Mortgage fraud on the rise - lying on an application could land prospective homeowners in jail

24 September 2019

13% of British adults believe it is reasonable to exaggerate income on a mortgage application new research has found

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Mortgage fraud is on the increase, with more than one in 10 (13%) UK adults thinking it is reasonable to lie on the application form, new research shows.

Mortgage fraud has risen by 5% in the first six months of 2019 compared to the last six months of 2018, according to fraud prevention service Cifas.

Cifas also found that 13% of British adults believe it is reasonable to exaggerate income on a mortgage application.

Mortgage application fraud occurs when people use false or altered documents in support of a mortgage application they might not be eligible for.

These applicants often provide false or altered bank statements and proof of income as a way to validate their income for mortgage applications.

Mike Haley, chief executive of Cifas, says: “It’s easy to assume that making exaggerations to improve the chances of your mortgage being approved is harmless, but the reality is that this is fraud and the consequences can be very serious.

“Mortgage providers carry out rigorous checks, and so exaggerating your income or withholding any change of circumstances could result in it being harder to obtain financial products in the future such as mortgages and loans.

"In more serious cases, this kind of fraud could result in a hefty fine or a prison sentence, or the possibility of losing your home.”

Nearly half of those caught committing application fraud (45%) were aged between 31 to 40-years-old, a rise of 16% compared to the last six months of 2018. They were closely followed by those aged between 41 to 50-years-old who saw a 6% increase.

The research also revealed that people in the 35 to 44 age category were more likely to think that exaggerating their income on their mortgage application was reasonable.

The West Midlands saw the highest increase in fraudulent mortgage applications at 43%, whereas cases in the North East rose by a third.

Consequences of mortgage fraud

While some may view mortgage fraud as a victimless crime, it is both illegal and could have serious consequences for those involved. 

As part of its ‘Faces of Fraud’ campaign, Cifas is urging people to consider the serious consequences of making false claims in mortgage applications.

Taking out a mortgage based on a false income could result in homeowners being unable to repay the debt later on.

Other consequences could include blacklisting against future product purchases, or possibly being reported to the police for investigation - potentially leading to a criminal conviction and a prison sentence.

James O'Sullivan, policy manager for the Building Societies Association, says: “A mortgage is a significant financial commitment and it is essential that applicants are honest about their personal circumstances.

“There are many risks inherent in being less than honest, not least that the borrower finds themselves unable to pay because a realistic affordability assessment was not possible or that, when caught, offenders struggle to get future credit. 

"It is far from being a victimless crime and is something that lenders take rigorous action on.”

Comments

Mortgage fraud

Submitting false documentation to obtain a mortgage is a criminal offence under Section 2 of the Fraud Act 2006 - it's that simple. In fact it's no different than making a false statement to obtain benefits from DWP.

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