Is fraud propping up house prices ?

DervProf

I have long suspected, and suggested that there is a fair degree of "dodgy" dealings going on behind the scenes when it comes to mortgage provision. I am often told that this is fantasy, and that if people were able to borrow more than they should, then why are repo levels fairly low ? I must admit that even with interest rates so low, it would seem impossible that more people who had "enhanced" their incomes would not be having trouble paying their mortgages. On the other hand, I still wonder why there are still lots of web based providers of replacement payslips, surely the reason they are still operating is because there is a demand, and when are you most likely to be asked to prove your income ?

I'm not suggesting that a majority of mortgage applications are fraudulent, but a post yesterday from a mortgage broker on this board revealed something that might show what could be going on all over the country. He explained that on a daily basis he meets people who appear to committing fraud. People sub letting council flats, landlords who have properties in their kids and relatives names, firemen who have second jobs where they don't declare the income etc. Now I'm not suggesting that this mortgage broker actually applies for mortgages for these people using dodgy (to say the least) income figures, but I have asked the question if he has a duty to report these people. At best, he may be finding out these things, but turning them away, but the fact is that he's meeting these people could be having an impact on property prices, and might explain why more honest people are finding it quite difficult to buy their first property.

So, is the "recovery" in the property market that some of our more bullish posters celebrate based on good, honest work, or is it partly due to dodgy dealings. And if it is partly due to fraud, should it be celebrated due to good old fashioned "entrepreneurial spirit" ?

Graham_Devon

Wouldn't think that many are fraudulent. At most, they will be like the old self certs.

I guess the fraud advisor just meets more people who need help tweaking their application, as it were.

UrWntr

While I have no doubt that mortgage fraud happens, I doubt it's prevalent enough to have any meaningful impact on house prices.

silvercar

Two issues, tax evasion and fraud. So your question is really does a mortgage broker have a duty to report tax evasion?

DervProf

People with mulitple properties in children's/relatives names ?

People sub letting council houses ?

If people doing this were stopped, surely that would effectively release more property to those who stay within the law of the land.

Even a small number of property sales (carried out with honest or fraudulent money) can have an effect on house prices locally. How does an estate agent value a property ? I suspect it is often done by looking at what prices other similar properties sold for locally. If one or two of these properties where sold to less than honest people, the price they paid will influence the asking prices of property coming to market.

DervProf

silvercar wrote: »

Two issues, tax evasion and fraud. So your question is really does a mortgage broker have a duty to report tax evasion?

My question is more of a point for discussion.

Is this a common situation ?

Does it effect house prices ?

And yes, what really does go on behind the doors of mortgage broker's offices ?

You raise another point about tax evasion. We all know it goes on, especially by the self employed, but it appears that it isn't just doing the odd job for £50 in the back pocket. If people are avoiding tax on a larger scale, then attempting (and maybe succeeding) in getting a mortgage using untaxed income, we have a very uneven playing field.

silvercar

I suspect that Anyone over inflating income runs the risk of the revenue finding out.

So the mortgage broker could be the one that brings " forgetful" people into line eg by reminding the fireman that he needs to declare the second income to the taxman if he wants it to be shown on his mortgage application.

DervProf

silvercar wrote: »

I suspect that Anyone over inflating income runs the risk of the revenue finding out.

So the mortgage broker could be the one that brings " forgetful" people into line eg by reminding the fireman that he needs to declare the second income to the taxman if he wants it to be shown on his mortgage application.

I think he should tell the fireman to declare the second income, even if it is not shown on the mortgage application.

Although the broker hasn't stated it, it would be interesting to find out if these people he is meeting are asking him to "cook the books", or they are just telling him about their overall financial situation.

RenovationMan

DervProf wrote: »

My question is more of a point for discussion.

It seemed more of a statement of fact, or at least a statement of belief than an actual question. What's the point of a discussion when the instigator has made up his mind at the start of the thread is merely seems to be calling for people to argue against him.

Might I suggest you join a gym or do some other form of exercise in order to get rid of that aggression. Good luck with that.

DervProf

RenovationMan wrote: »

It seemed more of a statement of fact, or at least a statement of belief than an actual question. What's the point of a discussion when the instigator has made up his mind at the start of the thread is merely seems to be calling for people to argue against him.

Might I suggest you join a gym or do some other form of exercise in order to get rid of that aggression. Good luck with that.

Thanks for not using bad language.

I may, or may not have made up my mind, but does that mean that it shouldn't be discussed ?

I happen to think it is a serious issue, and would like to know other people's views on it. It would be interesting to see what the broker has to say on the matter.

PasturesNew

The telly program that exposes cheats etc that was running recently in the mornings quite often had instances of people claiming rent on a place that turned out to be their husband/partner's house and they'd simply used different names.