Gifted deposits

superged

dunstonh wrote: »

That is valuation fraud.

Absolute tosh. Fraud would be paying the surveyor to increase the value! If there is a gifted deposit thats absolutely fine as long as the lender is aware of it (your solicitor is obliged to report all incentives to the lender so if you don't THEY WILL FIND OUT).

However many lenders are tightening up criteria and not accepting gifted deposits. Then we come to new build flats, many lenders are refusing to lend more than 65%-75% on them.

dunstonh

Absolute tosh. Fraud would be paying the surveyor to increase the value!

I suggest you read what has been happening. Or perhaps watch the panarama programme on valuation fraud which covers exactly what djdaface is saying he will ask them to do. (obviously ignoring the usual dumbing down and blame someone else approach which panarama takes).

A gifted deposit is not fraud but increasing the valuation to hide a gifted deposit and then using that higher valuation for the recorded purchase price (on land registry etc) is fraud.

edit: this has just been posted: http://forums.moneysavingexpert.com/showthread.html?t=904873

Tiddler_2

As long as the mortgage company (and their valuer) is aware of the transaction it is not a fraud.

For the fraud cases to succeed it would need the 2 solicitors to be in on the deal aswell.

dunstonh

Tiddler wrote: »

As long as the mortgage company (and their valuer) is aware of the transaction it is not a fraud.

For the fraud cases to succeed it would need the 2 solicitors to be in on the deal aswell.

That is not quite right. The fraud is recording the higher price on land registry. Knowing a fraud is taking place doesnt let you get away with it (although many have during the days of house price rises as the rises masked the fraud).

The correct purchase price needs to be used. Not one altered by incentives.

Tiddler_2

Forgive me for being a bit naive here, but who is being deceived if the higher pp is entered on the Land Registry, when all parties are aware of it and accept it?

Tiddler_2

Just to add:

The Fraud Act 2006

1 Fraud
(1) A person is guilty of fraud if he is in breach of any of the sections listed in
subsection (2) (which provide for different ways of committing the offence).
(2) The sections are—
(a) section 2 (fraud by false representation),
(b) section 3 (fraud by failing to disclose information), and
(c) section 4 (fraud by abuse of position).


2 Fraud by false representation

(1) A person is in breach of this section if he—
(a) dishonestly makes a false representation, and
(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.

(2) A representation is false if—
(a) it is untrue or misleading, and
(b) the person making it knows that it is, or might be, untrue or misleading.

(3) “Representation” means any representation as to fact or law, including a
representation as to the state of mind of—
(a) the person making the representation, or
(b) any other person.

(4) A representation may be express or implied.

(5) For the purposes of this section a representation may be regarded as made if it
(or anything implying it) is submitted in any form to any system or device
designed to receive, convey or respond to communications (with or without
human intervention).

3 Fraud by failing to disclose information

A person is in breach of this section if he—
(a) dishonestly fails to disclose to another person information which he is
under a legal duty to disclose, and
(b) intends, by failing to disclose the information—
(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.

4 Fraud by abuse of position

(1) A person is in breach of this section if he—

(a) occupies a position in which he is expected to safeguard, or not to act
against, the financial interests of another person,
(b) dishonestly abuses that position, and
(c) intends, by means of the abuse of that position—
(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.

(2) A person may be regarded as having abused his position even though his
conduct consisted of an omission rather than an act.

5 “Gain” and “loss”

(1) The references to gain and loss in sections 2 to 4 are to be read in accordance
with this section.

(2) “Gain” and “loss”—

(a) extend only to gain or loss in money or other property;
(b) include any such gain or loss whether temporary or permanent;
and “property” means any property whether real or personal (including things
in action and other intangible property).

(3) “Gain” includes a gain by keeping what one has, as well as a gain by getting

(4) “Loss” includes a loss by not getting what one might get, as well as a loss by
parting with what one has.


At no stage has anyone been dishonest.

dunstonh

I suggest you read up on valuation fraud.

Here is a good start: http://www.palgrave-journals.com/jba/journal/v3/n1/full/2950062a.html

or : http://news.bbc.co.uk/1/hi/programmes/panorama/7227310.stm

If you get a chance watch the programme on youtube:
http://www.youtube.com/watch?v=PL97yAE7PQw

(part 1 is the link, part 2 and part 3 are in the side panel. Valuation fraud is covered a few times in the programme but starts in first 10 minutes).

chappers

djdaface wrote: »

But I have learnt from this post, if they accepted the £190,000 offer, the best approach would have been using my savings for a £10,000 (5%) and having the builders value the place at £200,000 and have another £10,000 as a gifted deposit.

I agree this is definitely valuation fraud, using a contrived gifted deposit to artificially increase the original asking price for a property is fraud.
What you are doing is changing the "value " of the property to obtain borrowing from a lender , where you ordinarily wouldn't be able to secure borrowing.
Many of the "we will find, sell to you, find you tenants etc brigade" are being investigated and in some cases prosecuted for doing exactly this.

Tiddler_2

dunstonh wrote: »

I suggest you read up on valuation fraud.

Here is a good start: http://www.palgrave-journals.com/jba/journal/v3/n1/full/2950062a.html

or : http://news.bbc.co.uk/1/hi/programmes/panorama/7227310.stm

If you get a chance watch the programme on youtube:
http://www.youtube.com/watch?v=PL97yAE7PQw

(part 1 is the link, part 2 and part 3 are in the side panel. Valuation fraud is covered a few times in the programme but starts in first 10 minutes).

Ok I have read the articles and watched the Panorama programme, which was quite interesting as a lot of my "employers" business relates to New Build properties. However, going back to my point above, in all of the cases raised in the programme dishonesty was involved as the mortgage lender, and their valuer, was never made aware of the incentives being provided by the seller.

Of late we have had some of our builders who have tried to offer similar incentives in excess of the standard 5% accepted deposits, and we've informed them time and again that they would not get mortgages on those properties on that basis.

I said on a previous thread that life would be so much easier if builders did away with incentives and sold properties at the proper price.

Obviously the developers/builders are not bothered about who they sell the properties to, in the same way most people are when they are selling something, they want the best price they can get.

And the BTL cases where they gave the 15% deposit with no contribution from the borrower are always doomed from the start because the borrower can in theory just walk away if they don't get the right rental incomes

Unfortunately, in my opinion, property valuations for mortgage companies are done on a whim, without any scientific approach. To rely on Land Registry data is a flawed way of working anyway as the prices are often 3 -6 months old when the information is made public. This is why AVMs & "Desktop Valuations" are also flawed. I recently did a Hometrack report on my own property and it told me it was worth £113k. The actual figure is probably closer to £90k.

Whilst I feel sorry for the victims in the tv programme, the 2 women both purchased properties in areas that they weren't familiar with. Anyone knowing those areas would know that rental incomes and valuations just would not stack up in real life. Again it involved dishonesty - the solicitor, valuers and developers were all in on it.

In the OPs case I have always stated that as long as they are honest and advise the mortgage lender (and their valuer) of the existence of the "gifted" deposit then no fraud has been committed.

I feel I may have waffled abit here so I'll leave it at that!

FraudBuster

Tiddler wrote: »

Forgive me for being a bit naive here, but who is being deceived if the higher pp is entered on the Land Registry, when all parties are aware of it and accept it?

All the buyers of similar properties in that location as the latest Land Registry recorded sale figure sets the new benchmark for that location.