Mortgages attract most fraud

Mortgages attracted more fraudulent applications than any financial product last year, according to research that suggested the tightening of lending criteria was a factor driving the fabrication of home loan details.

The annual fraud report by information services company Experian also found that third-party fraud or fraud involving identity theft was on the rise. It accounted for more than half of all detected cases in 2014, a reversal of the situation after the recession hit, when first-party fraud became more prevalent.


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Nick Mothershaw, a director at Experian, said lenders were making strides in the fight against fraud. “But as more consumers access and apply for financial products across multiple channels, including online and mobile, fraud has also evolved accordingly.”

The largest annual fraud rise among financial products was for current account applications, with 79 detected frauds per 10,000 cases versus 64 in 2013. The proportion perpetrated through identity theft shot up by 20 percentage points to 47 per cent of current account fraud.

Getting a current account in someone else’s name does not bring immediate financial rewards for the perpetrator. Such “Trojan horse” applications are typically used to gain access to a string of loan or financing deals within a bank.

But mortgage fraud remains the commonest type of fraud, with 84 cases per 10,000 in 2014, though down from 87 in 2013. It is seldom associated with identity theft but, as Mr Mothershaw said, “most of it is individuals bending the truth to try and get a mortgage they’re not entitled to”.

New rules on affordability introduced last year have made it harder for certain types of borrower, notably self-employed individuals, to get a mortgage. Mr Mothershaw said there had been a rise in the number of false mortgage claims by the self-employed.

“It doesn’t mean they’re not going to pay for the mortgage but they’re making out that they are an employee of a business rather than a self-employed sole trader.”

The number of fraudulent loan applications picked up in 2014 was more than double the number detected in the previous year. Identity theft was involved in 73 per cent of these cases — up from 63 per cent in 2013.

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