Mortgage Fraud

Reading that the former English Defence League leader Tommy Robinson was last week jailed for 18 months for mortgage fraud got me thinking that it’s been a while since I have read a decent mortgage fraud story.

After the last recession, mortgage lenders took a long hard look at themselves and started to focus on the quality of their lending as opposed to the quantity. For the first time ever, lenders started to talk to each other, and share information about solicitors / brokers / estate agents / surveyors in fact anyone involved in the housing transaction, whom they believed may be involved in mortgage fraud.

Lenders imposed additional checks and set up specialist units to double check anything which looked remotely unusual or untoward. Suddenly when we called for updates, lenders were telling us “It’s gone to Head Office for audit” or “It’s with the Credit Risk Team.” Savvy brokers increased their firm’s fraud checks and made sure the mortgages they submitted were squeaky clean.

The clamp down took some brokers by surprise, as they were struck off lenders panels and black-balled by others. Banks started to press charges as opposed to quietly refusing future business and for a period of time the industry papers were full of tales of Mortgage Brokers being shut down and in some cases sent to prison.

One bank executive told me that their mortgage fraud had decreased from over £100m to less than £4m in 2 years. Their credit risk team are hailed as heroes and with such fantastic results have pretty much a free hand in deciding who stays and who goes. They also get to act with an air of mystery, striking individuals and firms off without giving a reason, to avoid anyone “tipping off” anyone else, which is another Money Laundering Offence.

Pretty soon these banning orders were extended to brokers who provide “poor quality” business as well as fraudulent business, as lenders found out that accepting only “quality” business meant their borrowers were less likely to fall into arrears.

Clearly the reason this particular story even made the BBC was Mr Robinson’s “celebrity” status rather than the ingenuity of the crime. The story in fact focused more on the terrible time he may receive have in prison from the various groups he has upset in the past than the fraud itself.

If anything this particular fraud was a bit on the boring side, £160,000 obtained by a dodgy mortgage broker with a couple of fake payslips. Clearly Credit Risk are still on top of their game!

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