According to Experian, 84 out of every 10,000 mortgage applications are thought to be fraudulent, causing losses of £1.3 billion annually. This deceptive practice undermines the integrity of the lending system and the housing market more broadly, and accordingly is seen as a serious offence that carries severe penalties. If you find yourself entangled in a mortgage fraud case, the uncertainty of its consequences can be overwhelming, especially if it’s your first brush with the law. In this article, we will explore the offence of mortgage fraud in England and Wales, provide some illustrative examples to help you understand the breadth of ways the offence can be committed, and address some of the most pressing questions that individuals face when confronted with such charges.
What is the offence of mortgage fraud?
Mortgage fraud can involve various activities where individuals or groups deliberately provide false or misleading information to secure a mortgage or other property-related financing. This fraud can take different forms, but it is generally covered by the provisions of the Fraud Act 2006.
Generally speaking, to secure a conviction for mortgage fraud, the prosecution must prove the following elements:
- Intent – they must demonstrate that the accused had the intention to deceive or defraud the lender. Proving intent is crucial, as inadvertent errors on mortgage applications are not typically considered fraud.
- False representation – the prosecution needs to establish that false or misleading information was provided knowingly. This could involve fabricated financial documents, false income statements, or misrepresented property details.
- Materiality – it must be shown that the false information was material, meaning that it was significant enough to influence the lender’s decision to grant the mortgage.
- Causation – there should be a causal link between the false information provided and the lender’s decision to grant the mortgage. In other words, the lender must have relied on the false information in making their lending decision.
- Benefit – the prosecution may also need to demonstrate that the accused obtained a financial benefit or advantage as a result of the fraudulent activity. This could include securing a mortgage with more favourable terms or obtaining a property they would not have qualified for under an honest application.
If you are facing allegations of mortgage fraud, seek specialist legal representation as soon as possible so that you have an expert on side, ready to help you navigate the complexities of your case.
What are some examples of mortgage fraud?
Examples of this offence include:
- Fraudulent misrepresentation – this covers dishonestly making false representations to secure a mortgage loan. Examples could include lying about income, employment status, existing debts etc.
- Fraud by false accounting – falsifying documents like bank statements or payslips to get a mortgage approved.
- Fraud by failing to disclose information – not revealing relevant information that may have affected the lender’s decision to provide the loan, like failing to disclose other debts or loans.
- Fraud by abuse of position – when someone uses their position or influence, like a broker or solicitor, to commit mortgage fraud.
- Making false documents – creating fake documents like employment letters, pay slips, references etc. to get a mortgage application accepted.
- Identity fraud – assuming someone else’s identity or using false identity documents to apply for a mortgage.
What happens if you are suspected of committing mortgage fraud in the UK?
Here’s what you can generally expect if you are suspected of mortgage fraud:
- Investigation – typically, suspicions of mortgage fraud trigger an investigation by the police or financial regulatory bodies. This investigation may involve interviews, document reviews, and inquiries into your financial history, property transactions, and other relevant information.
- Arrest and detainment – if there is substantial evidence supporting the suspicion of mortgage fraud and the relevant agency believes that you pose a flight risk or may attempt to obstruct the investigation, you may be arrested and detained pending further inquiries. However, not all suspected cases result in immediate arrest, as it depends on the circumstances and evidence.
- Interviews and questioning – during the investigation, you may be asked to participate in interviews or answer questions related to the suspected mortgage fraud. Remember that you have the right to remain silent and consult with a solicitor during questioning.
- Charges – if the investigation yields sufficient evidence to support the allegations of mortgage fraud, you may be formally charged with an offence. The charges will specify the details of the alleged fraud and the laws you are accused of violating (most likely, the Fraud Act 2006).
- Court proceedings – if charged, you will be required to appear in court. Mortgage fraud cases are typically heard in Crown Court due to their seriousness. During court proceedings, the prosecution will present evidence, and you or your solicitor will have the opportunity to present a defence.
- Penalties – if found guilty of mortgage fraud, you may face penalties that can include fines, imprisonment, or both. The severity of the penalties will depend on the specific circumstances of your case, the extent of the fraud, and the applicable laws. You may be required to repay any financial gains obtained through mortgage fraud, which can include repaying the mortgage lender and compensating any victims for their losses.
If you suspect you may be under investigation or have been charged with mortgage fraud, consult with a qualified mortgage fraud solicitor as soon as possible to understand your options and start building your defence.
What is the sentence for mortgage fraud in the UK?
Mortgage fraud sentences vary substantially based on the specific details of the case and the level of harm or financial loss caused.
For minor first-time offences involving small losses, offenders may receive non-custodial sentences like community service, fines, or suspended sentences. For more serious fraud involving losses of tens of thousands of pounds, typical sentences are 1-2 years’ imprisonment.
Large scale mortgage fraud with losses exceeding £100,000 can attract sentences of 5 years or more, with aggravating factors increasing this further. Sentences for multiple counts of mortgage fraud are often concurrent.
Additional confiscation proceedings are also common to recover the proceeds of crime.
Overall, sentences correlate to the culpability of the offender and the harm or monetary losses caused, ranging from community orders for minor cases to 10 years’ imprisonment for serious large-scale mortgage fraud.
Are there any defences to mortgage fraud?
Potential defences include:
- No material false information – mortgage fraud typically involves providing false or misleading information that is material to the lender’s decision. If the information you provided was accurate or not material to the decision, this could be a defence.
- Reliance on professional advice – if you relied on advice from a qualified mortgage broker, financial advisor, or legal professional and acted in good faith based on that advice, it may be possible to argue that you were not aware of any fraudulent activity and should not be held responsible.
- Duress or coercion – if you were forced or coerced into participating in mortgage fraud under threats or pressure from another party, you may have a defence based on duress.
- Identity theft – if your identity was stolen, and someone else applied for a mortgage in your name without your knowledge or consent, you can argue that you were a victim of identity theft.
- Procedural errors – your solicitor can challenge the legality of the investigative process, search warrants, or other procedural aspects of the case if they believe your rights were violated.
The viability of any defence depends on the specific facts and evidence in your case. The best thing to do is to consult with an experienced solicitor who can assess your situation, gather evidence, and develop a tailored defence strategy to protect your rights and interests throughout the legal process.
Will I go to prison if it is my first time committing mortgage fraud?
Getting caught committing mortgage fraud for the first time can be an incredibly stressful and frightening experience. That said, it helps to keep things in perspective.
For minor first-time offences involving small amounts, it’s actually quite unlikely that you’ll receive a custodial prison sentence. Courts recognise that imprisoning someone with no prior fraud history can be severely detrimental to their future prospects. Guidelines advise judges to consider a first-timer’s background and likelihood to reoffend. While the specifics of each case differ, generally the court weighs factors like impact on the lender, level of deception, and intent to determine a fitting punishment. Demonstrating remorse and making efforts to repay losses can be tremendously mitigating.
While serious or extensive fraud may still warrant prison time, in many instances for minor one-time cases, non-custodial community sentences, fines or suspended sentences are imposed. With adequate legal advice and a repentant honest attitude, people often emerge from a first fraud charge with their freedom intact.
Where to get further help
If you are facing mortgage fraud charges or prosecution, secure a specialist fraud lawyer for your defence as soon as possible. The team at Stuart Miller Solicitors have decades of combined experience in this field and are waiting to help. Contact us today for a free consultation about your options.
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