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March 10, 2009

Police investigate buy-to-let mortgage fraud

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by Gill Montia

Police investigate buy-to-let mortgage fraud

The City of London Police are questioning suspects in connection with an alleged buy-to-let mortgage fraud.

Eight people linked to Sussex-based Eastbourne Financial Services have been arrested on suspicion of conspiracy to defraud and money laundering.

The mortgage broker is no longer trading having lost its FSA authorisation earlier this month.

According to reports, the fraud could extend to £40 million in value and involve the purchase of 500 properties, between 2005 and 2007.

Buy-to-let lender Bradford & Bingley has reportedly been helping the police with their investigations.

The most likely method of perpetrating such a fraud would involve inflating the value of properties for mortgage purposes.

When purchases are made for below the declared value, fraudsters can then pocket the difference between the price paid and the mortgage.

The crime may not come to light until there are repossession proceedings.

Both organised criminal gangs and individuals have been involved in such activity and analysts expect more cases to hit the headlines as the property market downturn persists.


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