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Massive fraud at building society
Really2
Posts: 12,397 Forumite
http://news.bbc.co.uk/1/hi/business/8213504.stm
Thought I would get in first to stop someone getting a few free thanks
The Chelsea building society has revealed it has lost £41m as a result of mortgage frauds by some of its buy-to-let borrowers.
The frauds are the main reason for the society staying in the red, with overall losses of £26m in the first half of the year.
Last year, the Chelsea lost £39m, the largest annual loss yet recorded by any building society
But on the other side of things if you lose £41m on fraud perhaps that tells you that you have not been checking people.
I always think this kind of loss is compleatly avoidable (To a point a bit of fraud will always happen).
Yes the people have lied, but if it is your money you are lending you should make sure in every possible way you will be repaid, not just take the applicants word.
Thought I would get in first to stop someone getting a few free thanks
The Chelsea building society has revealed it has lost £41m as a result of mortgage frauds by some of its buy-to-let borrowers.
The frauds are the main reason for the society staying in the red, with overall losses of £26m in the first half of the year.
Last year, the Chelsea lost £39m, the largest annual loss yet recorded by any building society
But on the other side of things if you lose £41m on fraud perhaps that tells you that you have not been checking people.
I always think this kind of loss is compleatly avoidable (To a point a bit of fraud will always happen).
Yes the people have lied, but if it is your money you are lending you should make sure in every possible way you will be repaid, not just take the applicants word.
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Comments
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Do they not do they own valuation surveys when lending out mortgages?It said the frauds were mainly due to "the artificial inflation of property values by third party professionals involved in the transactions".0 -
No - they assume that house prices only ever go up - look at the overall repayment they'll get from the borrower and rub their greedy clammy hands together cackling with glee.0
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mr_fishbulb wrote: »Do they not do they own valuation surveys when lending out mortgages?
You would have thought they instigated the valuations at least.
It's another "lax lending" story where a Building society does not seem to realize that perhaps they were actually not doing everything they could do to make sure they were ripped off.0 -
This has been going on for years and years, lenders don't care who they lend to providing they are getting something in return.
From my experience, if clients are giving them lots of business (thus lots of money) they turn a blind eye....
Doesn't work with your average Joe with a few CCJs though
So this time they got stung, but there will be much more than 41million made out of all this...:cool:0 -
Thanked you. :rolleyes:
This was fraud. There's a few properties involved in this.
Has ceased its BTL lending totally.Impairment on loans and advances
The impairment on loans and advances of £53 million (6 months to 30 June 2008 £4million) is a result of:
• £41 million mortgage fraud
• mortgage arrears
• decreased property values as a result of the current UK economic environment
Mortgage fraud - Chelsea has identified that there are cases within its buy to let mortgage book where fraud has occurred. This relates primarily to lending during the period 2006 to 2008 and is mainly as a result of the artificial inflation of property values by third party professionals involved in the transactions. External consultants have completed a review of the entire mortgage book for suspected or proven fraud and the results of that review have been incorporated into the half year results resulting in a charge of £41million.
The Group ceased new buy to let lending (other than pipeline business previously committed) in the last quarter of 2008. Apart from a small confirmed recovery, the half year results exclude third party recoveries which the Society is pursuing vigorously.
Mortgage arrears - In line with the market we have seen rising levels of arrears on mortgages due primarily to the worsening UK unemployment situation; although there is indication from July 2009 data that the number of mortgage accounts in arrears is levelling off. The existing commercial book has performed well with no cases in arrears to date.
Chelsea BS release to the Stock Exchange below.
http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=101609120 -
mr_fishbulb wrote: »Do they not do they own valuation surveys when lending out mortgages?
The FSA has reported (in May). That there has been been fraud, without being specific as to which lenders, as a result of the collusion between developers, agents, mortgage brokers and valuers.
I doubt if Chelsea BS are the only lender to have been scammed.
Bigger lenders will keep quiet and absorb the losses.0 -
Thrugelmir wrote: »Thanked you. :rolleyes:
No need to thank me. It is a story in the news and put it on here.
But not being a bear I am sorry if I stopped someone getting lots of thanks.
(so no need for the :rolleyes: unless you wanted the thanks:))0 -
Mortgage fraud is a lot rifer (is that a word?) than most are aware of. Go onto the FSA website, there is a new news story every week where they've struck off a broker or 2, fined directors, banned people from practising etc.
I think on the mortgage board there is a poster who starts a thread each time there is a new one...It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
ruggedtoast wrote: »No - they assume that house prices only ever go up - look at the overall repayment they'll get from the borrower and rub their greedy clammy hands together cackling with glee.
not quite as simple as that, actually thinking about it.......0 -
ruggedtoast wrote: »No - they assume that house prices only ever go up - look at the overall repayment they'll get from the borrower and rub their greedy clammy hands together cackling with glee.
House prices aren't of any interest to lenders, other than being used as security for the loan.0
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