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The Land Registry has revealed that it has paid out almost £4 million in compensation to defrauded homeowners and mortgage lenders this year, twice the amount it paid out the year before for mortgage fraud.
It is estimated that the UK’s banks and building societies could be carrying up to £17bn worth of fraudulent mortgages on their books.
Paul Doxey, a forensic accountant at Navigant Consulting, told Channel 4 News: "There's been a complete explosion in mortgage fraud.
"There is probably over £7bn worth of fraudulent mortgages sitting on lenders' books. It could be much higher than that - as high as £17bn."
He went on to estimate between 30,000 and 60,000 properties in the UK could have been bought with fraudulent mortgages.
Property fraud is usually carried out by criminals obtaining false ID papers of a homeowner and then going to the Land Registry to transfer ownership to a new name.
Under the new name they obtain a mortgage and then disappear with the cash, leaving the owner facing repossession.
A spokesperson for the British Bankers Association said: "This is something we remain concerned about. "In a market downturn the risk of fraudulent activities always increases, especially given the big gains seen recently in the property market."
Earlier this year the BBA raised the problem with the Financial Services Authority to investigate.
The truth about house prices
We are constantly bombarded with, often conflicting, information regarding house prices. Paula John provides a round-up of the major indices, explaining why they differ.
The July/Aug issue of Your Mortgage is on sale now. In it we explain who now owns which UK banks and building societies; the ins and outs of interest-only mortgages, who they are appropriate for and the options for paying them off; we explain how offset mortgages work and how you could use one to make the most of your money, and why buying property overseas right now could be a smart move – if you look in the right place and arrange the right finance. Get your copy for the latest news, information and help.
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