Mortgage fraud set to soar as new lending rules come into force

 
File photo dated 12/10/2010 of For Sales signs. The number of potential home buyers looking to view properties dipped in August as the Olympics provided a distraction - although overall sales held firm, surveyors reported today. PRESS ASSOCIATION Photo. Issue date: Tuesday September 11, 2012. In the three months to August, chartered surveyors sold on average 7.5% of the homes on their books per month, a figure which has remained consistent throughout 2012, the latest RICS UK housing market survey said. See PA story ECONOMY House. Photo credit should read: Rebekah Downes/PA Wire
Rebekah Downes/PA Wire
4 December 2012

Cases of mortgage fraud are expected to surge next year as more people attempt to misrepresent their finances or hide adverse credit histories.

Information services company Experian predicts that a total of 43 out of every 10,000 applications will be identified as fraudulent, an increase of 13% on this year and up 26% on 2011.

It pointed out that almost 90% of mortgage fraud tends to stem from individuals offering misleading information about their own financial and employment backgrounds.

Tougher rules on UK mortgage lending are due to come into force in 2014, when lenders will have to put a borrower's ability to repay under great scrutiny.

Attempted mortgage fraud in the third quarter of this year was up 6% on the same period in 2011 and for the first time in the past year it has overtaken current account fraud, which stood at 31 in every 10,000 applications.

Cases of fraud across the financial sector broadly increased in the quarter, with 17 in every 10,000 applications received by institutions detected to be fraudulent - a rise of 7% on a year earlier.

Experian said investment in verification technologies meant cases in the automotive finance sector fell 29% to 15 in every 10,000 applications.

Savings account fraud jumped by 58% to reach 11 out of every 10,000 applications, with the vast majority blamed on money laundering or sleeper fraud by third party individuals.

Elsewhere, fraudulent applications for credit cards increased 16% and by 9% for insurance, while loans remained level at six in every 10,000 applications.

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