HM Revenue & Customs are now targeting fraudulent domestic mortgages

Frozen out of the housing market by new

HMRC mortgage verification probes?

A new mortgage verification scheme to help combat mortgage fraud was launched on 1 September writes Catherine Baksi of The Law Gazette

HM Revenue & Customs [HMRC] , the Council of Mortgage Lenders and the Building Societies Association have worked together on the scheme, as announced in the March 2010 budget.

It's been trialed, refined, and its use will be limited to cases where, following in-house checks, lenders reasonably suspect that mortgage fraud may be taking place.

HMRC has set up a specialised unit to deal with requests. For a £14 fee mortgage lenders can send relevant details of mortgage applications where they have inadequate evidence of declared income and suspect fraud, using a secure electronic platform to HMRC.

The Revenue will check income details declared to lenders against information provided in income tax and employment returns, and advise lenders whether or not the details correspond, to help them assess the risk and inform their lending decisions.

CML director general Paul Smee said: ‘Lenders have found during the pilot that the scheme has been very useful in helping them to lend responsibly.

‘It has helped them to avoid lending in some cases where there is a risk of fraud, at the same time as giving them confidence about the borrower's credentials in some cases that they might otherwise have felt compelled to refuse.’

Julian Bray chairman Park Farm Neighbourhood Watch comments: "Clearly something had to be done to combat high levels of blatent mortgage fraud but unfortunately this new £14 fee electronic automated scheme - which will be applied as a matter of course and not just for 'suspect' applications - throws the baby out with the bathwater. Sole traders, contract workers and self-employed people will now find it is virtually impossible to secure an appropriate mortgage from the main providers, that strictly meets current lending rules, as they will have to prove and declare all income sources to HMRC.  Often the lender would take in to account future earning potential, but this will now be discounted. The knock on effect will be further pressure on property prices, in the lower and middle price ranges. 

Source URL: http://www.lawgazette.co.uk/news/hmrc-and-mortgage-lenders-launch-verification-scheme

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