All About Loans Weblog

Many homeowners are being encouraged by their brokers to lie about their income in order to secure large mortgages. To lie about your income in order to secure a loan is a punishable offence and could land you with a hefty fine or even a jail sentence.

A recent story has emerged about a care worker employed by the citizens advice bureau who claims she was advised by her broker to lie about her salary when trying to secure her mortgage.

Sandra Ashcroft, 59, told her bank she received a £35,000 salary as a mid-wife in order to secure a home loan of £102,000 in 2003. She then applied to increase that mortgage to £122,000 after telling the bank she earned £80,000 working in the public services. Ms Ashcroft actually only earned between £3000 and £5,500. 

What Mrs Ashcroft did was highly illegal and she was charged for obtaining money transfers by deception. She was given a six-month suspended sentence but the judge said that there was evidence to suggest that she had been steered towards giving misleading information. 

The danger often lies with the temptation offered by self-cert loans and mortgages. These were created for self-employed workers or business owners who don’t always have records of their income. Whilst these loans are vital for those who have an income that doesn’t come from a salaried job, there is a possibility for people to try to obtain credit they cannot repay by lying on their application.

So if you are thinking of lying on an application for a mortgage or even if your broker is encouraging you to lie do not be tempted. This is a very dangerous route to take and if you are caught out you could face losing your house, ruining your credit rating and even a jail sentence. So always consult the mortgage company or even a lawyer if you are unsure about specific details on your loan application form.

A yearly holiday trip is something that everyone looks forward to and prepares for, however one thing that most people fail to do is prepare themselves by knowing how to protect their cards while overseas.  Millions of Britons are placing their bank accounts at risk of identity fraud by not taking precautions while on holiday.

Holidaymakers go on holidays to escape the everyday worry of work and bills and daily routines and get away to relax and enjoy new experiences.  However, this relaxed attitude means that many cardholders end up being a bit too relaxed with their credit cards as well, placing themselves at risk of identity theft.  With you no longer on guard, fraudsters are able to steal details of your accounts and use that information to open new credit card accounts, loans or bank accounts.

Research has found that only around 42 percent of Britons take all the necessary precautions to protect their identity while on holiday.  Another 23 percent claim that they have never even thought about protecting themselves while on holiday.

With cases of fraud on the rise, it is important that everyone takes precautions and ensures that their identity is protected.  So before you leave on your holiday it is important that you lock away all your important documents and stash them in a safe place.  You will also want your neighbour or friend to collect your mail for you and keep an eye on your home.  While you are on holiday you should keep your boarding pass or any other document that may have any information about your identity, this includes receipts from credit cards or ATM machines.  You will also want to keep your passport in a safe and secure place at all times while on holiday.

By following this advice, you should hopefully only return with a tan and some great photos. Ignore the perils and six months down the line may be the first you know that your identity has been stolen by fraudsters. Often it is only when you are turned down for a personal loan or mortgage do you realise the damage done to your credit record.

Gordon Brown’s controversial tax credit scheme is a failure by some standards. It has been defrauded by an estimated £3bn but it has also made overpayments in excess of £6.6bn since it being introduced in 2003, according to the National Audit Office.

Alistair Darling, the chancellor, yesterday said that “it is unacceptable to have these high levels of error.”

Sir Menzies Campbell said the party believes in “fairer, greener, not higher taxes.” The party estimates that a single-earner household with an income of less than £46,000 will be better off under the proposals but dual-income families will suffer if they surpass an income of £68,000.

Edward Leigh, Tory chairman of the Commons public accounts committee. He said: “The reputation of HM Revenue and Customs for competence looks increasingly threadbare.”

“There are no winners here. To the taxpayer it means a torrent of wasted money. To vulnerable families who have been overpaid, it means a future of almost certain hardship repaying debt to the government. Revenue and Customs mistakes do not end here. The department turns out to have provided incorrect advice on the taxation of small pensions. The amount lost to The Exchequer each year is running at £135m.”

Proposals to cut 4p from the basic rate of income tax, to 16p in the pound, the lowest rate since 1916 have been introduced. Government pledged to remove loopholes exploited by the rich and foreign millionaires.

Debt charities are encouraging people suffering from debt to review their taxes and make sure they are not losing a refund. Many families are buckling under the strain of high mortgages and personal loans taken out in easier times. For these people a tax break could be the difference between solvency and bankruptcy.

Most people worry over the risk of becoming victim of such crimes such as burglary or mugging but they don’t expect their money to be stolen through other forms of crime.  This is despite more and more publicity over identity theft and other fraudulent crimes.

By making themselves aware of these crimes, the public can prevent them before they occur instead of becoming part of the crime statistics.  Every year fraud costs the UK around £20 billion, with £3 billion of it being lost through Internet scams.

One of the latest scams is called the ‘lonely hearts’ scam.  This scam affects online users who use chatrooms or dating websites for online relationships.  The way it works is the fraudster befriends the victim over a period of time by feigning interest in them. All the time however, they are really interested in how rich their victim is, or how much access they have to credit.

After they have gained the victim’s confidence, the fraudster dupes them into taking out a personal loan or handing over life savings. There is always a ‘hardluck story’, usually a claim that this new friend desperately needs money for an operation or for travel expenses to escape an opressive regime.

Typically this type of fraud involves a man or woman from another country who builds a relationship over time through email and phone calls.  The relationship can last for months with the fraudster requesting to borrow money slowly over the time period, or they could suddenly come up with an emergency where they need the funds.

Although you may feel that you would never fall for something so obvious as this scam, it happens to people every day. The internet has a way of breaking down barriers between people, and the victims afterwards report that they genuinely thought they had found love or at least a real friend. When speaking with others who live in much poorer circumstances guilt over their better lifestyle is often all that is needed for the victim to borrow money to help out their new ‘friend’.
Unfortunately fraud has caused many people to become wary of others’ intentions, but with the amount of fraud that is occurring people do need to be more cautious.

A new type of fraudster is sapping many single adult’s life savings, and even driving them into insolvency.  These insidious fraudsters hit their victims from dating sites. They earn their victim’s confidence and learn whether they own a nice house, discover their mortgage level and whether they have a savings account.

A growing number of adults are victims of seemingly ‘caring’ people whose acting skills are so good that they quickly gain access to the victim’s accounts.  Reports are surfacing where con artists have stolen as much as £70,000, but usually target smaller amounts.

There are two types of con artists who use these scams.  The first type of fraudster often has a heart rending story; perhaps involving medical bills that cannot be met. They ask for financial help. Or perhaps they have a business idea which is a ’surefire winner’.  Each time the victim lends money to the fraudster – sometimes clearing their savings accounts, sometimes taking out personal loans to raise the cash. But once the money is handed over, the fraudster is never seen again.

The second type of fraudster dates the victim and then quickly moves in. They set up house and open joint accounts.  The fraudster can usually apply for a loan or open joint accounts on the victim’s credit rating. After a while they empty the victim’s accounts take gifts and disappear.

The first type of fraudsters are usually located in foreign countries, making it impossible to press charges.  For the second type, they could be masquerading under a false name, or a foreigner who expects money for a visa and airfare to the UK.

There are many different types of scams that separate UK adults from their money.  Many victims of fraud are left with no money, no way to repay their mortgages, and with only one option: insolvency.

ID fraudsters are becoming more sophisticated and are starting to use other avenues to steal from consumers.  There has been an increasing amount of mobile phone fraud, current account hijacking, and car leasing and cloned car number plate fraud throughout Britain.

Credit card and loan frauds are now the most popular forms of ID theft, where fraudsters gain information from one person to carry out as many  fraudulent activities as they can before the fraud is discovered.

The fraudsters create credit card accounts and run up huge bills which will never be paid.  They take out personal loans which get defaulted on, leaving the victim with a bad credit rating.

The average amount an individual is defrauded is currently £6,000.  Many consumers are not aware that identity fraud has taken place in a number of different ways and are still not protecting themselves and practicing good methods of identity protection.

Most consumers do not know what to look out for to discover whether they have fallen victim of an identity theft crime.

Identity theft can happen in a number of different ways and only just a few personal details are needed to commit a crime.

Often these personal details can be obtained through phone calls, phising, mail interception and other methods.  The personal information gained through the methods can then be used for fraudulent purposes such as account takeovers as well as taking out mobile phone contracts.

Over the last year there has been over a 300% increase in the number of serious fraud cases.  Fraudulent cases that included the take over of a current account were up by 24% in the first three months of this year with mobile phone contract crime up by 22%.

There are many stories of lottery winners who win money, only to be left in poverty a few years, or even months, after they collect their earnings.  But, now, there is a more insidious lottery scam that is taking people’s life savings.

This lottery hits most people from their e-mail address.  This scam does not originate in Nigeria, but in London. Once the recipient responds to the e-mail, the fraudsters talk of the money they already won, but there is always an administration fee.

The ‘real’ lotteries do not have fees. They also do not award prizes to people who did not buy a ticket, or fill in a registration form.

Many households in the UK are desperate enough to gamble on the slight chance that the lottery is for real. Unfortunately, victims do not speak up from embarrassment.

The administration fee is rarely charged by the company, but by a ‘government levy’ or a legal fee needed to claim the money.

The scam set up is very advanced. The fraudsters put people in touch with a London-based Lawyer who will help you. Many people take out a personal loan or borrow the money on their credit card.

He will arrange the government levy, and uses the same terms as the fraudsters.  He will attach his fee to the top of the government and legal fees.

Near the end, the fraudsters walk away with £3,500 that the consumer has begged or borrowed.  This type of scam traps the elderly, and the poor, who have not had financial training.  They borrow money in the hopes of eliminating their debts.

Experian, the global information solutions company, announced the integration of Hunter II and Detect fraud systems. This gives Experian a wide-ranging application fraud detection tool which will protect information and increase the company’s fraud location capabilities. The total fraudulent cases detected by Experian’s fraud prevention systems for mortgages, loans, credit cards, other finance, and leasing has risen significantly.

This move was in response to new statistics that show a serious increase in fraudulent application attempts on consumer’s credit information. The number of attempts in the last six months is increasing 2.6 per cent a month. On average, 0.23 per cent of all credit applications are suspected as fraudulent.

The total fraud attempts uncovered increased 20 per cent in the year ending 31 October 2006.

The new systems will cross-match applications against 500 million records in Experian’s consumer credit information database, plus 100 million previous application records. This creates the largest UK application fraud detection database.

Clients will benefit from a simple system using both systems. Results for fraudulent activity that is picked up by Detect and Hunter are fed to a single fraud detection system.

Experian’s consumer credit information management approach creates a seamless application processing systems.

Gary Wood, head of Experian’s Fraud Solutions Business, commented: “Fraud is the biggest cause of revenue loss for financial, telecommunications and insurance organisations. Whilst the identity and motivation of fraudsters will vary from dishonest customers to organised criminal gangs, the losses resulting from fraud have a direct impact on our clients’ profitability. Based on current application fraud trends it is estimated that during 2007 Experian will prevent more than £1.6 billion worth of fraud losses in the UK’s financial services sector.”