Fraud measures could damage housing market

A scheme tackling mortgage fraud – which cost the industry about £1bn last year – may slow applications in an already stagnant market, mortgage brokers have warned.

Lenders who "reasonably suspect" that mortgage fraud may be taking place will send details of the application to HM Revenue & Customs (HMRC), who will check income details against information provided in income tax and employment returns. HMRC will then advise lenders whether or not the details correspond.

According to CIFAS, the UK fraud prevention service, two prominent types of fraudulent mortgage activity came to the surface in the first half of this year. The concealment of adverse credit history, which could include not declaring debts or previous addresses with county court judgments associated with them, accounts for around 24 per cent of individual mortgage fraud recorded. However, altering proof of income, such as payslips or P60s, also accounts for around 24 per cent of reported fraud, up from 14 per cent in the last six months of 2010.

"People know enough about mortgage lending to realise that they need a certain income to borrow a certain amount," says CIFAS spokesman Richard Hurley.

"They are taking action they otherwise wouldn't have considered, but they aren't considering the ramifications. People don't see it as fraud, as akin to MPs manipulating their expenses. A mortgage application is a legal process concerning a large amount of money and a fraudulent application could certainly lead to a criminal record or a civil pursuit."

The Mortgage Verification Scheme comes at a time of acute stagnation in the mortgage market, and brokers worry that further bureaucracy could mean applications are slower to process.

"The fraud scheme is being introduced in response to some of the excesses in the market at the height of the lending boom," says Melanie Bien, director of mortgage broker Private Finance. "Mortgage fraud has been less of an issue since the downturn, as lenders have displayed more caution and the volume of lending has fallen.

"Lenders may welcome the opportunity to double-check an applicant's financial position but it could be an issue if this significantly slows down the application while the lender awaits a response."

A mortgage application currently takes around three to four weeks to process, including credit checks, valuation and references. Contract negotiation, surveys, exchange and the eventual fund transfer regularly makes the process 10 to 12 weeks long.

And that's when everything goes smoothly. If the new scheme becomes used widely then experts warn it will be vital that HMRC delivers information in good time to make sure that applications aren't delayed.

"The verification service will only be as good as the quality of the data and the matching process being up to scratch," warns David Hollingworth, of mortgage broker London & Country. "It could pose problems for borrowers if their data is not matched correctly.

"But if this service can be shown to be robust it could have some benefits and reduce the amount of documentation currently required."

Childcare costs squeeze households

Young families are giving up on financial security as the spiralling cost of childcare forces more parents to stop work to look after their children.

Despite a staggering 95 per cent of UK families worrying that they aren't protected against loss of income, many families are giving up the two-parent income as the cost of childcare reaches an average of £729 a month for a two-year-old, research from Aviva has found.

A typical working woman with two children could be out of pocket by £98 for part-time and gain just £120 a month in full-time work once childcare and work expenses are taken into account. The loss has prompted 32,000 more women to stay at home to care for children since the third quarter of 2010.

But the trend does nothing to help families who have little to fall back on if the main breadwinner's salary is lost. Just 10 per cent of families have an income protection insurance, and typical family savings are just £982, less than half the average monthly income, the insurer warns.

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
News
These photographs released by the University of Maryland Medical Center show images of full face transplant recipient 37-year-old Richard Lee Norris of Hillsville, Virginia
mediaGQ front page features man who underwent full face transplant
Arts and Entertainment
tv
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
PROMOTED VIDEO
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
football
News
The Swiss Re tower or 'Gherkin' was at one time the UK’s most expensive office when German bank IVG and private equity firm Evans Randall bought it
news
Sport
Moeen Ali wearing the 'Save Gaza' and 'Free Palestine' wristbands on his left arm
cricket
Arts and Entertainment
The Great British Bake Off 2014 contestants
tv
Life and Style
tech
Arts and Entertainment
filmThe Battle of the Five Armies trailer released
News
news
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
Extras
indybest
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
Life and Style
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    HR Business Partner (Maternity Cover 12 Months)

    £30000 - £34000 Per Annum 25 days holiday, Private healthcare: Clearwater Peop...

    Business Analyst - London - Banking - £400-£450

    £400 - £450 per day: Orgtel: Business Analyst - Credit Risk - Banking - London...

    Project Manager,Conduct Risk,London,£5-600pd

    £500 - £600 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Senior Fund Administrator - Edinburgh - £22 p/hr

    £20 - £22 per hour + competitive: Orgtel: Senior Fund Administrator, Top Four ...

    Day In a Page

    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    Countries that don’t survey their tigers risk losing them altogether

    Countries that don’t survey their tigers risk losing them

    Jonathon Porritt sounds the alarm
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz
    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on