Loan Arrears And Mortgage Fraud Go Together
We have reported recently on the increase in the level of fraud which is being committed on home owner loan and mortgage applications, as potential borrowers either exaggerate their level of earnings, or fail to mention commitments such as other personal loan repayments and credit cards.
With lending criteria becoming much tighter and people becoming more desperate to obtain the loan they require, the level of fraudulent loan applications has increased by around 2 per cent in the first half of this year alone, which has taken the total amount of fraud committed in the UK above the £1 billion mark for the first time ever.
Not surprisingly, those individuals who have told lies in order to get a loan approved in the past are now the most likely to face loan arrears, defaults and repossessions, as they can no longer afford to keep up with their loan repayments.
New research conducted by CoreLogic Solutions, has found that around two thirds of all borrowers who have defaulted on their home owner loan and now face repossession, gave false information at the application stage of the loan.
This amount of fraud is currently costing banks and building societies millions of pounds every year and the losses incurred by lenders have increased four fold over the course of this year alone.
It is estimated that out of all the repossession cases recorded so far this year, somewhere in the region of 6,500 will have had some false information somewhere in the application.
Beverley Houlbrook of CoreLogic Solutions commented on the figures, she said “Although consumers are committing mortgage fraud while telling what they believe to be harmless white lies, this fact seems to be regularly overlooked by applicants and although lenders check income and affordability, cases are still slipping through the net.”
