Landlord wants our help to convince mortgage lenders he lives here

DVardysShadow

PayDay wrote: »

Silvercar is correct. It's fraud to obtain money by deception. Applying for a residential mortage instead of the buy to let mortgage that someone needs, is fraud.

We have the legal definition on the thread already in #22. It is the intent which matters. If the house is mortgaged perfectly correctly but under the wrong type of mortgage and paid back, where is the loss and how does it tie back to the legal definition we have already?

If someone told the truth, got a mortgage and paid it back this would not be fraud. If someone did exactly the same but for a single lie, would this be fraud? Certainly the lender would be no worse off.

As I have already said

Fraud [NOT =] 3(a)

The Fraud Act says

Fraud = 3(a) AND [3(b)(i) OR 3(b)(ii)]

BTLs have a higher interest rate than residential mortgages, the borrower has also cheated the mortgage lender out of money.

You might be getting somewhere with that, now try fitting it into the legal definition.

mynameisdave

The lender does not have to be worse off. They have to be exposed to a risk of loss. That they get all their money back is irrelevant to it qualifying as fraud.

If they cannot apply all the usual criteria (LTV, 125% rental income etc) to asses a BTL mortgage they have been exposed to risk

DVardysShadow

mynameisdave wrote: »

The lender does not have to be worse off. They have to be exposed to a risk of loss. That they get all their money back is irrelevant to it qualifying as fraud.

If they cannot apply all the usual criteria (LTV, 125% rental income etc) to asses a BTL mortgage they have been exposed to risk

But the point of the mortgage is that the loan is secured and hence the risk is actually very low - and mostly derives from overlending on overvalued properties, which is under the control of the banks. If the lending is sensible and based on truth apart from BTL being done on residential, the actual risk resulting from the porky is trivial.

silvercar

mynameisdave wrote: »

The lender does not have to be worse off. They have to be exposed to a risk of loss. That they get all their money back is irrelevant to it qualifying as fraud.

If they cannot apply all the usual criteria (LTV, 125% rental income etc) to asses a BTL mortgage they have been exposed to risk

Many lenders would give consent to let when the normal BTL criteria wouldn't be met, so your second paragraph doesn't necessarily apply. They are exposed to a higher risk, but accept that they have a duty in treating customers fairly to allow them every opportunity to put themselves in a position where they can maximise their chance of repaying their mortgage. Hence lenders are more likely to give consent to let when someone job sends them across country.

payday wrote:

silvercar wrote:

Do we know that the landlord never lived in the property before letting it out?

Doesn't make any difference as he still has to ask his mortgage lenders for their permission to let.

The difference is whether it is fraud (ie the landlord obtained the money by deception ie he lied on his mortgage application that he would be living in the property when he had no intention of doing so.) or whether, having perfectly legitimately obtained a mortgage he subsequently breached a condition of the mortgage by letting the property.

This latter case isn't fraud as the landlord told no lies to get the mortgage. He has now breached the terms and could face some action by the lender but the lender couldn't march him down to the police station.

AFAIK no lender has ever repossessed a property on the grounds that the borrower DID keep up with repayments.

dodger1

PasturesNew wrote: »

Conspiracy to defraud ... probably 18 months to 5 years.

GBH about the same with our weak politicians.

kunekune

Payday, you're out of date, sorry, obtaining by deception is no longer on the statute books. And Fraud is NOT the same offence as obtaining by deception. There is no requirement that there is any loss. PN, common law conspiracy to defraud does still exist, alongside the statutory fraud offence, but I think it would be difficult to prove because it needs an agreement to do the fraud, and here, the tenants would at most be agreeing to do something that facilitated someone else's fraud. Their liability would have to be for aiding/abetting. But that is quite plausible, because the LL almost certainly falls under the Fraud Act offence.

If we're being pedantic, I'll quote paragraph (a) again:

"(b)intends, by making the representation—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss."

What matters is that the LL intends to make a gain, ie, pay less for his mortgage. If he has that intent, he does not have to intend to cause the bank a loss or expose them to a risk of loss. This is a bizarre offence in many ways, since it has a minimal act requirement, and what many people might see as an attempted fraud is in fact the complete offence. It may be that with no loss the CPS might choose not to bring charges, but that doesn't mean it is not criminal.

DVardysShadow is trying to construct an explanation in which there is no fraud, but it is hard to contemplate such an explanation, because if he didn't think he was getting something out of it why would he do it?

PayDay

kunekune wrote: »

Payday, you're out of date, sorry, obtaining by deception is no longer on the statute books.

I googled mortgage fraud deception and came up with lot of hits.

This person got 2 years in prison for obtaining property by deception.

"sentenced to a total of four years and nine months in prison, made up of two years three months for perverting the course of justice, two years for obtaining property by deception and six months for contempt of court. The sentences are to run consecutively."

"Hertfordshire Constabulary is now looking to seize the properties under the Proceeds of Crime Act (2002). "

http://lcjb.cjsonline.gov.uk/Hertfordshire/2934.html

What would he have been charged with to end up in prison for deception?

silvercar

But that case was someone obtaining 3 letting companies, 15 properties and £1.6m; hardly the same as this case.

ILW

DVardysShadow wrote: »

I find it hard to categorise that as fraud.

To me, fraud is where a lender is deceived into handing over money which is not paid back. In the cases we are talking about, there is deceit of the lender, in that the loan is used in a way which the lender was not told about. But I don't think that the lender is necessarily deprived of the money - although I do note that there is a suspicion of arrears.

The lender is being deprived of money as they normally charge a higher rate on a rental mortgage. Therefore fraud is being commited and he is asking the OP to aid and abet.

pinkshoes

UkBilly, there are two ways you can tackle this:

1. Play the LLs game, but try and gain from it i.e. tell him he can have a utility bill in his name, but only if HE pays the bill.

2. Have nothing to do with this. This also means that any letters with HIS name on should have "NOT AT THIS ADDRESS, RETURN TO SENDER" written on them, then put back in the post, and NOT forwarded to him. He can't write clauses like this in your contract!!