Fraud at building society
in
Chelsea Building Society announces fraudulent mortgages.
It was announced today that the Chelsea Building Society has been a victim of a huge number of fraudulent cases and has lost somewhere in the region of £41 million. The fraudulent cases have resulted in the building society remaining in the red with a recorded loss of £26 million overall loss in the half of this year, this is on top of a loss of £39 million last year.
The fraudulent cases were between 2006 and 2008 and were mainly buy-to-let mortgages which had been taken out. The main reason behind them being fraudulent is the borrower has taken out the mortgage and then inflated the value of the property therefore not having to put a deposit down or very little deposit. The banks/building societies are not to blame as they rely on surveyors and mortgage broker’s information.
The Chelsea has now put a team in place to go through all of these cases one by one, to confirm that there has been fraud committed.
There are also cases where the borrower is unaware that their property has been valued at a higher amount and never received any money off the back of it, in these cases the mortgage broker, survey and solicitor where more than likely working together.
The Chelsea has never been a major player within the buy-to-let mortgage market but they have always been relatively large in the sub prime/adverse mortgages. This is probably why they are now finding that they are have a sustainably amount of fraudulent cases.
The Council of Mortgage Lenders (CML) and the Financial Authority Services (FSA) have warned banks and building societies that this may had been going on and also be wary about new build properties over inflating there purchase prices and offering cash back deals.
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