Mortgage Fraud Increasing In UK

The number of fraudulent mortgage applications has been increasing since 2006. Currently, 34 of every 10,000 UK mortgage applications are fraudulent. This is more than double the rate of just five years ago. Misrepresentation of personal information is the most common type of mortgage fraud. This is causing some debt management companies to worry that clients could fall into this trap. They know how difficult it is for consumers to be approved for mortgages but they do not want their clients to head down a path of deceit.

Lenders avoid risk and mortgage lenders are no exception. If an applicant has a history of or is currently experiencing credit issues, a mortgage lender will shy away. Debt management professionals advise clients that rebuilding credit to the level suitable to receive an attractive mortgage rate can take years. Some clients feel that this is too long to wait and take matters into their own hands by misrepresenting themselves on mortgage applications to increase likelihood of approval.

Nearly all identified mortgage fraud pertains to providing false employment information, covering up bad credit, or other attempts to make the financial position appear more positive than it is. Hiding an Individual Voluntary Arrangement, Scottish Trust Deed, or bankruptcy is an example. These debt management plans become part of public records so consumers should not try to hide them. Some mortgage applicants go as far as falsifying payslips to reflect a higher income needed to qualify for the desired mortgage. Lenders may verify income details with employers, catching the fraudulent activities.

Debt experts fear that the rate of mortgage fraud will continue to increase. The Financial Services Authority requires the mortgage industry to provide UK consumers with affordable mortgages. Mortgage qualification guidelines have become stricter. Lenders are scrutinizing mortgage applicants more closely than they did several years ago. This will likely lead them to identify more mortgage fraud cases.

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For the many people who have sought help with managing their debt and been honest on their mortgage applications, the situation can be frustrating. Millions of UK residents are unable to qualify for a mortgage. When honest consumers see others obtaining mortgage loans fraudulently while they are unable to qualify, they become upset. Though it may seem like a slight bending of truth, mortgage fraud is a serious issue with serious consequences. The risk is not worth the potential reward.

According to The Crown Prosecution Service sentencing manual, the maximum penalty for committing mortgage fraud is ten years in prison. If a large amount of money is stolen or fraud is committed on multiple occasions, consecutive sentences may be imposed. Company directors who commit mortgage fraud may be disqualified from their position.

Rather than succumbing to the temptation to be deceitful, consumers should diligently improve their credit ratings over time by spending responsibly and repaying their debts. Professionals can get them on the right track by establishing a budget and using an informal or formal program to handle existing debt. Consumers will feel confident knowing that their actions are above the law.