Speaking at Manchester Mortgage Business Expo John Malone, executive chairman of PMS, said bridging was a hotspot for fraud of this kind.
He said: “More potentially fraudulent activity is taking place especially in the bridging sector. This is where the intermediary is pleading the surveyor to make the deal work.”
Malone said properties or developments were being overvalued so the borrower or developer could access a larger loan and effectively borrow at 100% loan to value.
And he added: “Lenders are now looking very hard at the valuation that is carried out where bridging finance has taken place. That’s where they’re seeing a lot of fraud taking place.”
Malone added that the Financial Services Authority was speaking to networks and clubs in an effort to turn the screws on attempted fraud.
He said: “The FSA have certainly been knocking on our door and they are certainly asking us to tighten up and tidy up some of our practices.
“And part of that is to try and crack down on fraud because it is a significant problem in the market.”
