More mortgage fraud as home seekers get increasingly desperate in tight housing market

Banks and other lenders have noticed a significant increase in mortgage fraud in recent months. The tight housing market, high prices, and high mortgage interest rates have people lying about their income to qualify for higher mortgages. The Authority for the Financial Markets (AFM) has tightened supervision of the almost 7,000 financial service providers in the Netherlands to fight this wave of fraud, the Telegraaf reports.

The AFM would not give the newspaper concrete figures on mortgage fraud but said it has seen an increase “in nature and in number” in the first four months of this year. The regulator has ordered banks and lenders to be extra alert when checking payslips, employer statements, and annual accounts.

In some cases, home seekers themselves try to present a better financial picture than they actually have. But more often, they’re getting help from corrupt notaries, appraisers, purchasing agents, and accountants, Telegraaf wrote based on recent lawsuits.

Last week, the Amsterdam police announced that they’ve arrested ten people in the region suspected of mortgage fraud, money laundering, fraud, and forgery. The suspects are between the ages of 23 and 45 and work in real estate, at administration offices, or as mortgage advisors. According to the police, the main suspect falsified income data, upwardly adjusted annual figures, and submitted falsified employment contracts.

In the investigation, the police searched nine properties in Amsterdam, Almere, Badhoevedorp, and Zaandam. The properties included a real estate agency, mortgage advice offices, and administration offices.

According to the association for mortgage planners, NVHP, people often don’t realize what a massive risk they’re taking when they commit fraud of this type. “The consumer does not understand the consequences at all. These can be enormous,” board member Mark Sanders told Telegraaf. A fraud convict can be ordered to pay back the full amount of the granted loan immediately. “On top of that, there may be a penalty interest. You then also run the risk of being registered in a banking referral system for up to eight years.”

The referral in the registration system means that other banks will also be reluctant to grant the convict a mortgage. “Renting also becomes difficult because, as a tenant, you often have to be able to demonstrate good behavior. As a fraudster, you therefore run the risk of literally ending up on the street.” Rogue financial service providers risk having their permits revoked, high fines, or even prison.

Regulator AFM also noted that criminals are increasingly using mortgage fraud to launder criminally earned money. For example, they purchase property partly with a mortgage and partly with criminally obtained money and also use criminal earnings to repay that mortgage more quickly. The purchased property is then sold on the regular housing market again.