Sub-letting fraud on the increase
The greatest increase in UK mortgage fraud is among borrowers renting out their homes to tenants when the terms and conditions of their mortgage contracts expressly forbid this, according to data experts Experian.
According to UK fraud prevention service CIFAS, official figures showed also a 41% rise in residential borrowers caught renting out homes in 2012.
CIFAS said increasing numbers of borrowers were trying to take advantage of the rising rental market but warned this exposes lenders to financial risk.
In July this year, buy-to-let lender Precise Mortgages warned borrowers attempting to dodge lender’s strict post-2008 income requirements by mis-representing themselves as landlords were acting fraudulently.
Mortgages account for the highest number of fraudulent applications across all financial services, according to credit rating agency Experian, however, mortgage fraud overall has fallen.
In H1 2013, 31 in every 10,000 mortgage applications were uncovered as fraudulent against 37 in 2012.
While attempts at hiding adverse credit was still the most common type of fraudulent behaviour, the misuse of mortgaged property and hidden buy-to-let were two of the areas to see a biggest rise compared to the previous year, said Experian.