Chelsea Building Society hit by mortgage fraud

21 August 2009

Chelsea Building Society has lost $67 million as a result of mortgage fraud, it has emerged.

As a result, the lender slipped to being $43 million in the red during the first half of the year.

In the opening half of 2008 it made a profit of $38 million and chairman and interim chief executive Stuart Bernau said that the financial institution "has been through a difficult period".

"Reporting a loss in the first half of the year is disappointing," he remarked, but added that underlying performance remains "strong".

According to the BBC, the frauds at the building society - which is the UK's fifth largest - were carried out by professionals working together to inflate the value of buy-to-let properties.

Last month, the Council of Mortgage Lenders warned that instances of fraud have risen due to the tighter lending restrictions placed on those looking to apply for homeowner loans.

It said that a growing number of applications have been using false information to obtain funds.

Written by Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development