Mortgage Fraud and the Law of Theft
| Author | Simon Parsons |
| DOI | http://doi.org/10.1177/002201839906300542 |
| Published date | 01 October 1999 |
| Date | 01 October 1999 |
| Subject Matter | Article |
Mortgage
Fraud
and
the
Law
of
Theft
Simon Parsons-
The House of Lords decision in
Preddy'
held that defendants involved in
mortgage fraud and charged with obtaining property by deceptlorr'
could
not
be guilty of that offence because there was
no
obtaining of
property by the defendants. This article will critically examine the
various offences which have been used to charge defendants involved in
mortgage fraud. The effect of the Theft(Amendment) Act 1996 on the
and
the TheftAct 1978 will also be examined.
What is mortgage fraud?
Mortgage fraud occurs
when
amortgage application to a building society
or
other
lending institution
and/or
accompanying documents contain
false statements, the applicant knowing the statements to be false.
Examples of such statements are the giving of a false name, false details
of employment
and/or
income, stating the property is to be
owner
occupied
when
in fact it is to be let to tenants, giving false details as
to the purchase price or stating there are no prior mortgages
when
there
are.'
The purpose of these false statements (misrepresentations
or deceptions) is to persuade the lender to agree to the mortgage
advance."
Obtaining property by
deception!
An examination of the history of the legislation which resulted in
the
Theft Acts of 1968
and
19786shows
why
obtaining property by decep-
tion has been used to charge mortgage fraud, a use it was
not
designed
for.
*Senior Lecturer in Law, Southampton Institute.
I [19961 2 Cr App R 524.
2 Theft Act 1968, S 15(1).
3If a solicitor suspects that a mortgage application contains false statements he or
she should investigate the matter fully and if not satisfied cease to act further for
the client. A solicitor remains bound by his duty of confidentiality to his client
and, therefore, is prevented from disclosing the suspected fraud unless
the
solicitor is satisfied that there is a strong
prima
fade case that
the
dient
was using
the solicitor to further a fraud or other criminal purpose (The Law Society's
Conveyancing
Handbook
(1994) at 50 and 649).
4 '[The] lenders appear to have been more interested in
the
value of the property
In question than in the personal details of the applicant', per Lord Goff in
Preddy
[19961 2 Cr App R 525 at 527. This raises the question as to
whether
there was
an operative deception for the purposes of s 15(1)? However in
Lambie
(1982) AC
449 an operative deception was held to have occurred where the victim would
not had concluded the transaction had
the
truth been known.
5 Above n, 2.
6 Above n, 1 at 530-3.
474
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