Mortgage Fraud: What it is and How to Prevent it

At Enderley Consulting, we advise our clients on how to comply with SRA regulations and pride ourselves on being one of the country’s leading Lexcel consultants. However, many firms are unsure about the SRA’s policies towards certain issues, including mortgage fraud.

What is Mortgage Fraud?

Mortgage fraud occurs when a mortgage is arranged by giving the lender incorrect information. This can be misleading to the lender, and causes them to grant a mortgage in a case where, should they have been given a solely factual report, they may not have agreed to lend.

Law firms and solicitors are integral to the mortgage granting process. As the potential safeguard for lenders such as building societies and major banks, they ensure that a mortgage is being granted fairly and that all codes of conduct are being followed correctly and ethically in order to prevent fraud, and are responsible for carrying out all procedures fully and in accordance with the law.

SRA Policy on Mortgage Fraud

The SRA has extremely strict guidelines and approaches to suspected fraud and dishonesty, and does not condone malpractice.

The SRA recognises that mortgage fraud has occurred in cases where:

  • The true purchase price was not disclosed to the lender.
  • The borrower’s true financial position was not disclosed to the lender.
  • The lender is not made aware of any chattels, repairs or incentives by builders selling new properties.

The SRA utilises a variety of methods if they believe a firm is operating outside its principles and codes of conduct. These include:

  • Telephone contact
  • Correspondence
  • Visits to the firm

If a firm is found to be operating outside the law, the SRA will ensure that the responsible party is prosecuted accordingly.

How to Prevent Mortgage Fraud

It is important to ensure that all of your members of staff are aware that they must comply with all SRA regulations, whether they are related to mortgage fraud or something else entirely. The most efficient way to ensure that you are complying with all SRA regulations is to utilise relevant consulting services, and we provide just such professional assistance.

If you are in need of advice on compliance with SRA rules, contact Enderley Consulting today by calling 01939 262502.