It is a sad state of affairs but figures released by the mortgage industry regulator, the Financial Services Authority (FSA), show that just five months into 2009 the fine levels against individuals for mortgage fraud have already overtaken the fines figure for the whole of 2008.

So far, they’ve fined individuals a whopping £302,445 and even banned nine individuals already from operating within the mortgages industry.

Mortgage fraud committed by individual mortgage advisors usually consists of over-inflating the applicant’s income so they can qualify for the mortgage. This is usually done by including overtime money, forging payslips or adding in a fake extra part time job. Sometimes the applicant knows about the falsification and sometimes they do not. The customer can get a larger mortgage and the advisor gets a larger commission.

It is problems such as this that contributed to the ever-increasing house prices and the subsequent credit crunch and now we are paying for it as house prices return to a more manageable level.

The FSA has spent the last 18 months cracking down on the problem and relies on whistleblowers within mortgage lenders, mortgage brokerage firms and others to help with this.

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