Criminals are increasingly exploiting weaknesses in lending and conveyancing systems to gain illegitimate financial advantage from the UK property market. This can be either:

-Opportunistic action using misrepresentation of income or property value to obtain greater loans than a person is entitled to
-Organised crime syndicates overvaluing properties, using false identities and failing to make any mortgage repayments

Individual purchasers can commit mortgage fraud by obtaining a higher mortgage than they are entitled to by providing untrue or misleading information or failing to discolse required information. This may include providing correct information about:

-Identity
-Income
-Employment
-Other debt obligations
-The sources of funds other than the mortgage for the purchase
-The value of the property
-The price to be paid and whether any payments have been, or will be made, directly between the seller and the purchaser.

Large scale mortgage fraud is usually more sophisticated and involves several properties. It may be committed by criminal groups or individuals, referred to hereon as fraudsters. The buy-to-let market is particularly vulnerable to mortgage fraud, whether through new-build apartment complexes or large scale renovation projects. Occasionally commercial properties will be involved. The common steps are:

-The nominated purchasers taking out the mortgage often have no beneficial inetrest in the property, and may even be fictitious.
-The property value is inflated and the mortgage will be sought for the full inflated valuation.
-Mortgage payments are often not met and the properties are allowed to deterioate or are used for other criminal or fraudulent activities, including drug production, unlicensed gambling and prostitution.
-When the bank seeks payment of the mortgage, the fraudsters raise mortgages with another bank through further fictitious purchasers and effectively sell the property back to themselves, but at an even greater leveraged valuation.
-Because the second mortgage is inflated, the first mortgage and arrears are paid off leaving a substantial profit. This may be repeated many times.
- Eventually a bank forecloses on the property, only to find it in disrepair and worth significantly less than the current mortgage and its arrears.

Sometimes fraud is achieved by selling the property bewteen related private companies, rather than bewteen fictitious individuals. The transactions will  involve inflated values, and will not be at arm's length. Increasingly, off-shore companies are being used, with the property sold several times within the group before approaching a lender for the mortgage at an inflated value.

Investors will always look to re-sell a property at a prfit. However, fraudsters may seek to re-sell a property very quickly for a substantially increased price. This process is called flipping, and will usually involve back-to-back sales of the property to limit the time between sales. Variations on this fraud include:

-The first mortgage is not registered against the property, and not redeemed upon completion of the second sale.
-The second purchaser may be fictitious, using a false identity or be someone vulnerable to pressure from the fraudster.
-A mortgage may only be obtained by the second purchaser and for an amount significantly higher than the value of the property. The profit goes to the fraudster.

Criminal methodologies are continually changing and fraudsters will endeavor to develop new schemes which we should all try to be aware of.