Mortgage fraud: why it never pays to lie

Unlike insurance fraud, where perpetrators tend to splash their fiddled cash on jewellery, fast cars and yachts, the rather less glamorous business of mortgage fraud rarely makes it into the headlines.

But mortgage fiddles rocketed by almost a fifth last year, according to figures from the industry’s Credit Fraud Avoidance System. These show an 18 per cent rise in falsified mortgages, with many incidents including crucial information provided in the original application form - such as salary - being inflated or simply made up. Brokers were behind some of these scams, often without clients realising.

“If borrowers lie on a mortgage application or provide fraudulent documentation, like fake bank statements or wage slips, lenders could choose to retract their mortgages or pursue cases through the criminal courts,” warns Sarah Bailey, of City watchdog - the Financial Services Authority.

“This doesn’t usually happen, but it’s important to take steps to avoid it, not just in your own work but also by opting for a reputable broker.”

The FSA has banned 95 mortgage brokers in the last four years for mortgage fraud. “The first thing to do before visiting a broker is to check that they are registered with the FSA,” says Bailey. The Register is online at www.fsa.gov.uk/Pages/register/index.shtml or call 0845 606 1234.

You can check the broker’s history online by entering either the company name of the mortgage broker, or the individual. This will bring up any disciplinary history. Borrowers who do not use an FSA-registered broker will not have any recourse if mortgage fraud by an agent is uncovered.