Buyers falsify and alter documents as mortgage fraud cases rise

There’s been a five per cent rise in the cases of mortgage fraud as increasing numbers of house buyers appear to be exaggerating their income in a bid to secure loans.

The claim comes from Cifas, a fraud prevention service, which says the five per cent rise took place over the first six months of this year, compared to the second half of 2018.

Mortgage application fraud occurs when either false or altered documents are provided in support of a mortgage application: on this specific issue, it says fraud by production of a false document increased by 14 per cent and fraud by submitting altered documents increased by 32 per cent according to Cifas figures. 

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

Cifas says almost half of those caught committing application fraud were aged between 31 and 40; this group saw a 16 per cent increase compared to the last six months of 2018. They were followed by those aged between 41-50 years old who saw a six per cent increase.

In terms of regional breakdowns, the West Midlands saw the highest increase in fraudulent mortgage applications at 43 per cent whereas cases in the North East rose by a third.

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.

“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” explains Mike Haley, Cifas chief executive.

“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” he adds. 

And James O'Sullivan, policy manager for the Building Societies Association, says: “It is far from being a victimless crime and is something that lenders take rigorous action on.’