Questions from student about mortgage and also fraud

Blade35

Hi,

I am currently studying mortgages at school as part of my business studies course. I have asked my parents some basic questions on mortgages (as they have the experience of taking a mortgage out), but as I want to get really accurate info and not out-of-date info when the applied, I have posted the following questions. Part of this research includes mortgage fraud, so I have posted questions on this too:

1) What is a self-prime mortgage?

2) Is it not possible to have two parties involved in a mortgage - one takes out a loan, the other pays the remainded of a mortgage? Is this exactly what a joint mortgage is? For people who are FTBs, isn't this ideal?

3) Related to the above, if your parents help you to buy a house by providing the deposit (which they have to repay) but they pass away, does this put the house at risk?

4) What does "remortgage house" mean? Does this mean to change the terms (Eg monthly repayments) because I have heard this phrase mentioned when someone has won a substantial amount of cash on who wants to be a millionaire, for example.

Mortgage fraud questions:

1) Is the relationship between banks and the authorities such that the banks report cases of fraudelent mortgages to the authorities (FSA or whoever else), or do the authorities do anything like random spot checks?

2) Surely checking the details of a suspect's NI number will reveal the truth (eg whether the job they put is real).

3) A lot of research states that for one time cases of this offence by lenders/borrowers, it is very unlikely to be caught. Is this in any way true~? If so, this seems to be a little like piracy of software.

4) If the borrower fraudelently takes out a mortgage but someone else takes out a loan (For the deposit), is the person who takes out the loan for the deposit implicated too?

5) My reckoning is this offence is quite common. I know that when insurers ask about circumstances (or me and applying to UCAS), there are question about my circumstances which I almost didn't bother to check so I could have easily made a fraudulent application.


Thanks

zppp

I will deal with your mortgage fraud questions;

Blade35 wrote: »

1) Is the relationship between banks and the authorities such that the banks report cases of fraudelent mortgages to the authorities (FSA or whoever else), or do the authorities do anything like random spot checks?

The FSA regulates mortgages, and has a statutory objective under FSMA 2000 (s.1) to prevent fraud. If a financial organisation suspects mortgage fraud, they will submit a suspicious activity report to SOCA (Serious Organised Crime Agency).

Blade35 wrote: »

2) Surely checking the details of a suspect's NI number will reveal the truth (eg whether the job they put is real).

This is something which SOCA can look at as an executive government agency. Banks can't actively take an NI number and check that somebod is telling the truth on an application. They will use credit scoring and other methods to investigate this.

Blade35 wrote: »

3) A lot of research states that for one time cases of this offence by lenders/borrowers, it is very unlikely to be caught. Is this in any way true~? If so, this seems to be a little like piracy of software.

The law in the UK is quite restrictive in that very few prosecutions are brought forward for fraud. Mortgage fraud is not yet fully surfaced, but is something that terrorists have been known to exploit.

Blade35 wrote: »

4) If the borrower fraudelently takes out a mortgage but someone else takes out a loan (For the deposit), is the person who takes out the loan for the deposit implicated too?

It depends if it is a joint mortgage and the intentions of the person handing money over. To prove this both the actus reus and mens rea would have to be proven. The actus reus is the action of handing the money over. The mens rea is the intent. Thus you would have to prove intention to defraud.

Blade35 wrote: »

5) My reckoning is this offence is quite common. I know that when insurers ask about circumstances (or me and applying to UCAS), there are question about my circumstances which I almost didn't bother to check so I could have easily made a fraudulent application.

It is only fraud if you intend to defraud somebody. If you make a slight omission on an application, this is different to purposely self declaring you earn £120,000 when you earn £10,000.

Annisele

I might be a bit less testy over this if I wasn't suffering a bout of insomnia, but "research" generally means a bit more than "post some questions on a forum somewhere and hope somebody else does my homework for me".

Google should be able to answer most of your questions - if you have trouble with something specific, ask then, and let us know what you've done to try to find the answer yourself.

Regarding your first question, are you sure you don't mean "sub-prime"?

Your second and third questions don't make sense to me (although that might be because it's silly-o'clock). What does it mean for one person to take out a loan and the other to pay the remainder of the mortgage? A mortgage is a loan.

You should be able to find the answer to several of your questions on the FSA's Money Made Clear website.

FraudBuster

Some reading:

Lie-to-Buy Mortgage Brokers & the FSA.

https://forums.moneysavingexpert.com/discussion/965771

zppp

Hope those answers were OK for you

Peter_L

Annisele wrote: »

I might be a bit less testy over this if I wasn't suffering a bout of insomnia, but "research" generally means a bit more than "post some questions on a forum somewhere and hope somebody else does my homework for me".

Google should be able to answer most of your questions - if you have trouble with something specific, ask then, and let us know what you've done to try to find the answer yourself.

Regarding your first question, are you sure you don't mean "sub-prime"?

Your second and third questions don't make sense to me (although that might be because it's silly-o'clock). What does it mean for one person to take out a loan and the other to pay the remainder of the mortgage? A mortgage is a loan.

You should be able to find the answer to several of your questions on the FSA's Money Made Clear website.

Think that the original poster was quite enterprising to post on here - after all to find this forum required some 'researching' and is perfectly acceptable and in fact counts towards 'primary research' as opposed to just 'googling' as ALL students just do ! which is just secondary research - not sure why they were asking about mortgages and fraud though as I do not know of any exam board which has a unit that deals with these issues at both GCSE and A - A/S level ??? Sorry for the rambling - just my tuppence worth ...

Blade35

Thanks for all the answers guys.

I posted here as I have seen researchers for TV programmes post on forums to research a topic.

If I google something, I may get old info, but here I can get new info and actually ask exactly what I need/want to know.

Also, this is a very technical topic and I don't understand a lot of jargon on sites like FSA, etc.

Peter L - you'll find syllabuses covering mortgages. I don't do GCSE/A Level anyway, I do AVCE, which is mostly coursework. My friends doing another qualification in Business Studies are actually covering the British Airways cabin crew strike (but then this is HR, which is a topic itself in the qualification). If this strike was not happening, they would not be doing HR to begin with.

jamesd

Blade35 wrote: »

3) Related to the above, if your parents help you to buy a house by providing the deposit (which they have to repay) but they pass away, does this put the house at risk?

You have to repay them unless they make it a gift to you. Normally you would inherit part of their estate (their assets, like their house and savings) when they die and the amount you still owe them would be deducted from your share. So if £100,000 was to be shared equally between two people and you owed £20,000 the final value of the estate would be £100,000 + the £20,000 you owe = £120,000. Each of you would be entitled to £60,000. The other person would get the full £60,000 and you would get £40,000 and your debt of £20,000 would make up the rest of your £60,000.

Blade35 wrote: »

3) A lot of research states that for one time cases of this offence by lenders/borrowers, it is very unlikely to be caught. Is this in any way true~? If so, this seems to be a little like piracy of software.

It's not really like copyright infringement of software and is even less like piracy of software:

A. In copyright infringement of software or anything else there's seldom use of physical threats or murder, as there usually is in piracy, so piracy is very unlike copyright infringement. Piracy is a word that sounds bad so some in the software industry use it to make copyright infringement sound bad.

B. In the case of mortgage fraud with false details the usual intent of the borrower is to get the mortgage and repay it normally. There will be no financial loss to the mortgage lender if that happens. Even if there is a failure to repay, a mortgage is a secured loan so the lender can repossess the house and sell it to get back all or most of their money. Organised criminal gangs may make fake applications, sometimes using property valuations that are too high, and take most of the money without ever having any intention to repay and this is a more serious problem.

C. In software copyright infringement there's often a complete loss of any money that the sale would have made, with little chance of recovery. For example,a customer of one of my employers had me spend three months writing a custom computer program, said it was unsuitable and that they wouldn't use it, then didn't pay. Three years later they asked us to do some data conversion work and we found that they had been using it many times a day for those three years. That's copyright infringement. No piracy involved, they didn't threaten us in any way to get the software, they cheated us in a business deal. In another case a Norwegian company removed identifying serial numbers from inside some software costing £20,000 or so and distributed it to other companies. We didn't make any money from the the copies that they passed on to others. In more general cases it's arguable how many of the infringing users would have purchased the software so it's not clear that the loss is the normal retail price of the software.

Blade35 wrote: »

5) My reckoning is this offence is quite common. I know that when insurers ask about circumstances (or me and applying to UCAS), there are question about my circumstances which I almost didn't bother to check so I could have easily made a fraudulent application.

You should google* with Bing the word CIFAS and name National Hunter. It's a bad idea for adults to get details wrong. There are firms who make it their job to catch out people who give different details on different applications or who are caught out when giving false information. Don't expect it to be easy to get credit once you've established a record of making fraudulent applications, even if you were lucky and didn't get a criminal prosecution against you.

*the use of lower case google as a verb and the phrase google with Bing is deliberate, in much the same way as hoover and Hoover have different meanings. Google hoover trademark and google wifi privacy to find out why.