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Matters to Report to NCA : Mortgage Fraud

By AMLCC

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It is quite common for banks and other lenders to require accountants to ‘certify’ someone’s income when they apply for a mortgage. Clearly care should always be taken that sufficient evidence is obtained regarding the client’s financial position before any such assurance is provided. One simple example of mortgage fraud would be your client providing false information which overstates their income. You incorrectly certify this and a fraud will have occurred as the bank will have lent the client more money than the client was legitimately entitled to.

Where the individual concerned is an existing client of your firm, the risk is reduced as you may have a good understanding of their actual level of income and be able to identify unexpected discrepancies. However, of course risk still exists. If the individual is a new client, great care is required.

Mortgage fraud may also occur on a much more significant scale. Criminal gangs are known to inappropriately inflate property prices to gain mortgages larger than the actual value of the property. Alternatively, mortgages may be obtained against properties which the fraudster does not own, or perhaps does not even exist. Generally, such fraudsters rely on a corrupt associate (perhaps solicitor, surveyor or accountant) to assist them. However, you may be an innocent adviser dealing with other professionals who are associated with the criminal and thus be in a position to make a report.

To highlight the scale of the problem, Scotland Yard recently disclosed that £180m of British property has been investigated in the last 10 years as the likely proceeds of corruption.

Published May 2015