Brokers were warned at the Mortgage Business Expo at Manchester of bridging loan fraud, which was described as a fraud hotpsot by John Malone, executive chairman of PMS.
Mortgage Introducer reports that brokers are accused of pushing surveyors to overvalue properties to get a bigger bridging loan.
John Malone comments:
“More potentially fraudulent activity is taking place especially in the bridging sector. This is where the intermediary is pleading with the surveyor to make the deal work.”
It was claimed that properties or developments are being overvalued so that borrowers could apply for larger loans and effectively borrow a loan with a 100% LTV rate.
John Malone adds:
“Lenders are looking very hard at the valuation that is carried out where bridging finance has taken place. That’s where they’re seeing a lot of fraud taking place.
“The FSA have certainly been knocking on our door and they are certainly asking us to tighten up and tidy up some of our practices.
“And part of that is to try and crack down on fraud because it is a significant problem in the market.”
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