20 Jul 2012

Scottish Mortgage Fraud Update

Scottish Mortgage Fraud Update

Neil Fraser, Partner, looks at identity theft of both borrowers and solicitors.

Neil Fraser, Partner, looks at identity theft of both borrowers and solicitors.

While a significant amount of mortgage fraud is still restricted to individual instances of borrowers lying about their financial position, we appear to be seeing serious fraud becoming more sophisticated.

One popular type of mortgage fraud remains basic identity theft. The client instructing the solicitor may simply not be who they appear to be. When considering cases for potential negligence we take note of any failures by the solicitor to properly identify their client.

We are aware that this is becoming more sophisticated as fraudsters are now known to have assumed the identity of firms of solicitors, to the extent that bank, Solicitors Regulation Authority, and Companies House records have all been manipulated. Recent cases have gone against honest, but negligent, solicitors dealing with these fake firms.

For some reason, we are not seeing a similar type of fraud, and resultant negligence, in Scotland. Overall, mortgage fraud rates in Scotland are lower than in England and Wales. Aside from the honesty and integrity of the average Scot, is there a good reason why that is the case?

Well, for one thing, the Scottish Legal Profession is smaller than in England and Wales, and resultantly more closely connected. Firms are in regular and frequent contact with each other. This makes the type of fake firm fraud seen in England much harder to pull off in Scotland.

We also have the advantage of one master policy providing cover for all operating solicitors. This means that even if things do go wrong and we are obliged to make claims on behalf of our clients, we deal with the same organisation. This lets us turn our experience of each settlement negotiation into the ability to predict tactics, positions, and offers in future cases.

Neil Fraser, Partner

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