Sharp rise in mortgage fraud
UK mortgage fraud rose sharply in the first half of 2010, according to KPMG.
The accountancy firm’s “fraud barometer” registered 21 cases in the six months to the end of June, compared with 18 in the same period of 2009.
More alarmingly, the value of the fraud rose to £96 million, up from £24 million a year earlier.
The trend is expected to continue as a fuller picture of the part played by mortgage fraud in the credit crisis emerges.
KPMG forensic partner, Hitesh Patel, says: “This is a legacy issue for the banks from the pre-recession boom years when house prices inflated, providing the opportunity for fraud.”
He adds: “Banks will be hoping that they have uncovered most of their fraudulent loans. But the trend remains upwards and it could be some time before we see the peak.”
Last month the Financial Services Authority set out new measures aimed at ensuring all mortgage lenders get back to the basics of responsible lending.
The regulator also revealed that between 2007 and the first quarter of 2010 almost half of new mortgages were provided without verification of income, indicating that the lessons of the credit crisis have yet to be fully acknowledged.
Earlier this year, the National Fraud Authority estimated the annual value of UK mortgage fraud at £1 billion and warned that the figure could increase.