Mortgage fraud industry is “booming”

| January 12, 2010 | 0 Comments

Last year saw a steep rise in reported mortgage fraud, new research from BDO has revealed.

During 2009 mortgage fraud accounted for 18% of all reported fraud and 27% of fraud in the UK finance and insurance sector.

The accounting firm’s spokesman, Simon Bevan, comments: “It may have become more difficult for the person on the street to secure a mortgage in the UK, but the mortgage fraud industry is booming!”

He adds: “These frauds typically work through a large loan being taken out on an overvalued property, with a crooked buyer in collusion with a corrupt valuer and/or lawyer.”

Consequently the frauds can be large, as the same team will work on a succession of properties.

The study also reveals an “explosion” of reported fraud in the UK during 2009, breaking the £2 billion barrier for the first time.

Furthermore, the amount lost by businesses and the public sector to larger frauds soared by 76% during the recession, with both the number and size of frauds increasing dramatically.

The average value of each fraud now stands at over £5 million compared to £1.8 million in 2003, according to BDO.

Worryingly, BDO sees the 2009 figures as a “precursor of things to come”, and warns that annual reported corporate fraud could hit £5 billion in 2012 as mangers focus on reducing costs, and tighter cashflow and credit makes fraud harder to hide.

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