Apprentice star commits mortgage fraud!
The conviction of Apprentice star, Christopher Farrell, reveals the shady side of the housing boom.
Last year’s crop of contestants for The Apprentice included 29-year-old Christopher Farrell, a former Royal Marine sniper who claimed to take his ‘killer instinct’ into business.
Chris the colourful character
As Series 6 of the hit BBC1 show -- presided over by entrepreneur Lord Sugar (catchphrase “You’re fired!”) -- got underway, news emerged of Farrell’s less-than-squeaky-clean past.
First came reports that a routine police search uncovered a knuckleduster and an extendable baton in Farrell’s Mercedes. In September 2009, and before filming started, Farrell pleaded guilty to two counts of possessing offensive weapons. Magistrates gave him a two-year conditional discharge and ordered him to pay costs of nearly £850.
So far, so bad.
Farrell the fraudster
Alas, last week saw the latest instalment in Farrell’s fall from fame, when he admitted four counts of fraud.
At Plymouth Crown Court on Friday, Farrell was given a nine-month prison sentence, suspended for two years, after pleading guilty in December to four charges of fraud by false representation. In addition, Farrell was ordered to perform 200 hours of community service.
Before winning a place on The Apprentice, Farrell worked as a mortgage broker at Mortgages for Plymouth from November 2007 to August 2009. During this time, he altered mortgage applications in order to help homebuyers to borrow more. By inflating his clients’ incomes, Farrell also boosted his earnings by pocketing commissions on home loans obtained using false information.
What’s the harm?
Some readers may be wondering, “What’s the big deal, did he really do any harm?”
After all, the borrowers got their loans, the sellers sold their homes, and Farrell trousered generous commissions, so who loses out? The answer is that mortgage lenders lost out, because they were duped into making loans that they would otherwise not have granted.
In court last month, Merseyside-based Farrell admitting submitting false information when making three mortgage applications and one remortgage application. In total, these four loans came to more than £750,000.
It’s important to note that Farrell’s clients had no knowledge of his fraudulent actions. For instance, in order to get one loan approved, Farrell tripled an applicant’s salary from £40,000 to £120,000 a year. These ‘liar loans’ came to light when one bank uncovered false information in one of Farrell’s caseload, leading to his arrest last August.
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At first, Farrell tried to ‘do the dirty’ on his colleagues, blaming co-workers for the forgeries. However, he quickly changed his tune and pleaded guilty in front of Plymouth magistrates, who referred him to the Crown Court for sentencing.
Bubbles breed sharks
While Farrell will probably be 2011’s famous mortgage fraudster, he’s just one of a growing band of mortgage advisers who broke the law during the housing bubble.
With house prices rising every year from 1996 to 2007, it became increasingly difficult for people on modest incomes to buy their own homes. In response, banks and building societies repeatedly relaxed their lending criteria in order to lend ever-higher sums to the widest possible range of borrowers.
This ‘race to the bottom’ led to the creation of self-certified mortgages: home loans that didn’t require borrowers to declare their incomes. Now dubbed ‘liar loans’, these high-risk loans became early victims of the credit crunch that began in August 2007.
Nevertheless, despite lax lending standards, even self-cert loans weren’t loose enough for some borrowers and mortgage advisers. Thus, a few ruthless brokers and homebuyers overstepped the line by inventing or falsifying information aimed at transforming bad loans into good.
The tip of an iceberg
Such fraudulent behaviour -- breaking the law to keep a worn-out bandwagon going -- is a classic sign of the late stages of a bubble. Unfortunately, frauds of this kind are often discovered years later, when hard-pressed borrowers begin defaulting on unaffordable loans.
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See the guideTherefore, as the housing tide goes out and lenders pore over their loan books, I expect more and more cases of this kind to come forward. In time, dozens of mortgage advisers could face charges for altering P60 forms, printing bogus payslips or faking key documents -- with or without the approval of borrowers.
Play it safe
Of course, borrowers and their advisers should avoid making false claims when applying for credit. Otherwise, as well has getting a black mark on their credit ratings or CVs, these folk could end up facing the full force of the law, up to and including a prison sentence.
What’s more, by playing it straight and not borrowing up to the hilt, borrowers won’t end up with loans that become impossible burdens.
Finally, Farrell lasted a full eight weeks on the show before being given the push by Lord Sugar. This just goes to show that even the most demanding and savvy bosses can be fooled by smooth-talking shysters and spivs!
More: Find your perfect mortgage | The sneaky mortgage trick to save you money | Don’t make this home-insurance mistake
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Comments
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Just like people who can't seem to help themselves gorging on food and getting fat, the people taking these loans have to take responsibility too. Just because something is on offer doesn't mean you have to, or can sensibly afford to have it. Excess is becoming the norm. More money is being spent to deal with the excesses. Those who don't control their excess should be the ones to pay for it, not those who know the difference between animal and human behaviour.
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One of thousands. The price bubble was part fuelled by liar loans, or in old fashioned speak, fraud. I've emiled my MP and suggested every mortgage supplied between 2000 and now be investigated. We should not have to put up with this sort of thing in a civilised society. Also, those who lied about their pay, how do they change mortgage ( come off initial fixed rate/ change to fixed rate, etc) without being caught out?
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Farell got what i consider a light sentence because his face is so well known that he faces no chance of getting such a position again. It thus saves us (taxpayers) money by not sending him to prison. However, it send no harsh message to others and reinforces a (wrong!) perception of his crimes being victimless. Contrast this with the prison sentences given to MPs found to have had their hands in the public purse illegally. They too are broken men - but they still went to prison for their offences. The housing bubble was caused by too much credit being available at too cheap a price. Banks fell overthemselves in their desire to lend and normal banking prudence went out of the window. Things now have moved the other way - interest rates are very low, savers have no encouragement to save, and consequently there is little money to lend, so banks have been able to tighten their lending policies to ration the dosh to only the very best (in risk terms) borrowers. The only bright sign is that existing borrowers are using the low level of interest rates on their mortgages to use the spare cash to reduce their outstanding mortgage balanace. While this helps the banks because those repayments can be used to finace new lending, its arguable that if the money was being spent in our economy that would be better for the country as a whole. But in their shoes, my own finaces would come before the nedds of the poppulation as a whole.
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07 February 2011