Types Of UK Mortgage Fraud
January 18, 2009 by admin
Filed under Mortgage Articles
At one point or another most people in the UK have heard the term “mortgage fraud” before. While most people may consider mortgage fraud to be the domain of professional con artists and hardened criminals, this is not necessarily the case.
Mortgage fraud encompasses a wide range of activities and a growing number of otherwise law abiding UK citizens are committing the crime at least once in their lifetime without being aware of it.
Below is a list of several activities which are considered mortgage fraud in the UK.
False Information on Mortgage Applications
Most mortgage applicants in the UK are likely to only ever apply for a mortgage on their own home. An individual who fits into this category will probably remortgage or move home at least once during their lifetime and will therefore apply for residential mortgages on several different occasions.
For this type of borrower there is a limited number of ways they can purposely or inadvertently commit mortgage fraud. These methods include exaggerating income and providing false details on other parts of the application form.
The most likely of the above activities this type of borrower will undertake is exaggerating their income on the mortgage application form. This is usually done to increase the amount they are entitled to borrow. While this may seem harmless if the borrower believes they can meet their monthly mortgage repayments and therefore avoid defaulting on their home loan, it is still considered mortgage fraud.
Additionally, providing false information to the lender on any other part of the mortgage application form will also be considered mortgage fraud. This includes, but is not limited to, personal information such as their name and address and marital status, and historical information such as their previous addresses.
False Documents
Providing false documents to mortgage lenders is fraud. This type of mortgage fraud has become more common in recent years and usually involves submitting false documents as evidence of income or identification. Such documents are widely available through a growing number of suppliers who advertise their businesses on the internet.
The quality of false documents has improved considerably in recent times which has led an increasing number of people to attempt to pass them off as real. Providing a UK mortgage lender with false documentation is a serious form of mortgage fraud and a criminal offense.
Undisclosed Transactions
It is also fraudulent to withhold information from lenders related to property transactions. For example, UK mortgage lenders expect to be told if there is a gifted deposit, discount, cash back or other incentive offered by the seller to the buyer of a property.
All of these things can be regarded as a reduction of the property’s value. UK mortgage lenders will want to know the true market value of the property being transacted as they will be securing a mortgage on it.
It is therefore necessary to inform the lender of all details involved in property transactions. Withholding relevant information can be regarded as mortgage fraud.
Exaggerated Valuations
Finally, a new and highly sophisticated type of mortgage fraud has become wide spread in recent years. The scam involves property professionals such as mortgage brokers, surveyors, and solicitors working together to obtain mortgages on properties that are overvalued.
For example, if the fraudsters negotiate to buy a property for £200,000 the surveyor will value the property at £250,000 and they broker will arrange for a mortgage to be secured against the property to that value. The solicitor will perform the conveyancing on the property and when the mortgage funds are obtained from the lender the vendor will be paid £200,000 and the fraudsters will keep the additional £50,000.
This scam is highly sophisticated and involves several partners working together and is considered to be mortgage fraud by the UK authorities.
Mortgage fraud encompasses a wide range of activities and a growing number of otherwise law abiding UK citizens are committing the crime at least once in their lifetime without being aware of it.
Below is a list of several activities which are considered mortgage fraud in the UK.
False Information on Mortgage Applications
Most mortgage applicants in the UK are likely to only ever apply for a mortgage on their own home. An individual who fits into this category will probably remortgage or move home at least once during their lifetime and will therefore apply for residential mortgages on several different occasions.
For this type of borrower there is a limited number of ways they can purposely or inadvertently commit mortgage fraud. These methods include exaggerating income and providing false details on other parts of the application form.
The most likely of the above activities this type of borrower will undertake is exaggerating their income on the mortgage application form. This is usually done to increase the amount they are entitled to borrow. While this may seem harmless if the borrower believes they can meet their monthly mortgage repayments and therefore avoid defaulting on their home loan, it is still considered mortgage fraud.
Additionally, providing false information to the lender on any other part of the mortgage application form will also be considered mortgage fraud. This includes, but is not limited to, personal information such as their name and address and marital status, and historical information such as their previous addresses.
False Documents
Providing false documents to mortgage lenders is fraud. This type of mortgage fraud has become more common in recent years and usually involves submitting false documents as evidence of income or identification. Such documents are widely available through a growing number of suppliers who advertise their businesses on the internet.
The quality of false documents has improved considerably in recent times which has led an increasing number of people to attempt to pass them off as real. Providing a UK mortgage lender with false documentation is a serious form of mortgage fraud and a criminal offense.
Undisclosed Transactions
It is also fraudulent to withhold information from lenders related to property transactions. For example, UK mortgage lenders expect to be told if there is a gifted deposit, discount, cash back or other incentive offered by the seller to the buyer of a property.
All of these things can be regarded as a reduction of the property’s value. UK mortgage lenders will want to know the true market value of the property being transacted as they will be securing a mortgage on it.
It is therefore necessary to inform the lender of all details involved in property transactions. Withholding relevant information can be regarded as mortgage fraud.
Exaggerated Valuations
Finally, a new and highly sophisticated type of mortgage fraud has become wide spread in recent years. The scam involves property professionals such as mortgage brokers, surveyors, and solicitors working together to obtain mortgages on properties that are overvalued.
For example, if the fraudsters negotiate to buy a property for £200,000 the surveyor will value the property at £250,000 and they broker will arrange for a mortgage to be secured against the property to that value. The solicitor will perform the conveyancing on the property and when the mortgage funds are obtained from the lender the vendor will be paid £200,000 and the fraudsters will keep the additional £50,000.
This scam is highly sophisticated and involves several partners working together and is considered to be mortgage fraud by the UK authorities.
The Poor Credit Mortgage Market
December 14, 2008 by admin
Filed under Mortgage Articles
Poor credit mortgages are for those people who have a bad credit history, maybe showing defaults, mortgage arrears, bankrupt, county court judgements (CCJs) or other problem debts.
Current estimates are that one in four people, or five million households in the UK, come across problems when trying to get a mortgage or remortgage because they’re suffering from poor credit history. This poor credit mortgage market is also known as the sub-prime market.
Despite recent problems in the sub-prime market there are still a good number of lenders who offer mortgages for people with a poor credit history and mortgage advisors can help you locate the right adverse credit mortgage for your situation.
Every mortgage application will mean a check by the lender with a credit reference agency such as Experian or Equifax to determine your creditworthiness. If the search reveals any problems, you will have a poor rating or low credit score and as a consequence would have problems getting a mortgage with a high street lender. However there is a wide range of Poor credit mortgages which are designed for people who have blemished credit records.
The main reason people fall into the sub-prime category is because they have suffered previous credit difficulties and consequently have a bad credit rating. However, a bad credit rating does not necessarily mean you have done anything wrong in the past. For example, divorce and redundancy can account for some of the reasons why people get into financial difficulty through no fault of their own.
In addition, in a culture of borrowing and consumer credit as we now have, there are times when people take on too much debt and can find themselves struggling to make repayments.
Would-be borrowers who have no credit history at all, individuals who do not appear on the electoral roll, and people who have moved a lot of times in a short space of time can also find themselves categorised as a non standard borrower.
The sub-prime market rose by 28% during 2006, making it worth £24.6bn. Previous research suggested that the market would continue to expand, and faster than the regular mortgage market. This is as a result of levels of debt in Britain, which are at their highest ever level and still increasing, and more difficult circumstances such higher interest rates on mortgages. However, some companies are finding it difficult to stay in the market. Northern Rock has all but been lost, and it is forecast that others may follow.
It is likely that the economy will become trickier in the next year or two. This, together with high levels of debt will help to push the sub-prime market forward in the next five years. As more people default or make late payments, more will become poor credit mortgage candidates.
Specialist poor credit mortgage providers give options to obtain a mortgage, rehabilitate finances and improve future credit ratings. There are still plenty of lenders in this sector including global investment banks and specialist arms of high street banks who underwrite a broad spectrum of cases, from people with minor financial misdemeanours to those with heavy adverse credit.
Current estimates are that one in four people, or five million households in the UK, come across problems when trying to get a mortgage or remortgage because they’re suffering from poor credit history. This poor credit mortgage market is also known as the sub-prime market.
Despite recent problems in the sub-prime market there are still a good number of lenders who offer mortgages for people with a poor credit history and mortgage advisors can help you locate the right adverse credit mortgage for your situation.
Every mortgage application will mean a check by the lender with a credit reference agency such as Experian or Equifax to determine your creditworthiness. If the search reveals any problems, you will have a poor rating or low credit score and as a consequence would have problems getting a mortgage with a high street lender. However there is a wide range of Poor credit mortgages which are designed for people who have blemished credit records.
The main reason people fall into the sub-prime category is because they have suffered previous credit difficulties and consequently have a bad credit rating. However, a bad credit rating does not necessarily mean you have done anything wrong in the past. For example, divorce and redundancy can account for some of the reasons why people get into financial difficulty through no fault of their own.
In addition, in a culture of borrowing and consumer credit as we now have, there are times when people take on too much debt and can find themselves struggling to make repayments.
Would-be borrowers who have no credit history at all, individuals who do not appear on the electoral roll, and people who have moved a lot of times in a short space of time can also find themselves categorised as a non standard borrower.
The sub-prime market rose by 28% during 2006, making it worth £24.6bn. Previous research suggested that the market would continue to expand, and faster than the regular mortgage market. This is as a result of levels of debt in Britain, which are at their highest ever level and still increasing, and more difficult circumstances such higher interest rates on mortgages. However, some companies are finding it difficult to stay in the market. Northern Rock has all but been lost, and it is forecast that others may follow.
It is likely that the economy will become trickier in the next year or two. This, together with high levels of debt will help to push the sub-prime market forward in the next five years. As more people default or make late payments, more will become poor credit mortgage candidates.
Specialist poor credit mortgage providers give options to obtain a mortgage, rehabilitate finances and improve future credit ratings. There are still plenty of lenders in this sector including global investment banks and specialist arms of high street banks who underwrite a broad spectrum of cases, from people with minor financial misdemeanours to those with heavy adverse credit.