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.

News
news
Arts and Entertainment
tvPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
News
Katie Hopkins makes a living out of courting controversy
people
Finacial products from our partners
Property search
  • Get to the point
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

    Guru Careers: Pricing Analyst

    £30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

    £21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

    Ashdown Group: Head of Client Services - City of London, Old Street

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

    Why Mohammed Emwazi chose Isis

    His friends were betrayed and killed by al-Shabaab
    'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

    Open letter to David Cameron

    Building the walls of fortress Europe has had deadly results
    Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

    You don't say!

    Tory candidates' election tweets not as 'spontaneous' as they appear
    Mubi: Netflix for people who want to stop just watching trash

    So what is Mubi?

    Netflix for people who want to stop just watching trash all the time
    The impossible job: how to follow Kevin Spacey?

    The hardest job in theatre?

    How to follow Kevin Spacey
    Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

    Armenian genocide and the 'good Turks'

    To continue to deny the truth of this mass human cruelty is close to a criminal lie
    Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

    'Lou needed care, but what he got was ECT'

    The truth about the singer's upbringing beyond
    Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

    This human tragedy has been brewing for years

    EU states can't say they were not warned
    Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

    Women's sportswear

    From tackling a marathon to a jog in the park, the right kit can help
    Hillary Clinton's outfits will be as important as her policies in her presidential bid

    Clinton's clothes

    Like it or not, her outfits will be as important as her policies
    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders