Read Between The Lies – Mortgage Fraud in 2025
David Ryder
9 January 2025Surveying 2,000 UK adults, the research revealed 14% of respondents did not think it was illegal to provide mortgage lenders with misleading information, with nearly one in 10 (9%) believing it was ‘reasonable’ to exaggerate their income. The most likely age group to commit this type of fraud were between 25-34 (16%).
It is no great surprise to see what is predominantly the first-time buyer age group being the most likely to commit mortgage fraud, particularly given the affordability issues which can hold back this demographic from achieving home ownership, something the generations before them took for granted and which is an opportunity that many of the current generation feel denied.
However, regardless of any feelings of injustice, committing mortgage fraud is a criminal offence. If found guilty, the impact can be profound with damaged credit scores and closed bank accounts the lighter of the consequences for actions that could potentially lead to a criminal record and a possible prison sentence.
Of course, the Government has made clear its aim to introduce more affordable housing into the UK housing stock, with its other stated aim, that of raising landlord’s taxes in order to free up housing for first-time buyers, appearing to have an impact already.
A recent article in The Times highlighted how 35% of British properties sold by landlords were bought by first-time buyers in 2024 (an increase from 16% in 2016) with London seeing higher figures (56% up from 24%).
In addition, Halifax research revealed 49% of British properties were bought by first-time buyers in 2024, one of the highest proportions ever, with this trend having regional hot spots, for example, the figure increased to 75% in Manchester.
While the Bank of Mum & Dad has played its part in these figures by helping with the affordability factor, not everyone has access to this source of funding. It therefore raises the question, given the research, of how many mortgage applications made to support these purchases may have had some aspect of mortgage fraud, falsely inflated salaries and/or forged pay slips, for example, included?
Of course, mortgage advisers do a great job at being industry gatekeepers in this situation but, given the pressure on finances currently, it is more important than ever that they are constantly and consistently switched on to the possibility of suspicious activity and/or the supply of false data.
This not only protects their customers, but also protects their business from possible panel removal and/or regulatory censure, as well as protecting the lenders and financial institutions who they conduct business with. Interrogation of the facts and documentation provided by customers is crucial.
To help with this, Paradigm has produced a free eBook to assist firms in raising awareness of this important topic with their staff. It is designed to help advisers in identifying the different types of mortgage fraud customers can commit, identifying typical characteristics of clients that may commit fraud, focusing on what to look for on documentation which customers provide as part of an application (pay slips and bank statements), while highlighting other areas of mortgage fraud prevalent within the industry. Plus it outlines suggested tools for mortgage fraud prevention.
Paradigm also provides a dedicated Mortgage Fraud File Review Service. When used as a preventative tool, the service looks at selected files your firm may consider to be at risk or may wish to select at random, with the review focused on conducting a comprehensive review of supporting documents and case details.
Taking this type of preventative approach can help firms demonstrate to lenders and the FCA that they take the matter of mortgage fraud seriously and it clearly demonstrates the firm takes a proactive approach to dealing with combatting financial crime.
The service can also be beneficial in more serious circumstances. For example, a firm may have received a decline letter from a lender due to inconsistencies in an application and its supporting documents. In this situation, any inconsistencies that might be present on the file can be identified via the review and we can then subsequently assist the firm in dealing and communicating with the client and lender. This service can play a big part in helping firms appeal against any possible removal from a lender panel.
The importance of mortgage fraud awareness cannot be underestimated and, as we move into 2025, it is important senior managers ensure all relevant staff are alert at all times to the different ways in which their business could be used as a vehicle for mortgage fraud.
