Buy to Let fraudsters target yet another financial institution.

ad44downey

I doubt if there's an honest man involved in the sleazy buy to let trade.


Society admits £41m internal fraud. The loss-making fraud, connected to lending between 2006 and 2008, was caused by 'artificial inflation of property values by third-party professionals'The sign outside the Chelsea Building Society. The £41m fraud pushed the firm into the red for the first half. Chelsea Building Society today admitted that it had uncovered a £41m fraud within its buy-to-let mortgage book, which pushed the firm into the red in the first half.The fraud relates mainly to lending between 2006 and 2008 and is a result of the "artificial inflation of property values by third-party professionals involved in the transactions said Britain's fifth largest building society.It was discovered following a review by external consultants of the entire mortgage book. Chelsea said it was trying vigorously to recoup the money lost and had already made a small recovery; which is included in its half-year results, published this morning.The resulting charge of £41m pushed the building society to a first-half loss of £26m, compared with a profit of £23m last year. The fraud losses increased Chelsea's total impairment charge to £53m from £4m last year, as it also wrote down other loans.The building society, which dates back to 1875, abandoned buy-to-let lending at the end of last year.Stuart Bernau, the new chairman, said that the Society has been through a difficult period and reporting a loss in the first half of the year is disappointing. However the underlying performance is strong even though we have had to make provision for impairment and fraud losses."Our mortgage lending is now fully covered by our retail deposits and this has significantly reduced our reliance on wholesale markets he added.The building society's new lending of £242m is now focused on low-risk customers. Savings accounts rose by 38,000 to more than 606,000 in the first half while savings balances climbed by £498m to £1bn.

http://www.guardian.co.uk/business/2009/aug/21/chelsea-41m-mortgage-fraud

Really2

Or here over 1 hour ago.

http://forums.moneysavingexpert.com/showthread.html?t=1895683

michaels

Bet if the market hadn't soured no one would have called it 'fraud'!

nearlynew

Rising prices and the feel-good factor they produce masks the unsavoury practices and everyone turns a blind eye.

Only when things go bad does the spotlight shine on those who were up to no good. Then they become scapegoats.

Happens every time. Think Bernie Madoff.

mynameisdave

Bernie Madoff wasn't a scapegoat....

nearlynew

mynameisdave wrote: »

Bernie Madoff wasn't a scapegoat....

No?

Tell us more.

baby_boomer

Why pick on Chelsea?

They'll have tested the market to find an institution whose directors were gullible, self-interested and careless of their responsibilities; a building society which had long ago forgotten its roots - the HQ is in Cheltenham, not Chelsea and the directors have a long record of filling their boots - fitted the criteria perfectly.

pete80

baby_boomer wrote: »

Why pick on Chelsea?

They'll have tested the market to find an institution whose directors were gullible, self-interested and careless of their responsibilities; a building society which had long ago forgotten its roots - the HQ is in Cheltenham, not Chelsea and the directors have a long record of filling their boots - fitted the criteria perfectly.

Too true baby boomer but there were lots of lenders at it, Chelsea, Birmingham Midshires, Bradfraud & Bingley, A & L, Mortgage Express, Paragon and the list goes on.

I started investIng in BTL (then for the long term) in 1999. By the time (2003/04) all the herdsters paid thousands for seminars at "hotels" (which they could have got for £25 with a good book) the BTL mortgages were being made too easy to obtain by the lenders.

I lived right opposite a mortgage lenders dingy office over a shop and he was offering deals with rigged valuations for those who had insufficient or no deposit. The fiddling *astard even introduced me to his surveyor who said he had converted flats ready to go and would take care of all conveyancing fees. All wrapped up nicely in a bright looking package for the eager new landlords to fall for.

He was even hassling me to take on more debt even though I already had £880,000 borrowed but I didn't want to leverage up any more and was looking to pull out because of the huge growth in my portfolio.

The lenders were fully aware of all this going on, same as in the USA but just wanted to make more money off the mortgages without even considering that a downturn would arrive. I have no sympathy for Chelsea and their like, they dealt the cash - they lost their stash.....:rotfl:

mynameisdave

nearlynew wrote: »

No?

Tell us more.

Because he was a crook responsible for his own actions. He is not taking the fall for others. That more guilty parties have not been prosecuted is irrelevant. The fact that the authorities failed to stop him earlier is also irrelevant.

What definition of scapegoat are you using?

mewbie_2

mynameisdave

It probably isn't.