Mortgage fraud emerges as a serious issue when interest rates rise, house prices fall and borrowers can no longer meet their commitments. Only at this point do lenders and watchdogs question why many loans were granted in the first place.

Furthermore, when finance is tight, the pressure on homebuyers and brokers alike to falsify personal information increases.

Sarah Robson, a spokeswoman for the Council of Mortgage Lenders, said: “Certainly the conditions for growing fraud are there. When the interest rates increase and prices fall, fraud tends to show up. The temptation to commit fraud increases.”

Abuses in the mortgage market can range from innocent borrowers being poorly or misleadingly advised, through to being actively encouraged to falsify their earnings.

Further up the food chain surveyors and solicitors can become involved in corrupt activity, with organised gangsters controlling the serious fraud.

A spokesman for the FSA said: “Mortgage fraud is serious and people have to understand that it is a crime and they can go to jail.

“Individual borrowers can be guilty as well as professionals. For example, we are seeing cases where a property might have been worth say £200,000, but surveyors, solicitors and a broker colluded to raise a mortgage of £300,000. Maybe the borrower makes a few mortgage repayments, but then he disappears with nearly £100,000 in his pocket. If you repeat this pattern enough times, and quickly enough to avoid being caught, you can make a small fortune. It’s a scam.”

Since the arrival of the internet it has become easier to get hold of false documents such as wage slips, birth certificates and driving licences.

One website, www.confidentialaccess.com, even claims that providing false documents is not illegal, alleging “United Kingdom laws are complicated” over the issue.

It says it is not a criminal offence to create a sham so long as you do not intend to deceive or permanently deprive someone of money using it.

It does, however, admit that it is a criminal offence to use fraudulent documents to permanently obtain money fraudulently and asks users to refrain from using the site to do so.

Nevertheless, its catalogue of satisfied customers include testimonials along the lines of that from a Mr Snelling of Basingstoke, who says: “Perfect in every way, as good as my own. I can just pretend I earn a little extra now.” And Mr Harper of Welling: “My man accepted them, now I’m driving my new car which I pay for legally each month.”

Mortgage broker Ray Boulger of Charcol said: “The ease with which people can obtain fraudulent documentation is becoming a headache for lenders. Some admit the quality is so good that they can’t tell a fake from the genuine article.”

The police and FSA, though, are taking a stringent line. The City watchdog has banned 17 brokers for fraud and other offences this year as well as handing out fines of nearly £300,000, although some firms had their fines cut by co-operating with the investigations.

On Wednesday PMSG Insurance Services, in Darlington, was fined £35,000 and its compliance officer, Irene Hall, was banned from the business after borrowers were given disastrous advice, such as encouraging them to remortgage when they were still subject to early redemption penalties.

The police are taking an even tougher line, as can be seen by a recent spate of court cases which ended in jail sentences.

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• Three con artists were jailed after using property as security to raise multiple fraudulent loans worth more than £1m and then laundering the money into gold bullion. Shazad Hussain Aslam received a five-year sentence and Mohammed Urfan Al-Haq and Sandeep Kaur each received four years after being found guilty of conspiracy to defraud.



• An IFA, Gordon Benville, who stole more than £440,000 through fraudulent money transfers, was jailed for three and a half years. Police were alerted when he asked customers to sign incomplete mortgage applications, allowing him to submit them to lenders for higher amounts than the clients required. He pocketed the difference.



• Mortgage broker Surjit Kaul was jailed for 30 months after supplying clients with false details of employment and assets to secure them mortgages. Kaul, owner of Mortgage Plus, in Southall, London, was involved with a gang of identity fraudsters who acquired seven properties in London worth a total of £2.2m through Mortgage Plus using false payslips and bank statements.



The FSA is now determined to crack down on any mortgage abuses by targeting small broker firms with higher than usual default rates, and also studying property developers closely for any signs of fraudulent valuations.

An FSA spokeswoman said: “We will be visiting 200 mortgage brokers as part of this crackdown. Abuses will not be tolerated. We are simply banning anyone we find behaving inappropriately. There are no second chances.

“We will also be working closely with new-build firms, where mortgage fraud can be rife.”

Offenders named and shamed

July 23 – fined and banned: PMSG Insurance Services Ltd fined £35,000 and approval for its compliance officer withdrawn for failing to ensure advice given to customers was suitable.

• July 16 – banned: Derick Whewall and Alan Hewitt, partners of The Mortgage Exchange, Wakefield, banned for incompetence and suspicion of false and fraudulent applications.

• July 15 – fined and banned: Mortgage Master (Glasgow) Ltd fined £11,900 for failing to adequately supervise Ian Sanderson, resulting in applications containing false and misleading information being submitted to lenders. The firm co-operated fully with the FSA, qualifying for a 30% penalty reduction.

• July 9 – fined and banned: North-east-based mortgage broker Robin Knox, managing director of Mortgage and Property Services, fined £17,500 and banned for poor advice.

• July 7 – fined and banned: Sadia Nasir, of London Mortgage and Financial Services, fined £129,000 for involvement in numerous fraudulent mortgage applications.

• June 13 – banned: Muhammad Adnan Ashraf, of OCS Property and Financial Services, of Barking, London, for issuing false applications in his own name supported by false documentation.

• June 13 – banned: Muhammad Asnim Iqbal, of OCS Property and Financial Services, for submitting fraudulent information in support of mortgage applications.

• June 13 – banned: Mohammed Atif Mayo, of Mac & Mayo Property Services of Forest Gate, London, for fraudulent applications including false pay slips.

• June 10 – fined: Andrew Jeffreys, of Chepstow Financial Services, fined £10,500 for relying too heavily on customers’ declarations that they could afford mortgages. A £15,000 fine was reduced by 30% for settling early.

• May 28 – banned: Erinma Didi Jordan, of Trekfree Associates Ltd, of Peckham, London, for lack of honesty.

• May 23 – banned: Rafin Adisa Akanbi, of Greenwich, London, for lacking honesty and integrity.

• May 22 – fined: Mohammad Rana, registered as Countrywide Management Consultancy and trading as Property Compass (Countrywide), fined £14,700 for supervision failures (reduced from £21,000 for co-operation).

• May 22 – fined: Peter Scott, trading as the Mortgage House (Peter Scott), fined £11,900 for advisory failings (reduced from £17,000 for co-operation).

• May 22 – fined: Chariot Mortgage Services fined £10,500 for giving misleading information (reduced from £15,000 for co-operation).

• May 22 – banned: Gerard McStravick, of Fast Track Mortgage and Finance Consultants, Belfast, for lack of honesty.

• May 21 – banned: Byron Brown, of Millbank Mortgages of Lewisham, London, for falsifying customer information.

• May 2 – banned: Isah Mohammed, of Initial Financial Services Ltd, Old Kent Road, London, for submitting false information and false applications.

• April 21 – banned: John Keay, of Jack Keay Mortgage Services, Canary Wharf, London, for lack of competence, capability and compliance.

• March 5 – banned: Andrew Talai Kiplimo, of Ilford, London, for false mortgage applications.

• February 14 – banned: Amjab Ali Malik, of York Financial, Ilford, London, for making false applications.

• February 14 – banned: Tahir Mahmood, of York Financial, Ilford, London, for making false applications.

Brokers hit back at criticism

Brokers have rushed to defend themselves against the Which? criticism that only four out of 50 advisers gave good advice.

Researchers visited 50 offices in Scotland and England posing as first-time buyers.

Which? alleged that out of the 50, 41 didn’t volunteer all relevant information, 31 didn’t adequately check earnings and outgoings, and half didn’t discuss the pros and cons of interest rates, fees or the mortgage term.

However, brokers said most of the offices visited were bank branches, and independent brokers came out on top.

Charcol’s Ray Boulger added: “They only visited 50 offices. That hardly constitutes a valid statistical survey.”