Guidance for police on tackling mortgage fraud

A restricted ACPO Intelligence report has been sent to the financial industry and police forces highlighting the nature of mortgage fraud. The report, which follows an increase in reported mortgage fraud during 2007, aims to raise awareness of the problem and provide guidance on how to investigate and tackle it.

The report is based on evidence taken from, amongst others, 47 police forces, 45 mortgage providers, the Serious Organised Crime Agency, Serious Fraud Office and the Financial Services Authority, and highlights the following conclusions:

?There is currently a low risk of detection and high profit opportunities in mortgage fraud.

?It generates significant income for organised crime groups.

?Property sales can be used to launder the proceeds of other crime, including drug supply, human trafficking and prostitution.

?Mortgage fraud has implications for society in the form of a transfer of asset wealth from the legitimate to the criminal sector.

The report gives examples of the various forms that organised mortgage fraud takes:

?Overvaluation of ‘new build’ residential properties.

?False valuations by corrupt surveyors which result in higher loans to asset ratio and quick illegal profit.

?Bogus applications predated on false identity documents.

?Applications supported by false income documentation.

?Conveyancing professionals assisting organised criminal groups to secure mortgages illegally.

?Commercial property values being significantly inflated by the use of fraudulent lease contracts.

As part of its guidance on how to identify and investigate organised mortgage fraud, the report identifies key features of mortgage fraud:

?It is concentrated in pockets around the UK, with London being the main areas (46 per cent of cases).

?It is generally committed by men in their mid to late 30s from a range of social backgrounds.

?Organised crime groups associated with mortgage fraud are often grouped along ethnic lines depending on their geographical location.

Key recommendations for tackling the problem of mortgage fraud made in the report include:

?Organised mortgage fraud should be considered as a higher priority within future Home Office Policing Plans.

?Effective intelligence led initiatives by governing/regulatory bodies, mortgage providers and law enforcement are needed to reduce the threat of organised mortgage fraud.

?Nationally agreed measurement indicators need to be developed to assess the value and volume of mortgage fraud crime.

?The establishment of an automated, online, system of checking all mortgage applications against official records including passports, driving licences, National Insurance numbers, declared income and benefits data.

?The creation of a multi-agency Mortgage Fraud Bureau to analyse trends and supported targeted investigation.

?The creation of a National Mortgage Fraud Intelligence Database under the control of a single law enforcement agency.

?Provide regular updates to the mortgage industry and law enforcement agencies regarding current typologies, fraud indicators, geographic ‘hotspots’ and information on organised mortgage fraudsters.

?Clear and direct action to be taken by governing/regulatory bodies against property professionals involved in mortgage fraud.

?Mortgage industry to produce best practice guidance for lenders regarding the identification and prevention of organised mortgage fraud.

?Consideration by the Financial Services Authority of central registration and regulation of individual mortgage intermediaries.

?Advice leaflets for customers regarding the mortgage process, helping them to understand the market and recognise warning signs of fraud.