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Local Business Leader Sentenced to Two Counts of Wire Fraud


When payments Shockley owed his clients began to run late and complaints were made to the Oregon Real Estate Agency, the true financial health of the company began to unravel. The investigation revealed that Shockley struggled with financial issues and was ...


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-1?"ttf":"woff";localStorage.setItem(formatStorageKey,format)}return format}();var fonts=document.querySelectorAll(".webfont");var hinting=fontHinting==="Off"?"":"hinted-"+fontHinting+"-";var urlAttribute="data-cache-file-"+hinting+fontFormat;for(var i=0,j=fonts.length;i0&&alpha-1){styleSheet.media="screen";window.guardian.css.loaded=true;try{window.guardian.css.onLoad()}catch(e){}return true}}setTimeout(function(){setMedia(styleSheet)})}function useCss(){for(var i=0,totalStyleSheetLinks=styleSheetLinks.length;i switch to the US edition switch to the UK edition switch to the Australia edition switch to the International edition current edition: US edition The Guardian - Back to home Make a contribution Subscribe Find a job Jobs Sign in Comment activity Edit profile Email preferences Change password Sign out My account Search News Opinion Sport Culture Lifestyle Show More News US news World news Environment Soccer US politics Business Tech Science Homelessness Opinion The Guardian view Columnists Letters Opinion videos Cartoons Sport Soccer NFL Tennis MLB MLS NBA NHL Culture Film Books Music Art & design TV & radio Stage Classical Games Lifestyle Fashion Food Recipes Love & sex Home & garden Health & fitness Family Travel Money What term do you want to search? Search with google Become a supporter Subscribe Sign in/up My account Comment activity Edit profile Email preferences Change password Sign out US edition switch to the UK edition switch to the Australia edition switch to the International edition Jobs The Guardian app Video Podcasts Pictures Newsletters Digital archive Crosswords Facebook Twitter Jobs Business Economics Banking Money Markets Project Syndicate B2B More Banking Huge increase in mortgage fraud, report police With Bradford & Bingley and Chelsea Building Society recently hit by criminal gangs, police estimate that mortgage fraud is now 'one of the biggest areas of investigation' Phillip Inman Share on Facebook Share on Twitter Share via Email View more sharing options Share on LinkedIn Share on Pinterest Share on Google+ Share on WhatsApp Share on Messenger Close This article is over 8 years old Last year the Association of Chief Police Officers estimated that mortgage frauds rake in £700m a yearPhotograph: Andrew Parsons/PA City of London police has reported a 72% increase in cases of financial fraud largely driven by a jump in mortgage scams over the previous year. The force said allegations of mortgage fraud had reached double figures and were one of the largest areas of activity for its officersThe number of investigations is expected to increase over the next year as frauds came to light and lenders sought to recover their losses, it said. Last week Chelsea Building Society became the second lender to be hit by mortgage fraud after Bradford & Bingley said it was the target of criminal gangs. Chelsea estimated its losses at £41m, which pushed the mutual into a first-half loss of £26mThe building society said gangs with the support of professional advisers were behind fraudulent buy-to-let loans made between 2006 and 2008 on hundreds of properties in Manchester, Leeds and several other northern cities. This month Bradford & Bingley, the nationalised buy-to-let lender, set aside an extra £100m for potential losses from mortgage fraud. Detective chief superintendent Steve Head, the chief of the City of London's economic crime directorate, said mortgage fraud "was happening all over the country" and "has jumped from nothing 18 months ago to being one of the biggest areas of investigation". Head said he expected the number of investigations to rise, though lenders were being slow to report cases to his unit, which has taken the lead in tackling financial crime since 2003. "While the amounts of money we are dealing with are significant, I don't think we are seeing the full pictureIt is a fraction of the amount of fraud that has taken placeIt is the mortgage lenders that are hit by the crime and they usually see it firstIt would be good if the lenders were coming forward more than they are at the moment." Most of his work centres on potentially fraudulent mortgage applications or professional negligence on property valuations driven by a booming property market. Last year the Association of Chief Police Officers estimated that mortgage frauds rake in £700m a year. "Greed is the driving factor in fraud," said Head"There are some where there are family links, some cultural links and some where the only link is greedBut a valuer is a key figure in the process." The Royal Institution of Chartered Surveyors is investigating 10 complaints of valuation fraud, several of them in conjunction with the City Police. Simon Bevan, head of fraud services unit at BDO Stoy Haywood, estimated that mortgage fraud cases had risen from £13m in 2008 to almost £200m in the first half of 2009"This is not a figure showing how much fraud was out there, it's just the tip of the iceberg," he said"We are six months away from investigations starting in earnest because the lenders haven't got round to tackling it yet. Bevan believes that domestic mortgage fraud could top £1bn by the end of the recession and commercial property mortgage fraud could reach £5bn. The Financial Services Authority has banned 65 mortgage brokers in the last three years for mortgage fraud and levied fines totalling more than £1m. Since last year a group of 40 of its staff from its enforcement division investigated brokers for a range of rule breachesOften the brokers allowed customers to inflate their incomes to obtain larger mortgagesWhen they could no longer pay the monthly bills, it emerges the customer could never afford the original loan. How a mortgage scam works In some cases gangs would buy a property, typically in a large development, at a deliberately inflated price. Once the purchases appeared on the Land Registry website, they would be used as a basis for subsequent valuations, enabling the fraudsters to obtain inflated mortgage applications on other homes, often in the same development. So, if a property was valued at £250,000 but was only actually worth £200,000, the gang could pocket the spare £50,000 to fund further deposits or to remove offshore. The gang would usually include a solicitor and surveyor "on the payroll" to ensure that the funds from the lender were siphoned off. Frauds went undetected because, at the height of the boom, lenders were happy to hand out mortgages without carrying out their own due diligence but relying on third party valuations. Rising property values disguised the fraud so that only when the market collapsed and the fraudsters pulled out did lenders realise that an asset they thought was worth £250,000 – to use our example – was worth much less, perhaps as little as £150,000 due to the falling market. Other scams involved enticing investors to buy new-build ­ properties off-plan. The homes would be advertised as high-specification and priced accordingly but in reality they would be built on the cheap, leaving investors and lenders with properties worth a fraction of the mortgage. Topics Banking Mortgages Mortgage lending figures Bradford & Bingley Crime Financial advisers news Share on Facebook Share on Twitter Share via Email Share on LinkedIn Share on Pinterest Share on Google+ Share on WhatsApp Share on Messenger Reuse this content Most viewed Business Economics Banking Money Markets Project Syndicate B2B back to top jobs become a supporter make a contribution guardian labs about us work for us contact us advertise with us help terms & conditions privacy policy cookie policy securedrop

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