Don't lie on your mortgage application. The taxman will get you too.
Remember the good old days when a self-certification mortgage meant you could make up whatever numbers you needed to get your mortgage? No payslips required, and favoured by the self-employed, this type of mortgage was the most frowned upon when the sub-prime accusations were flying back in 2008.
But never fear, lenders are now claiming it will be easier to get a self-cert mortgage, provided you are telling the truth, as they can now slip HMRC some cash and they will divulge your personal details in an entirely legitimate transaction.
HM Revenue & Customs, the Council of Mortgage Lenders and the Building Societies Association are today launching the Mortgage Verification Scheme, an “important additional tool to help beat fraud”. The National Fraud Authority estimates the cost of mortgage fraud at £1 billion last year, so measures to tackle it are ‘important’.
The scheme was announced in the March 2010 budget and has been refined during the pilot period since. Use of the scheme will be limited to cases where lenders reasonably suspect, following their own rigorous checks, that mortgage fraud may be taking place.
Under the scheme lenders can now send relevant details of mortgage applications where they have inadequate evidence of declared income and suspect fraud using a secure* electronic platform to HMRC. HMRC will then advise lenders whether or not the details correspond.
Of course, the major advantage is for mortgage lenders who can manage their risk for a measly £14 plus VAT fee. However, selling your personal information to interested parties to make a quick buck is not really what HMRC ought to be doing, right?
But don’t worry, it’s all above board**. Remember those information powers I told you about last week? HMRC are using them again. You see, if the mortgage application income details are higher than those declared on tax returns, then clearly HMRC have reasonable reason to suspect that you may be avoiding tax. It is clearly far more likely that you are lying on your mortgage application, but this suspicion is all HMRC need to legitimately sell your details.
Of course, they don’t see it like that, the official line from the HMRC’s Assistant Director of Risk and Intelligence Service is that
"HMRC are determined to tackle fraud wherever we can. The Mortgage Verification Scheme is an unprecedented opportunity for HMRC and lenders to work together to combat fraud in the mortgage industry."
Unsurprisingly the mortgage companies are also saying this is A Good Thing. The director of the Council of Mortgage Lenders thinks it may actually help those who are telling the truth,
"Lenders have found during the pilot that the scheme has been very useful in helping them to lend responsibly. It has helped them to avoid lending in some cases where there is a risk of fraud, at the same time as giving them confidence about the borrower's credentials in some cases that they might otherwise have felt compelled to refuse."
So provided you are telling the truth, and don’t mind having your personal information shared for cash, everyone’s happy, right?
* secure normally means safe, as in not left on a laptop in a pub or something. Just saying.
** as in legal. As in within the terms of the legislation. Which may or may not be above board.