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19 Sep 2012

Home Loan Application Fraud Up 23%

Home Loans No Comments

John Vaughan (Financial Advisor) @ Lucid Living

More people are lying about the state of their finances in an attempt to take out loans for homes which are beyond their reach, a study has found.
Some 39 in every 10,000 home loan applications were detected as fraudulent during the second quarter of this year, a 23% year-on-year increase, said Experian.

The rise in home loan fraud attempts coincides with a period when lenders have been tightening up their borrowing criteria, making it harder for borrowers to take out a home loan and triggering a drop in the proportion of home loan approvals.

James Jones, head of consumer affairs at Experian, said: “The increase certainly reflects the fact that many households are increasingly cash-strapped and resorting to ever more desperate measures.
“Nearly a quarter of home loan fraud is due to people inflating their incomes.”

Experian said the majority of attempted home loan frauds were due to people lying about their own circumstances. Just under a quarter of them were made by people trying to hide a bad credit history and one in five attempts were due to people giving misleading employment information.

The study also noted an increase in cases where people gave wrong information about the use of the property, such as saying they intended to live in it themselves when in reality they planned to rent it out.

Nick Mothershaw, from Experian, said: “Over the course of the last year, we have seen home loans continue to be targeted at a high rate, with more people trying to misrepresent their personal, employment and credit information on applications to get properties out of their reach.”

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