Mortgage Fraud
Mortgage fraud is the criminal offence of obtaining a mortgage advance by deception — typically by misrepresenting income, employment, the purchase price, the identity of the borrower, or the nature of the transaction. Mortgage fraud is a predicate offence for money laundering and is one of the most common AML scenarios faced by conveyancing solicitors.
solicitors acting for both lender and borrower owe duties to both. Identifying a discrepancy — between the price stated to the lender and the price actually paid (a 'value uplift'), or between the buyer named and the person funding — must be reported to the lender or the buyer relationship must be terminated, depending on the duty owed.
Other terms that go with Mortgage Fraud
Conveyancing Risk Factors are the recognised red flags that elevate AML risk in residential or commercial property transactions. They include unexplained third-party funding of the purchase, gifts from non-disclosed donors, large cash elements, rapid resale or sub-sale patterns, no-search indemnity policies in place of standard searches, suspiciously high or low purchase prices vs valuation, and clients reluctant to evidence source of funds or attend in person.
A predicate offence is the underlying criminal activity that generates the proceeds laundered through a money laundering offence. Under POCA, almost any criminal offence — committed in the UK or overseas — that produces a financial benefit can be a predicate offence. Common examples include tax evasion, fraud, drug trafficking, corruption, theft, and modern slavery.
Money laundering is the process of disguising the proceeds of crime so they appear to come from a legitimate source. Under the Proceeds of Crime Act 2002 (POCA), the principal money laundering offences are concealing criminal property (s.327), entering into arrangements that facilitate it (s.328), and acquiring, using, or possessing criminal property (s.329). All three carry maximum penalties of 14 years' imprisonment.
Put Mortgage Fraud into practice with Certivus
Knowing the term is the first step. Certivus gives you the workflows — client intake, CDD, EDD, PEP and sanctions screening, audit-ready records — to apply it across every client.
Back to the full glossary