Mortgage Fraud in the UK - Essay Example

Mortgage Fraud in the UK Abstract In the United Kingdom, mortgage fraud is a growing problem in the sense that citizens want equity in their homes exceeding the loan on their assets. The housing market in the United Kingdom is experiencing a boom and fraudsters in the mortgage market take this situation as an advantage with the aim of profit maximisation since they get higher loan than they would if the lender had all the information regarding mortgage loan application at hand. Mortgage fraud has an adverse consequence on individual homeowners, communities, and many indirect victims of the crime. While past research has focused on the personal motivating factors behind the commission of white-collar crime, this particular article review several facets of the crime itself and explores the possible neighbourhood risk factors that help attract the crime. From a national perspective, mortgage fraud seems to take place more frequently in neighbourhoods that have low socioeconomic indicators. These links become even more distinct when the amount of fraud occurrences within the community is factored in as a variable. Upon disaggregating the data according to region, the fraud indicator variables also display differing trend levels, perhaps indicating that as mortgage fraud practices begin to mature within an area, its community dynamics are likely to modify as well. In conclusion, mortgage fraud is on the increase in the United Kingdom and good measures need to be put in place to curb the crime. A delay in proactive and preventive measures in regard to mortgage fraud will greatly affect the economy and that the revenue collected by the government will reduce drastically. Introduction Mortgages have a long history spanning from the 12th century but have been in common use in the UK housing sector since 1925. The word mortgage is said to derive from the French for a ‘dead pledge’ meaning “the one in which the borrower has to find ways to repay the loan” (Giles 2009). According to Giles (2009) the process of securing a mortgage can be defined as “A lien on a piece of land or property as security for a debt”. During late 2008 and early 2009 the downturn in the UK economy had a drastic impact on the once strong housing sector with house prices slumping and mortgage approval decisions declining (House Price Crash 2009). A leading factor as to why lenders run into financial trouble was lending to applicants who had provided falsified information (BBC News 2009). Other factors include mortgage fraud such as inflating property values carried out by corrupt surveyors (Mae 2007). In the United Kingdom, mortgage fraud is a growing problem in the sense that citizens want equity in their homes exceeding the loan on their assets. This is so because there is a lot of material misrepresentation of information regarding the mortgage loan when an applicant applies for the mortgage loan. The housing market in the United Kingdom is experiencing a boom and fraudsters in the mortgage market take this situation as an advantage with the aim of profit maximisation since they get higher loan than they would if the lender had all the information regarding mortgage loan application at hand. This paper sets out to review the types of mortgage fraud and evaluate whether mortgage fraud in the UK is a growing problem. Fraud is the deliberate dishonesty committed for unlawful or unjust gain (Financial Crimes Enforcement Network (FinCEN 2006). Fraud in relation to mortgages can be defined as fraud for property generally involving material misrepresentation or omission of information with the intent to deceive or mislead a lender into extending credit that would likely not be offered if the true facts were known” (Mae 2007). According to Adrianne (2008) mortgage fraud is a criminal action with the intention of obtaining a loan or a larger one by failing to provide the lender with enough truth regarding the mortgage loan application through inadequate information or material misrepresentation. The citizens of United Kingdom need to understand schemes used by mortgage fraudsters so as to minimize the increasing cases of the criminal actions. Citizens need to understand property flipping as a scheme used by mortgage fraudsters (Adrianne 2008). It is not necessarily that property flipping is an illegal action but the manner in which the information is appraised makes property flipping an illegal action. In this case property appraisals are fraudulent done, for instance if land is bought and soled fast after being appraised for a higher dollar value then this is mortgage fraud. Also documents of loan involving the transaction are doctored; the income of the buyer is inflated. Further important definitions include; Mortgage lender: A mortgage lender is an investor that lends money secured by a mortgage on real estate (FinCEN 2006). Mortgagor: The person who mortgages the asset such as the borrower (FinCEN 2006). Mortgagee: The person to whom an asset is mortgaged i.e. the lender (FinCEN 2006). According to Inman (2009, p. 1) professionals are diverging from being trustworthy and criminals have been able to infiltrate the mortgage lending process and defraud financial institutions out of large sums of money. Falsifying information activities which can result in mortgage fraud include falsifying bank statements, fake identity, inflated incomes and inflated property appraised value due to large positive adjustments (The Law Society 2009). This is true in the case of Ian McGarry, former director at Erinaceous subsidiary Dunlop Haywards who duped Cheshire Building Society out of 10.5 million by inflating a property value significantly which was located on Priory Road in Aston (Doyle 2008). In another more recent case Lisa Sanderson was sentenced on the 14th July, 2009 at Leeds Crown Court to twenty seven months imprisonment for her part in a £508,000 mortgage fraud. In giving out the ruling HHJ Kershaw QC said that the guilty pleas characterize the making of two quite deceitful mortgage applications in two years. The above case is one of many as the Serious Fraud Office reveals that lenders have been victims of this type of crime due to the reason that professionals have not acted in good faith. Overall, this crime has a knock-on effect on the housing market and the general public, as lender’s ability to offer mortgage diminishes due to huge financial losses. This has in turn led to the London police force and the Financial Service Authority (FSA) to form a task force to combat mortgage fraud which is viewed as a serious crime and having a dramatic effect on the housing market as the recent lending crisis has revealed (ACPO 2008).     Data gathered from Klynveld Peat Marwick Goerdeler (KPMG) reveals that there are a record number of mortgage fraud cases filed; totalling 160 just in the first half of 2009 and in the 21 year history of its fraud barometer the total that has come to court is 636 million pounds. Hitesh Patel, who is a partner at KPMG, commented that the figures are already bad, but more is yet to be witnessed. It will take a couple of years for the recession fraud statistics to be fully feed through (KPMG 2009). This is a significant reason why the researcher believes it is important to review mortgage fraud and evaluate whether it is a growing problem.   With mortgage reforms proposed by FSA during 2010 the researcher believes it will be hugely beneficial to examine the sensitive and somewhat hidden side of the mortgage industry (FSA 2009). The findings will allow many organisations to gain valuable knowledge and awareness on threats they are faced with and prompt many organisations to take steps to detect, prevent and combat mortgage fraud.  Aims and Objectives The research involved in writing this paper has the possibility to go in many directions as mortgage fraud within the property sector has many substantial areas that can be researched. However, given the researchers interest in mortgage fraud and to provide an overall insight into mortgage fraud the main aim of this paper is to: Examine the recent trend in mortgage fraud with a view to ascertaining whether it is indeed a growing problem. This will be achieved through the following objectives: Review the recent cases of mortgage fraud Identify the types of mortgage fraud in mortgage lending decisions in UK Examine the effects of mortgage fraud on the mortgage industry Mortgage fraud undoubtedly will affect the mortgage industry, victims caught within the crime, the UK housing sector and the UK economy. A concise and factual document will clearly inform people about the types of mortgage fraud that exist, mortgage industry professionals and organisations involved in mortgage fraud and the extent to which it is a growing problem. There is a high trend in mortgage fraud across United Kingdom. Such types of mortgage fraud include: Occupancy fraud: this kind of fraud is a situation whereby a borrower applies a loan to occupy a property as a second home and ends up in using the obtained mortgage as an investment property. If there is no detection on this fraud then the borrower will obtain an interest rate lower than that which was warranted which results to insufficient capital returns  than what the lender would have expected. This also has great effect because the property is relatively exposed to loss because properties owned for residence purposes have lower interest rates. In addition, owner occupied property has a larger loan compared to loans for investment properties. If occupancy fraud happens there is the likelihood of an additional fraud in that there is evasion of tax payment on gains. This is so because there is material misrepresentation of the risk by the borrower to the lender in favour of obtaining a larger loan (Al-Hawamdeh, 2000 p. 489). Income fraud: this is a situation whereby someone qualifies for a mortgage by overstating his/her income. This is quite evident in a case whereby the borrower did not state the needed income to qualify for the loan it is mainly referred to as stated income mortgage loans. The tightening of mortgage underwriting standards by mortgage lenders and that the stated income being less available this has increased income fraud traditional documents loans whereby a borrower alters the tax returns issued by the employer or forges bank records to support  him/her inflate the income. It is a well thought-out fraud because in most situations the borrower would not have been eligible for the loan had the accurate earnings been revealed. The meltdown of mortgage was caused when large figures of borrowers in region of rapidly escalating home prices lied with reference to their earnings, acquired homes they could not come up with the money for, and then defaulted. Employment fraud: this is the case whereby someone gives false information about himself regarding either self employment or refers to another company as an employee so as to have a justification of his/her income.  Failure to disclose liabilities: Borrowers cover up obligations, such as credit loans on other assets or credit card debt which is newly acquired to reduce the quantity of monthly balance due acknowledged on the loan request. Debt to income ratio is lowered if liabilities are omitted artificially since they form a major part of the underwriting criterion in determining mortgage loan eligibility. It is a well thought-out fraud because it makes the borrower to meet the requirements for a loan which or else would not have been approved, or to qualify for a better loan than what would have been approved had the borrower's accurate balance due been revealed. Fraud for profit: this is the case whereby a well financially motivated schemed is constructed by mortgage loan professionals, which is complex aiming at defrauding the lender large amounts of money. Fraud for revenue schemes regularly include a straw borrower whose credit report is used, a fraudulent evaluator who deliberately and considerably overstates the value of the area under discussion of the property, a fraudulent completion representative who might prepare sets completion statements or makes disbursements from credit earnings which are not revealed on the settlement statement, and a property owner, all in a harmonized effort to obtain an incorrectly large loan. The mortgage finally goes into default after the scheme succeeds and the ill gotten money is shared. In other cases naive investors are lured into the scheme with the organizer's guarantee that the home will be repaired, maintenance and/or renovations will be made, tenants will located, rents will be collected, mortgage costs made and earnings will be split upon sale of the assets, all without the active involvement of the straw purchaser. Once the credit is stopped, the organizer disappears, no maintenance are made nor renters found, and the investor is liable for paying the mortgage on a assets that is not worth what is owed, leaving the investor financially ruined. If unobserved, a bank may lend hundreds of thousands of dollars against a property that is actually worth far less and in large schemes with multiple transactions in which banks may lend millions more than the properties are worth. Appraisal fraud: When there is overstatement or understatement on appraising of home this is referred to appraisal fraud. When overstated, more money can be obtained by the borrower in the form of a cash-out refinance, by the broker in a procure transaction, or by the organizers of a for-profit mortgage fraud scheme. Evaluation fraud also includes situations where the home's cost is intentionally understated to get a lower price on a foreclosed residence, or in a fraudulent endeavour to encourage a lender to decline the quantity owed on the credit in a loan modification. A fraudulent appraiser may be fixed up in the preparation of the fraudulent appraisal. Cash-Back Schemes:  This occurs when the property price is illegally inflated to help provide cash-back to deal participants, the largest part often being the borrowers, who receive a return which is not disclosed to the lender. This leads to the lender lending more which is pocketed by the buyer with other partners in the scheme. This design requires evaluation scam to mislead the lender. This results to fraud in that it is unrecorded and unknown to the lender. Shot gunning: Is a situation whereby one property is used to acquire multiple loans which exceeds the actual value of the said property because it is obtained for the same home. Lenders are exposed to big losses when such a scheme takes place since subsequent mortgages are juniors and that the asset value is not enough for the subsequent lenders to collect against the property in foreclosure. Identity Theft: This happens when someone takes an identity of someone else and uses the same personification in obtaining a mortgage without an agreed consent or the know how of the victim. The scheme is not easily realized unless the lender tries to get money from the victim because the thieves will already have escaped without paying for the mortgages. The victim suffers the cost of proofing that his/her identity was stolen.  Reasons why mortgage fraud may continue: The increasing rate of housing and the desire of owning own home in United Kingdom. The requirements for licensing need to require a greater level of education, more than a high school degree as a prerequisite for licensing and harder licensing requirements, such as more pre-licensing education and harder tests. This will result in better people and less people entering the real estate profession.  Lenders need to offer less loan programs, for example, stated income loans (some refer to this as inflated income loans) and no doc (no documentation loans).Most lenders require an IRS (Internal Revenue Service) Form 4506 at time of closing. Now, there is something that an underwriter or lender can request information and stop an inflated (aka stated) income mortgage application dead in its tracks there should be maximum indemnity on the part of the borrowers because if they lie concerning their income tax returns there is also the high chance of giving the same lie when applying for the mortgage. The credit reporting and scoring system needs an overhaul. Too often, I find errors on credit reports, where the creditor is not reporting timely or accurately information. A good example is a case where a customer completed in full their collection in February 2006. The agency in charge of collection in the second half of April was showing that the account was still outstanding as per that date. The payment was reported but the balance potion that had been negotiated had not been removed. This clearly illustrates that there in no enough control points in the current system. What could possibly be done to reduce the mortgage fraud? More cheques and balances within the structure to recognize possible credit fraud cases. Extra education is needed for all real estate lenders, professional-real estate agents and underwriters. Greater licensing necessities to all cornered with real estate. And licensing requirements where no licensing is required at this time. Achievement of a whistle blower security system and cell phone hotline is another. Down to business anticipatory action on the part of lenders is another. Any central body should work within a broad framework for fraud as a whole; in that such an approach will avoid unnecessary attention being given to what is currently counted at the expense of what is not. This adoption of a victim centric approach should be similar to that developed in the current study and thus could serve this purpose. Moreover, because the term fraud covers such a wide and varied set of behaviors, one of the key priorities of any national centre would need to be to categorize and record individually different fraud types. Enforcement of the law regarding real estate: Enforcement of the paragraphs from the typical mortgage, which reference the borrower’s loan application and acceleration clauses: Borrower’s Loan Application. Borrower shall be in default if, during the Loan application process, Borrower or any persons or entities acting at the direction of the Borrower or with Borrower’s knowledge or consent gave materially false, misleading, or inaccurate information or statements to the Lender. There is need for a better and possibly required education of prospective borrowers, so they can recognize the impact. In United Kingdom, City of London police has reported a 72% increase in cases of financial fraud largely driven by a jump in mortgage scams over the previous year. Mortgage fraud has reached the highest numbers ever in fact it has doubled double figures and was one of the largest areas of activity for its officers. Several investigations are predictable to increase over the next year as frauds came to light and lenders sought to recover their losses, it said. In United Kingdom, Chelsea Building Society was adversely affected by mortgage fraud a case that had previously affected Bradford & Bingley where both seem to be the target of criminal gangs Szockyj(2002, p.278). It was estimated that Chelsea losses a figure equivalent to £39m, which pushed the mutual into a first-half loss of £22m. With the support of professional advisers are behind fraudulent, the building society believe that the gang will continue to dominate the market, buy-to-let loans made between 2006 and 2008 on hundreds of properties in Manchester, Leeds and several other northern cities. Bradford & Bingley, the nationalized buy-to-let lender, set aside an extra £200m for potential losses from mortgage fraud. Steve Head, the chief of the City of London's economic crime directorate, said credit fraud was happening all over the country and has jumped from nothing 18 months ago to being one of the biggest areas of investigation. The number of investigations will be increased according to the head of the investigations, though lenders were being slow to report cases to his unit, which has taken the lead in tackling financial crime since 2003.the full picture might not come out despite the fact that the investigations are concerned with big figures. It is a little bit of the quantity of fraud that has taken place. Credit lenders that are hit by the crime and they usually see it first. A big achievement can be achieved if lender becomes more serious than they are today such that fraudsters will be cornered. The cases of mortgage fraud can be reduced to zero if there is a serious commitment on the part of the lender more than they show today. Investigations usually centre on potentially fraudulent mortgage applications or professional negligence on property valuations driven by a booming property market. Last year, it is estimated by the Association of Chief Police Officers that mortgage frauds rake in £700m a year. Desire to own more is the driving factor in fraud. Presently are some where there are family links, some cultural links and some where the only link is greed. But a value is a key figure in the process. A police inspector, Bevan believes that domestic mortgage fraud could top £1bn by the end of the recession and commercial property mortgage fraud could reach £5bn. The Authority has banned 65 mortgage brokers in the last three years for mortgage fraud and levied fines totalling more than £1m. The society since last year, a group of 40 of its staff from its enforcement division investigated brokers for a range of rule breaches. Brokers often allowed customers to inflate their incomes to obtain larger mortgages. If this fraudsters are unable to pay the monthly bills, it emerges the customer could never afford the original loan. How a mortgage scam works In some instances fraudsters would typically buy a property at a deliberately inflated price in a large development and ensure that they do any other business relating the registration of the property in haste before they are caught. After Land Registry website updates the purchases of the property on their records, such records would be used as a starting point for successive valuations, enabling the fraudsters to contract hold of puffed up mortgage applications on other homes, often in an equivalent development. If asset was prized at £300,000 but was only actually worth £250,000, the bunch of hooligans could abridge the additional £50,000 to sponsor further deposits or to remove offshore. The bunch of criminals would more often than not include a solicitor and surveyor on the payroll to ensure that the funds from the lender were siphoned off. Criminal acts in the mortgage industry go unobserved because, at the elevation of the boom, lenders are happy to hand out mortgages without carrying out their own due diligence but relying on third party valuations (Tait 2005, p. 6). Increasing assets values masked the scheme such that only when the market collapsed and the fraudsters pulled out did lenders realize that an asset they thought was worth £300,000 – to use the example above – was worth much less, possibly as little as £150,000 due to the diminishing market. Other scams concerned alluring investors to buy new-build ­ properties off-plan. The homes would be advertised as high-specification and priced consequently but in authenticity they would be built on the inexpensive, leaving investors and lenders with just a fraction of the mortgage in the whole deal. There the possibility that the scam will bring down thousands of lenders before the whole scheme is unravelled. Majority of these homes are by now in the foreclosure procedure and many of the investors are ready to lose their own personal residences (Annesley 2005, p. 10). It appears that this high level of attention has been sparked, to a large extent, by the latest information about mortgage fraud coming from the FinCEN, the agency that collects Suspicious Activity Reports from all federally insured financial institutions. Table 1 below shows almost 22,000 mortgage-related SARs were filed in fiscal 2005, compared to slightly fewer than 7,000 only two years earlier. The most worrying issue is that majority of the investors are not hardened know-how real estate investors - they are hard working middle class people who were in Riverside County at the right time - as prices were increasing by 20 to 25% per year and they were offered a chance to take advantage of this enormous hand-out. Fraudsters who are considered as mothers of evil work in more advance jobs and other professionals until you wonder why they must be criminals of our current times. There has not been the kind of centralized effort into estimating the extent of fraud that there has been into other areas of unreported and unrecorded crime: indeed it is not always obvious to victims themselves, or to outside observers, whether or not fraud has been committed. Nor has there been much effort in either private or public sectors to drill down into the social and economic costs of fraud (Law Review, p. 35) Nevertheless, substantial and varied data about many types of fraud in the UK are available. For each sector, this research sought to summarizes data availability and deficiencies; the reasons reinforcing data collection; data collection methods; and the known costs of fraud—divided into the direct costs of the fraud, the costs of preventing fraud and the costs of responding to fraud after the event. Data on the costs of responding to fraud and of fraud prevention are particularly sparse, and for clarity, they have been kept disaggregated from fraud losses to victims. The studies reviewed in this research encompass global surveys national level surveys both rolling and snapshots, through to national data collection exercises drawing on administrative data compiled by umbrella organizations, often focusing on particular types of fraud as reflects their funding and member interests. Indeed, in the absence of a more systematic overview such as this and, to a lesser extent, the NERA 2000 study that preceded it, something of a ‘free market’ in information about the cost of fraud has developed. The publicity given to the ever-higher estimates of fraud bears little relationship to the scientific rigour of the studies themselves Bell (1999). In analyzing the cost of fraud, the study adopted a conservative position based on the lower end of estimation ranges. One consequence of that is that the aggregate cost figures in some sectors are lower than might be expected if better research were available. The data below are principally from 2005 or shortly before, but the lag in awareness of longer-term frauds and the fact that some data such as income tax returns need to be filed only after the event mean that some will date back years; and whereas the private sector data are generally based on calendar years, the public sector typically uses financial years, making impossible their integration into annual snap-shots. The ‘health warning’ on these data is that because of uneven awareness and reporting, and the different approaches adopted in surveys/ studies, they may not reflect the ‘true’ distribution of fraud. Moreover, the extent and nature of fraud are shaped by organizations’ business and service activities as well as by their culture, transparency and prevention efforts plus offender skills/energy. Now see in your mind's eye what type of professionals we have, if just 10% of the staff is stressed out over private monetary disasters. This has great effects on United Kingdom such that it diminishes professional ethics. Well, see in your mind's eye an expansion of 150 new-fangled homes built and occupied 18 months ago.  Those who live in such places have a lot to worry about because if there had the desire to change their cash into equity then they have to follow a complex procedure that can take a lot time like even four months.  There will by now be firm antagonism for your home since majority of your neighbours have the same fate as you. See in your mind's eye as an alternative of challenging with the 10 to 20% of the homes that are coming on the market anyway, you have another 10 to 20% of homes sitting vacant and neglected.  All these actions have caused your neighbourhood go down.  The costs are going to plunge because the lenders are going to have fire sales to dump the REO excess properties, as quick as they can unload them. The Real Estate Pond seems as though a stone has been cast which is likely to cause ripple effects in the future. It is not anything but self indulgence and wickedness.  Methodology According to Arbnor and Bjerke (1997) as citied in Blaxter (2006) “The best approach for collecting data can never be empirically or logically determined. It can possibly be done reflectively by considering a situation to be studied”. Taking into consideration the nature of the aim and objectives it is important to use the right research methods to fulfil these. To fulfil the objectives, majority of the research was derived from secondary sources although certain primary sources were used in order to gain new evidence that had not been collected before. Additionally, in regards to the material collected, primarily qualitative research was employed throughout but quantitative research was used in certain aspects. In order to justify the methods employed which enabled the research to take place an explanation of these terms is discussed. Punch (2005) in Blaxter (2006, p. 64) defines qualitative research as “where the data is in form of numbers” and as suggested by Oakley (1999) as citied in Blaxter et al (2006) “quantitative data is outcome orientated”. Therefore, the use of questionnaires was suitable for this study in ascertaining from professionals such as solicitors, surveyors and mortgage brokers within the mortgage industry that mortgage fraud is a growing problem (Bell 1999). Researchers can generate theory from data gathered (Denscombe 2003) this usually comes in the form of qualitative research. The process deals with collection and analysis of non-numerical i.e. qualitative data to search for patterns, themes and holistic features (Instructional Assessment Resources, 2007). Therefore, this study wanted to obtain real and rich data and an insider perspective therefore qualitative research methods of analysing past mortgage fraud cases and interviewing mortgage brokers etc was deployed. According to Blaxter, et al (2006) data which has never been collected is classed as primary data and secondary data “put together by somebody else, but reused…in a different way” as “it makes sense to use it if the data you want already exists” (Blaxter et al 2006, p. 170). Subsequently, the secondary and primary data collection that was done, justifying why it was done that way, the credibility of the sources and how it was obtained is considered below. Secondary sources selected for this paper have been carefully chosen from professionals; well know public and private establishments which operate within the mortgage industry such as the law society, FSA, BBC and many others. Recent Case studies of mortgage fraud published on the serious fraud office website, in which convictions have taken place have been analysed and theories drawn from them in particular the most recent one of Doyle and Sanderson. Reviewing case studies has the advantages of data that is drawn from practice and so it is seen to be strong in practice, more persuasive and accessible. They also allow for generalisations from specific instance to a more general issue. In order to reveal types of mortgage fraud a combination of case studies, interview responses and research already conducted by specialists within the field such as ACPO were reviewed. This allowed conclusions to be drawn both from primary, secondary and qualitative and qualitative sources. Apart from relying on case studies and interpreting them, to gain direct evidence a number of participants such as solicitors, mortgage brokers, estate agents, surveyors and victims were interviewed (Dillon 1990, p. 155). Different forms of interviewing were practiced dependent upon the participant present for example personal interviewing, clinical questioning etc. A questionnaire was used for over 50 participants to find out what types of mortgage fraud exist and whether they believe mortgage fraud is a growing problem. This was an obvious strategy deployed to find the answers to the objectives posed (Blaxter et al 2006). Ethical issues were raised when interviewing participants such that many had been convicted of or had been apprehended in taking part in mortgage fraud and consequently, the details were kept anonymous. As suggested by Oakley (1999) and as citied in Blaxter et al (2006) “quantitative data is outcome orientated”. Therefore, secondary resources will be relied on to determine trends in mortgage fraud cases which are based on quantitative data collected by others. Primary research will also be conducted in the form of interviews to gain valuable qualitative data on individual’s frames of reference and gain an insider perspective of how professionals within the mortgage industry and victims of mortgage fraud crime perceive the impact and comment upon weather mortgage fraud is a growing problem. In conclusion, mortgage fraud is on the increase in the United Kingdom and good measures need to be put in place to curb the crime. A delay in proactive and preventive measures in regard to mortgage fraud will greatly affect the economy and that the revenue collected by the government will reduce drastically. The public also need to be educated on mortgage fraud and how it works so as to be on high alert concerning the vice. With a serious commitment from the side of authorities it is possible to eradicate mortgage fraud in the industry. References ABI – Association of British Insurers 2003, Facts on fraud, No.1. London, Association of British Insurers. 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