Credit Industry Fraud Avoidance System (CIFAS) – the fraud prevention service reported that mortgage brokers had introduced 69 percent of all fraud cases in 2010.
Presenting its latest report, CIFAS said the finding is not surprising since most brokers carry out their operations over long distances, making it difficult to identify fraudulent applications.
Nonetheless, some brokers have also indulged in fraudulent activities such as overstating client’s income to ensure mortgage approval by lenders. The economic downturn made situations worse as brokers struggled to keep afloat.
Total frauds detected in 2010 were reported at 3,542, an 18% jump from 3,004 cases reported in 2009. CIFAS said that jump in number of application frauds drove the hike in mortgage frauds. Application frauds zoomed by 27% to 3,391 in 2010 from 2,677 recorded in 2009.
Application frauds now amounted to 96 percent of all mortgage frauds, the not-for-profit organisation revealed.
Other common fraud detected was giving false employment details in mortgage applications, 8 percent in 2010 compared to 5 percent in 2009. However, the most common form of application fraud was attempt to hide low credit scores linked to an undisclosed address, 43 percent of total applications in 2010 compared to 30 percent in 2009. Another 23 percent of application frauds did not disclose adverse credit history at all.