High End Property Prices Kept Up By Mortgage Fraud

At the weekend I heard a report on Radio 4 that the National Crime Agency (NCA) had reported that property prices on more expensive homes was being kept artificially high as a result of mortgage fraud involving overseas firms and individuals. Unfortunately since then  I haven't been able to find anything on the web to support this. However it does raise an important point in the mortgage brokers exposure to financial crime. Mortgage fraud covers the whole range of the mortgage market from impoverished-looking first time buyers through to the high net worth client.

For those firms who deal with high net worth clients ( and I don't mean high net with by MCOB definitions, I simply mean clients who are better heeled than most) there is an additional level of vigilance required.

Often the high net worth client can have a bewildering collection of  income sources and income types as well as a complex array of assets. Even if the facts as presented to you are genuine, you will need to pick your way carefully through them to identify what is good income that is acceptable to the lender and what is not acceptable. Even more reason therefore to be on the alert for potentially fraudulent income.

Another important factor to consider and guard against is the source of funds that are going into the purchase. Many high net worth mortgages will be lower loan to value and this means that large tranches of money will be  put down by the client. Where has it come from? The lender is certainly going to want to know  (and if they don't, they should). Even if they don't want to know, you should. If you process a fraudulent transaction you could be  prosecuted.

The issue doesn't only apply to  purchases. Re-mortgages, especially where there is capital raising could be  seen as an opportunity to get funds back out of the property. Such funds may have been invested there several years ago when their was less  focus on financial crime by brokers, lenders and regulators. Just recall for a moment the amount of checks you carried out against financial crime and source of funds back in say 2005?

What do you do if you spot or suspect something? If you do nothing else SAR it.