Attempted mortgage fraud as part of the residential conveyancing process is increasing and something which solicitors need to be more aware of, according to figures from a credit rating agency.
Experian said that 32 out of every 10,000 applications for home loans in 2010 contained untrue information – a rise of 14% on the previous year – and that it was likely to continue because of pressures on the economy.
Because of the difficulty in obtaining finance to buy a house or flat, prospective buyers often do not reveal they have had problems obtaining credit in the past or exaggerate their income in order to meet mortgage criteria.
This problem is particularly prevalent where prices for houses and flats have risen quickly in the last decade, such as in London and other city centres.
Director of identity and fraud at Experian Nick Mothershaw said: “Fraud in the UK is a growing billion-pound illegal business with fraudsters resorting to innovation and inventiveness, targeting any perceived weaknesses in the system. Fuelled by the recession’s aftermath, it is likely that financial services providers could see fraud attempts rise during 2011.”
As well as being alert to the honesty of buyers and sellers, property conveyancing lawyers have an important part to play in combating other types of mortgage fraud, such as identity fraud or pretence of ownership of a home, prior to drawing up a contract for a sale.