Mortgage fraud in the United Kingdom has increased steadily over the last few years, possibly in response to tighter lending criteria and a troubled economy. According to financial reporting company Experian, the trend continues to grow. Experian reports 39 of every 10,000 mortgage applications were fraudulent in the second quarter of 2012. That’s a 23 percent increase from 2011.

Nor is the situation a recent development. Statistics from 2011 reported an even greater increase in mortgage fraud, with cases up 77 percent from 2010. Mortgage fraud has become commonplace – and  is likely to continue into the future.

Income Inflation

The majority of fraud cases involved applications where people inflated their incomes to secure the loan. In many cases, the applicants didn't see the harm, and they were simply desperate to meet the lender’s mortgage criteria. Knowingly providing inaccurate information, however, is a criminal act. Those who are caught risk more than a rejected loan application.

Just under a quarter of fraud cases involved people trying to hide bad credit, while in approximately 20 percent of cases applicants provided misleading employment information. This year, we’ve also seen an increase in people giving fraudulent property use information, such as applying for a residential mortgage when they intend to rent the property.

Fraudulent Documents

Mortgage lenders have also seen a rise in falsified documents, a serious crime that carries hefty penalties. The documents falsified most often pertain to identification or evidence of income. The increase in falsified documents stems, in part, from online “services” that provide fake paperwork to loan applicants.