SRA looks to act against rising mortgage fraud

01/02/2010

Written by Marc Riches

While significant difficulties in the property sector have been seen over recent times in the shape of failed transactions and falling values, solicitors involved in the industry are being warned to think carefully about the role they have to play.

Indeed, the Solicitors Regulation Authority (SRA) notes that instances of claims relating to property transactions, for example, where there have been changes to the purchase price of a property which have not been made clear to lenders, are rising among legal practices, with over 400 suspected cases dealt with over the course of last year.

Not only does this represent an increase from the 356 noted in 2008, it is also significantly above the 85 recorded in 2005.

Other instances include cases where the improper obtaining of mortgages means consumers are unable to afford repayments or they end up with a property which is worth less than the price they paid for it.

Due to a rise in such cases, the regulatory body points out that it has issued guidance to all legal practices highlighting the need to be aware of any signs of suspicious activity on transactions they are involved with and to report them to the relevant authorities.

Furthermore, solicitors are reminded of their obligations so as to make sure they do not become involved in such dealings, whether unwittingly or otherwise.

Some 24 fraud cases were referred by the authority to the police for investigating, with a total of 106 examinations of suspected misconduct in property and mortgage deals completed over the past 12 months.

More than 20 firms have been shut down, while 30 cases were handed to the Solicitors Disciplinary Tribunal for assessment.

The authority goes on to highlight that inspections of suspected property fraud cases carried over the past nine months are thought to have saved lenders somewhere in the region of £15 to £20 million.

Steve Wilmott, head of the authority's fraud and confidential intelligence bureau, states: "Last year the SRA stepped up its work to prevent, deter and tackle mortgage fraud. We've recruited two dedicated fraud officers, increasing our fraud unit to 18. Mortgage fraud is a serious issue for homeowners and lenders. We are working closely with major lenders and the police to share intelligence and take prompt action."

Director of solicitors specialist Professional Indemnity Insurance Broker PYV Legal Marc Riches said: "Insurers have been paying close attention to claims arising in this area and we advise all solicitors who transact this type of business to be wary and take every possible precaution to prevent any issues."

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