Mortgages attract more fraud than any other financial product
The tightening of mortgage criteria has made it tough for many new borrowers to be approved for a home loan and to get onto the property ladder and. Now, new research suggests that these changes to mortgage rules may also have resulted in mortgages attracting more fraudulent applications than any other type of financial product.
The annual fraud report by credit specialists Experian has revealed that mortgages are the most common type of fraud, with identity theft a particular problem.
Identify theft contributing to rise in mortgage fraud
The latest data from financial information company Experian has suggested that the tightening of lending criteria has been a factor in mortgages attracting more fraud than any other financial product. The annual report revealed that mortgage fraud remains the commonest type of fraud with 84 cases per 10,000 in 2014, although this was down from 87 per 10,000 in 2013.
Experian also found that third-party fraud or fraud involving identity theft was on the rise. This accounted for more than half of all detected cases in 2014 and while mortgage fraud is generally not associated with identity theft Nick Mothershaw from Experian said, “most of it is individuals bending the truth to try and get a mortgage they’re not entitled to”.
Mothershaw added that lenders were making strides in the fight against fraud. “But as more consumers access and apply for financial products across multiple channels, including online and mobile, fraud has also evolved accordingly.”
The number of fraudulent loan applications detected in 2014 was more than double the number detected in the previous year. Identity theft was involved in 73% of these cases — up from 63% in 2013.
Rise in fraud among self-employed mortgage applicants
Changes to mortgage rules introduced last April have made it harder for millions of borrowers to be approved for a new mortgage. Changes to affordability criteria have made the underwriting of home loans much more strict and self-employed applicants have found it particularly tough to get the loan they need. The Mortgage Market Review also signalled the end of 'self-certification' loans which were particularly popular with self-employed applicants.
Experian reports that there had been a rise in the number of false mortgage claims by the self-employed. “It doesn’t mean they’re not going to pay for the mortgage but they’re making out that they are an employee of a business rather than a self-employed sole trader,” added Mothershaw.
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