking financial ruin.

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

yes, yes, you've posted the same link many times. There is a difference between suggesting that people lie and them actually doing it.

Back to my original point, how many actually HAVE lied and by how much? That is all that matters here. If you have those figures then please post them so we know what we are talking about.

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whilst 8% of mortgage applicants may have been encouraged to lie about their earnings, the only thing that matters is how many actually have and by how much. I know it says the FSA have no idea but it must be possible to estimate somehow.

That's easy. Just compare the earnings stated on mortgage application forms against those recorded by the Inland Revenue. Significant discrepancies are proof of obtaining goods/services by deception - a criminal offence.

Two possible punishments : An Inland Revenue investigation costing them tens or even hundreds of thousands or the compulsory sale of the property for the price they paid for it.

Boy o boy o boy! I wouldn't wanna be a Lie-to-Buy homeowner right now!! Once this story goes mainstream they'll be quaking in their boots!!

It's great to see the IMF are now making serious comments about the UK market!!

And do I have to end every sentence with exclamation marks?!!!

Edited by nmarks

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I heard this whilst ironing this morning. The interview with the guy who's application came back reading like the greatest work of fiction since the Bible was hysterical. At no point did he point out to the lending company that the information given by the agent was wrong.

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I thought I heard recently that about 40% of UK mortgages were self-cert in the past year? Which is bad news if the majority have purchased at recent highs with fictitious incomes.

At what point did self-cert emerge? I remember there used to be special mortgages for self employed people which involved presenting 3 years accounts prepared by a qualified accountant. When did that go out the window?

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That's easy. Just compare the earnings stated on mortgage application forms against those recorded by the Inland Revenue. Significant discrepancies are proof of obtaining goods/services by deception - a criminal offence.

well, what is it then?

The point about saying we need to know how much buyers lie and by how much is to be able to take an accurate view as to whether this is an important factor on the housing market. It is all very well saying that is it theoretically possible, but that doesn't enlighten the situation.

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Radio 4 at ten to seven this morning, ran a report on the extent and damage of mortgage fraud in the UK.

Over one million home buyers have been encouraged to lie about their income on mortgage forms through-out England. The chap that they interviewed had borrowed 8 times his income by talking up his take home pay and exaggerating claims about overtime, non existent bonus payments, and other income outside of working hours.

The FSA have no idea which home owners have lied on self certificate mortgages and people are reluctant to admit to it, because it is against the law. Most of these fraudulent mortgage claimants are expected to default or be repossessed in the near future.

Their has been no regulation of these aggressive lending companies and their tactics of over stretching clients. One lender encouraged applicants to pencil in income claims so that they could be altered buy the lender at a later date.

OMG, what have they done?. This has been one of the forces behind HPI and it is blatant fraud and law breaking by both sides. It will IMO be one of the forces behind the coming house price crash.

It is all such a mess out there on so many levels and I'm so relieved that i wasn't talked into breaking the law by these cowboy lenders.

Were you? and how much did you pump up your income on your mortgage documents by?

Edited to add this link to the Radio 4 broadcast this morning. http://news.bbc.co.uk/player/nol/newsid_70...sb=1&news=1

Why do these people want to do it anyway? when they're sitting in every night warming their hands on their candle having not left the house other than for work for a year, whilst red bills and repo orders fall throught the letterbox, will they be so pleased with getting away with it <_<

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A massive investigation would lead to tens if not hundreds of thousands of mortgages being revoked, and a knock on effect in the housing market that would cause HPC, even without al the other troubles in the economy. Under such scrutiny the banks wouldn't lend you a toffee apple without a signed photo of you in a sex act with a goat, which would make things even worse.

The options are -

Let fraud go unpunished and let people who were lying go tits up naturally.

Or

Crash the whole economy for the sake of a few people scamming a system that's based upon fraud anyway for some catchword moral argument.

That's why there is no chance of this ever going anywhere, ever. Forget about it.

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A massive investigation would lead to tens if not hundreds of thousands of mortgages being revoked, and a knock on effect in the housing market that would cause HPC, even without al the other troubles in the economy. Under such scrutiny the banks wouldn't lend you a toffee apple without a signed photo of you in a sex act with a goat, which would make things even worse.

The options are -

Let fraud go unpunished and let people who were lying go tits up naturally.

Or

Crash the whole economy for the sake of a few people scamming a system that's based upon fraud anyway for some catchword moral argument.

That's why there is no chance of this ever going anywhere, ever. Forget about it.

Never a truer word spoken. The banks might not escape so easily if people default on these mortgages and pursue the banks or brokers for being complicit in fraud. It would be pretty easy to prove on a balance of probabilities in a Chancery court that the banks knew what was going on.

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I thought I heard recently that about 40% of UK mortgages were self-cert in the past year? Which is bad news if the majority have purchased at recent highs with fictitious incomes.

At what point did self-cert emerge? I remember there used to be special mortgages for self employed people which involved presenting 3 years accounts prepared by a qualified accountant. When did that go out the window?

Self Cert was available atleast five years ago as an agent tried to sell me one back then.

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Never a truer word spoken. The banks might not escape so easily if people default on these mortgages and pursue the banks or brokers for being complicit in fraud. It would be pretty easy to prove on a balance of probabilities in a Chancery court that the banks knew what was going on.

You are both right that the authorities will want to turn a blind eye to this issue (Gordon can!) and that means we live in a country of mass corruption, a country whose economy is based on a foundation of lies. However it doesn't mean we here should give up. Quite the opposite, we should be shouting about this issue at the tops of our voices. No-one should be allowed to prosper from the fruits of their crimes. You know its the end of a civilisation when greed and wealth takes precedence over truth and justice.

Edited by nmarks

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Good links Eric,

Surely fraud is fraud and should be punished, it seems that the law has turned a blind eye to bank's/lender's fraudulent activity and not just one or two cases but over a million cases. How dare they allow mortgage advisors to flout the law like that?. Are they above the law? and how could the FSA stand by and watch it happen?.

I have to say -- to see this only being discussed now - after ALL these YEARS of out and out fraud -- IT IS ENDEMIC -- simply beggars belief!! THIS HAS ALL BEEN GOING ON RIGHT ACROSS THE BOARD FOR YEARS!!!!!1

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I have to say -- to see this only being discussed now - after ALL these YEARS of out and out fraud -- IT IS ENDEMIC -- simply beggars belief!! THIS HAS ALL BEEN GOING ON RIGHT ACROSS THE BOARD FOR YEARS!!!!!1

I couldn't agree more. I have read most of your posts on the subject and i always thought you were spot on (if a little loud) but someone will, i hope, soon bring this up where it counts.

Its appalling that this has been allowed to go on for so long and, it seems, with the full blessing of the lending banks.

Perhaps now someone with some power will get something done about it.

Confidence in the banking/lending system is going to take a thrashing when all this comes out.

Edited by charliemouse

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At what point did self-cert emerge? I remember there used to be special mortgages for self employed people which involved presenting 3 years accounts prepared by a qualified accountant. When did that go out the window?

Good question. Perhaps it coincided with 4 years back when the level of revenue at which the accounts of small businesses are subject to an annual audit by an accountant was increased to north of £5m.

This has meant the number of audit firms has declined and that (more or less) a blind eye is turned to the finances of entrepeneurs.

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