Most UK residents have heard the term “mortgage fraud” before but many people may not be aware of the full range of activities that it encompasses. To many it may seem like the domain of professional con artists, however, a growing number of otherwise law abiding UK citizens are committing the crime at least once in their lifetime.

There are a range of activities which can be considered mortgage fraud in the UK. This includes exaggerating income, falsifying personal details on application forms, and providing lenders with fake documents. More recently, it has emerged that professionals operating in the property industry have been working together to commit mortgage fraud on a large scale.

For an individual UK mortgage applicant who will only ever apply for a mortgage on their home during their lifetime, there are a limited number of ways they can purposely or inadvertently commit mortgage fraud.

For this type of borrower, defrauding a mortgage lender will usually happen by exaggerating their income on the mortgage application form. This is usually done to increase the amount they are entitled to borrow. While this may seem harmless if the borrower believes they can meet their monthly mortgage repayments and therefore avoid defaulting on their home loan, it is still considered mortgage fraud.

Additionally, providing false details to the lender on any other part of the mortgage application form will also be considered mortgage fraud. This includes, but is not limited to, personal information such as their name and address and marital status, and historical information such as their previous addresses.

This type of mortgage fraud has existed for many years in the UK and is more wide spread than most people would imagine. In recent years, however, a new type of mortgage fraud has emerged for that involves buying false documents as evidence of income or identification. Such documents are widely available through a growing number of suppliers who advertise their businesses on the internet.

It almost goes without saying that providing a UK mortgage lender with false documentation is considered mortgage fraud and a criminal offence.

Finally, a new and highly sophisticated type of mortgage fraud has become wide spread in recent years. The scam involves property professionals such as mortgage brokers, surveyors, and solicitors working together to obtain mortgages on properties that are overvalued.

If the fraudsters negotiate to buy a property for £200,000, for example, the surveyor will value the property at £250,000 and they broker will arrange for a mortgage to be secured against the property to that value. The solicitor will perform the conveyancing on the property and when the mortgage funds are obtained from the lender the vendor will be paid £200,000 and the fraudsters will keep the additional £50,000.

This scam is, of course, also considered to be mortgage fraud by the UK authorities.

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