Written by Alice Payne
Posted on 23/05/2016

Don’t fall victim to mortgage fraud

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The growing housing crisis and the resulting imbalance between supply and demand means buyers are at a disadvantage. Unfortunately, this scenario is ripe for fraudsters to exploit.

Impersonating the dead

Identity theft is rising as criminals find ever-more sophisticated ways to manipulate gaps in security. In a new low, fraudsters are stealing the identities of people who have recently passed away in order to make fraudulent mortgage applications to lenders, according to new research.

After sourcing details of recently deceased home owners, fraudsters impersonate their identity to put forward a mortgage application. Once the application is successful, they either use a corrupt solicitor to receive the funds or create a false solicitor profile themselves. Once the mortgage funds have been obtained, they can then cash in this money.

Recent research reveals the level of attempted mortgage fraud through identity theft rose to 6% in the first three months of 2016 - the highest level witnessed since 2012 .

Industry experts see this as a worrying development. The complexity of third party mortgage fraud makes it more difficult to commit on a large scale: the notable increase is something lenders will need to address.

Intercepting mortgage deposits

House buyers are also falling victim to mortgage fraud, with purchasers tricked out of their mortgage deposits by fraudsters impersonating solicitors.

These phishing scams see con artists targeting those buying or selling a home, hacking into databases or emails to intercept their communications with solicitors. Once the criminals have this access, they trick the house buyer out of their deposit by stating that payment is due and providing bank details to transfer their deposit. 

Once the money is transferred, it’s quickly removed by the fraudsters, robbing the home buyer of their housing deposit. With the high cost of deposits and the significant length of time required to save for one, this type of fraud is particularly devastating. Unfortunately this money is rarely protected or refunded by banks. 

Anyone who has fallen victim to this type of fraud should contact Action Fraud, the UK’s national reporting centre for fraud and cybercrime. 

Help is at hand

The good news is that organisations are fighting back. The Conveyancing Association, a trade body for solicitors involved in home-buying, has launched a Cyber Safe Scheme to protect its members. Beth Rudolf, a leading protagonist in the Conveyancing Association, has some pertinent advice for home buyers to make sure their money is safe:
“As a further preventative measure, we would also urge customers – when first sending money – to send the smallest amount possible and then check with the law firm so they can be confident the money is going to the right place .”

The Conveyancing Association has advised solicitors to use post instead of email when communicating sensitive information . It recommends that conveyancers’ initial communication with clients should be by post and include the company’s bank details. In turn, clients should be asked to confirm their own account information in the same way, with Rudolf calling the postal system “as safe as you can get”.

Similarly, using the telephone or a fax machine when transferring sensitive information can also be safer than email.
Being prudent on social media is also key, with Rudolf advising discretion. Home buyers or sellers should avoid posting statuses about their activity on social media. This information is easy for criminals to find and provides a tip-off that a financial transaction is impending.

Tips from The Telegraph

As part of its campaign against mortgage fraud, The Telegraph has also put together some useful tips, such as:

  • Ensuring your solicitor or conveyancer’s website is secure – the URL should begin with HTTPS and there should be a padlock at the left side of the browser
  • Checking what security measures the solicitor or conveyancing firm has invested in – emails can be secured for free through different software, including Sender Policy Framework, Domain Keys Identified Mail, and Domain-Based Message Authentication
  • Making sure not to reveal sensitive information in email titles – for example, avoid writing ‘bank details’ or ‘transaction information’ in the subject header.

Although mortgage fraud is on the rise, taking precautions can help keep your money safe. With the prevalence of fraud across all areas of personal finance, we’ve also put together a set of recommendations on how to protect yourself against identity theft.