Mortgage fraud remains largely undetected despite rising risks

The client due diligence platform Thirdfort has raised concerns about the true scale of mortgage fraud in the UK, highlighting how the number of enforcement investigations may not reflect the reality of the situation. A Freedom of Information request submitted by Thirdfort to the Financial Conduct Authority (FCA) unveiled that there have been merely 17 investigations into mortgage fraud since 2018. This figure includes a peak of five cases in 2019 and an average of three to four annual cases from 2022 to 2024. Notably, two years of inactivity during 2020 and 2021 were likely impacted by pandemic-related disruptions that hindered the detection and enforcement of financial crime.

Despite these figures, broader industry insights suggest that mortgage fraud remains prevalent and is significantly under-reported. Olly Thornton-Berry, co-founder and CEO of Thirdfort, commented on the situation, saying “these figures suggest that the number of mortgage fraud investigations is relatively low, but of course that’s not the full picture. In the UK, in addition to the FCA, the Serious Fraud Office (SFO), local police forces, and the National Crime Agency (NCA) all play a role in investigating cases involving suspected mortgage fraud. Moreover, with fraudsters becoming more sophisticated, and industry data telling a different story, it’s likely that there’s a significant amount of fraudulent activity going undetected.”

Recent industry statistics demonstrate the growing threat of mortgage fraud. There has been a 32.8% rise in mortgage fraud cases between 2022 and 2023 according to Apex Bridging. Furthermore, one in six UK adults either admits to or knows someone who has misled a lender to secure a mortgage, as reported by Cifas. UK Finance revealed that there were losses of £1.17bn to fraud in 2023, and separate analysis from Cifas suggests mortgage fraud is growing.. The challenge of detecting such fraud is exacerbated by the use of AI-generated fake documents and identity fraud, as highlighted by Cifas.

Mortgage fraud typically involves the use of forged documentation, fictitious identities, or misrepresentation of income to deceive lenders. This poses serious risks not only to financial institutions but also to legal and property professionals engaged in the mortgage process. As awareness of the issue grows, so too does the necessity for enhanced detection methods and more stringent enforcement initiatives to combat mortgage fraud across the UK.