Property Fraud may take many different forms, including using forged documents in order to obtain ownership or by impersonation of the owner of a property. Another common type of property fraud is by offering properties for sale at a reduced rate. These properties are often misrepresented or purchased off plan and then never completed. Other methods of property fraud include an activity known as buy-to-let fraud, whereby people are persuaded to invest in properties on the promise by a company that the property will be managed and rented. However, these properties are usually in bad condition and cannot be rented, and the company overcharges and then disappears. These are just some of the many examples of property fraud.
Mortgage fraud is simply any fraudulent activity that relates to a mortgage. This type of fraud is often carried out by well connected criminal organisations acting alongside solicitors, surveyors, accountants and other professionals. There are many different forms of mortgage fraud, including over valuing properties , misrepresenting financial information as part of a mortgage application, using fraudulently obtained identity to take out mortgages on behalf of other people and taking out several mortgages on one address. This list is non-exhaustive and there are a number of different forms of both property and mortgage fraud.
One of the most common examples of mortgage fraud involves using incorrect valuations. A mortgage is then taken out at the over-inflated value. The agreed repayments are then not met, and the properties are not maintained. In fact, they are often used for further criminal activities. After defaulting on the mortgage, the individuals then take out another mortgage on the same property through another lender in order to repay the first mortgage. As the price has been previously inflated, the amount received will cover the repayments, and often leave a substantial profit. This cycle is then repeated several times.
In order to try and mitigate any potential risk of mortgage fraud, it is advisable that individuals should register their properties with the Land Registry. Recent figures suggest that approximately twenty per-cent of property in England and Wales is still not registered. As the Land Registry is a government department, individuals who have suffered from property fraud may be compensated. In fact, in 2010, the Land Registry paid over four million pounds in compensation. In order to receive any compensation, the affected party will need to show that the documents used were indeed forged or fraudulently used. It is also important to note that the Land Registry has put a number of strategies in place to attempt to minimise the risk of fraud. These strategies and additional checking is not disclosed in order to ensure confidentiality. Further, the Land Registry works alongside the police and other bodies to try and reduce the risk. Further, when registering a property, it is vital to ensure that the Land Registry has correct contact details. This means that the Land Registry can contact the individual whenever it is necessary to do so.
The current economic climate has led to an increase in property and mortgage fraud, according to specialist investigations company Blackhawk. Recent research has shown that this increase is expected to continue in 2013. This is due to the fact that as debts continue to increase, individuals are more willing to commit fraud in order to attempt to clear their debts or give themselves a better chance of obtaining a property. The quality of forged documentation is increasing, and false documents are now more easily obtainable, especially from the internet. Technological advancements have meant that fake documents such as payslips and P60′s are being used more regularly. Further, mortgage lenders are now applying much stricter criteria and require a deposit to be higher, which in turn means that people are more likely to misrepresent financial information. Additionally, this increased use of technology has led to an increase in identity theft, something that is linked with fraud.
To highlight this clear increase, Experian, a global information services and credit scoring agency, predicts that in 2013 there will be thirteen per cent more fraudulent mortgage applications that 2012 and a twenty-six per cent increase from 2011.