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Ask Clare Your Own Question

Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 33281
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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hi mat can we finish the question i started a month ago

Customer Question

hi mat can we finish the question i started a month ago please and i will finish and pay up today

i have taken out three mortgages from three different lenders over a period of 16 years - i never told each lender about the other mortgage i had as i couldn't be bothered not trying to cheat just thought the process would be easire - each time i took a mortgage it was to buy a place to live in then i would move on and rent it - currently i rent two properties - i think i may have committed mortgage fraud though i did not know it at the time - how do i own up or what should i do to sort it out - whats the worse that can happen

Submitted: 1 year ago.
Category: Law
Expert:  Clare replied 1 year ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
Have you notified the other two Lenders that you are no longer living in the properties?
Clare
Customer: replied 1 year ago.

yes i have done that now by getting consent to let and they approved the consent

Expert:  Clare replied 1 year ago.
Hi
Then all is well ad whilst technically s you should have informed then Mortgage companies of the other mortgages there is no legal action that will be taken against you
Please ask if you need further details
Clare
Customer: replied 1 year ago.

ok - thanks for that - before i pay this is the last question; so even though now i have my two properties with consent to let - none of the mortgage companies know about each other - do i need to tell them

Expert:  Clare replied 1 year ago.
Hi
No there is no requirement to do so
Clare
Expert:  Alice H replied 1 year ago.
Failing to disclose the existence of other mortgages is likely to amount to mortgage fraud.The definition of fraud in the Fraud Act 2006 covers fraud by false representation and by failure to disclose information where there is a legal duty to disclose. False representations can be made explicitly or implicitly and may occur even where you know only that the representation might be misleading or untrue Individual purchasers can commit mortgage fraud by obtaining a higher mortgage than they are entitled to by providing untrue or misleading information or failing to disclose required information. This may include providing incorrect information about:identityincomeemploymentother debt obligations e.g. existence of other mortgagesthe sources of funds other than the mortgage for the purchasethe value of the propertythe price to be paid and whether any payments have been, or will be made, directly between the seller and the purchaserWhether any legal action is taken against you depends on each mortgage providers policy on this issue. But as a matter of law your actions do appear to amount to fraud.
Customer: replied 1 year ago.

i am confused as i have two different answers here - one telling me that its not really a problem the other saying i have committed mortgage fraud ?

can you please clarify

Expert:  Alice H replied 1 year ago.
Do you accept that you gave false or misleading information about the existence of other mortgages?
Customer: replied 1 year ago.

yes i did - but i was just reading that the mortgage fraud has to be operative and dishonest - is that correct - which means - that had 1 declared my assets in other words the equity i had in the other properties which was enough to clear all my mortgages - i may have been ok - slightly Undecided;

see when i applied for my mortgages i did not declare the others even though they had alot of equity in the or am i clutching at straws

Expert:  Alice H replied 1 year ago.
No, you're not clutching at straws at all.
You're right about the need for "dishonesty" which is an essential element of proving criminal fraud.
You asked "what is the worse that can happen?" And the worse that could happen is that you could be prosecuted for fraud.
Nobody can say with any certainty what will happen in the future and I hope that nothing comes of this situation; but as a solicitor I have to give you an honest and objective opinion.
s.2 Fraud Act 2006 states:
2Fraud by false representation
(1)A person is in breach of this section if he—
(a)dishonestly makes a false representation, and
(b)intends, by making the representation—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
(2)A representation is false if—
(a)it is untrue or misleading, and
(b)the person making it knows that it is, or might be, untrue or misleading.
(3)“Representation” means any representation as to fact or law, including a representation as to the state of mind of—
(a)the person making the representation, or
(b)any other person.
(4)A representation may be express or implied.
(5)For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).
The case of R v Ghosh sets out the legal test for "dishonesty". In that case Lord Lane said:
"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.
If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest."
So you will see by looking at the Fraud Act and the case of Ghosh that failing to disclose the existence of other mortgages is likely to amount to fraud and there is the risk of investigation and prosecution notwithstanding your ability to meet monthly repayments and ability to clear the debt with equity existing elsewhere.
Hope this helps.
Alex
Customer: replied 1 year ago.

ok - thanks alex you answers have been really good - my plan is to move mortgages to new providers and be honest upfront - that at least shows whatever happened in the past - i did try to fix it as my intention was not to fraud even though i did

thanks

H

Expert:  Alice H replied 1 year ago.
My pleasure. All the best.
Alex
Expert:  Clare replied 1 year ago.
Hi
Legally - by the letter of the law - you committed fraud by your failure to disclose.
However unlike your work colleague you did not falsify any evidence to induce the Mortgage company to lend you the money and your actions did not increase the risk of loss to the Mortgage Companies.
Accordingly the risk of action being taken against you is slim to negligible - and given that Credit checks would have been done and revealed the existence of other accounts then it is in fact highly likely that the Companies involved are already aware of the issue.
There is no need to rush to redeem the mortgages - if this tiny risk is keeping you awake at night then inform the mortgage companies.
Clare

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