Redundancy, mortgage fraud & prosecution: a cautionary Reddit thread

[KievLoverTwo]

Posting without judgement. People have to do what they have to do to keep a roof over their heads.

However, I see people advising folks just to keep quite on MN now and then too. I neither agree nor disagree with that advice. Home ownership is tough.

Anyway, I felt duty bound to post it here.

www.reddit.com/r/HousingUK/comments/1p5e9fo/lender_pulled_offer_after_exchange_please_help/

Cut and paste of the OP's text:

"We are honestly in tears and don’t know what to do.
Currently buying our dream home, in a chain of five (people buying our house are FTBs). Conveyancing has taken over 4 months, but we finally exchanged last Friday, with an agreed moving date of 05/12.
2 months ago, my wife unexpectedly lost her job. Everyone we spoke to, all the advice we read on Reddit and other forums, told us to remain silent. This we did, because we knew we could just about afford the mortgage payments on my salary alone, and my wife has been frantically searching for a job. Then this morning, my MIL (who is gifting a small amount towards the deposit) phoned the solicitor to ask him about some final AML checks he needed to undertake, and during this conversation my MIL let slip that my wife had recently lost her job
Cue a call to us to confirm this was true, and we had no choice but to admit it was. He informed us that he would be placing the process on hold with immediate effect, and had a legal duty to inform our lender. He also reprimanded us for withholding it and said there’s a good chance we could be prosecuted for mortgage fraud. He also said that the lender is within their rights to withdraw the offer, place a mark against our credit files and that we will most likely now lose our (£60k) deposit.
As we feared, when we spoke to the lender later this morning they confirmed the withdrawal of our offer pending further checks (though we know that our current situation will not pass their affordability criteria). They will be investigating further the question of possible mortgage fraud.
To say we are scared out of our minds about the fall out from this is an understatement - my wife is virtually having a breakdown over the prospect of losing our entire life savings that we have spent the past decade saving, and our dream home. We’ve also been told that we could now be liable for our buyer’s legal costs - their solicitor informed ours that they will be looking at claiming compensation if we don’t complete on the 5th, and everyone else in the chain above us is furious and panicking of course.
I admit, we played a stupid gamble and it has backfired hugely. Please, any help or advice at all on what we can expect to lose, the effects and whether we’ll be able to save this house sale will mean so much to us.
EDIT: MIL is in her 80s and English isn’t her first language. She phoned the solicitor To ask what the final AML checks on her gift contribution would entail. We don’t yet know the full story but think she might have said something that raised red flags about our situation, solicitor got pushy and she admitted up to my wife being unemployed.
EDIT 2: I have looked into bridging loans and it seems the most we will get is 75% of the value of the property. As this is £400k we would be £40k short of the amount we need to complete, when our deposit is included. we don’t have any relatives that could lend this amount. Any ADVICE please???"

They say
"We told her when we exchanged last Friday that the solicitor would need to undertake some final AML checks like reviewing her bank statement to proof where the gifted funds was coming from. I believe she phoned him to ask what information she’d need to provide. Unfortunately she’s in her 80s and very uncomfortable with banking apps/downloading statements"

So it is possible solicitor mentioned it week before, then it wasn't needed and they misunderstood.
It would be such a phenomenal solicitor fuck up if they didn't complete AML before, I think it's bogger chance OP misunderstood something. I had really shite solicitor and this was done before mid point of transaction.

I appreciate that you've posted this in good faith, but I wouldn't necessarily assume that this is all true. Presumably there are plenty of trolls on Reddit as much as anywhere else who like to cause drama for whatever reason.

If it is true then hopefully they've done a quick Google and are reassured that there have only been 17 enforcement investigations into mortgage fraud since 2018. I don't think they will be going to prison at any rate.

I know that they've acted foolishly, but I genuinely feel bad for them. The process of buying or selling a house in the UK can drag on for ages, months, or sometimes even years, which naturally increases the likelihood of things going wrong and people's circumstances changing during that time, like losing a job, for example. So, if you've already spent money on surveys, legal fees, and poured so much time into the whole buying process, I totally understand why people might take the risk and choose to stay silent.

A few years back, my friend bought a house and was then made redundant a couple of months later. She obviously didn’t mention it to the lender and just found another job, but if it had happened earlier, she would have been in a shit spot and would have had to pull out of the purchase. So really, it all comes down to timing and luck!

I saw that too. It’s seems so low doesn’t it.

In as much as they have to tell the bank if the house itself is a financial liability.

You can't buy a house with a mortgage without one.

If they say 'that house is a risk, sorry, no' to the bank, the bank will pull the offer.

Ergo, they work, albeit indirectly, for the bank.

As the poor Redditor's post illustrates.

Idk. Redditors are usually like bloodhounds when it comes to sniffing out trolls. That said, the OP clearly NC'd for that post, as they have no posting history before today.

Suspicious me is wondering whether people are going to start saying "I'll give you £100, me too, I'll give you £50" and there you go the OP has just got lots of money from a scam Reddit post.

Looking at the Reddit username this person has no posting history and this is the only thread they have created or commented on.

Whilst loosing your job and staying silent is plausible, 80 year old MIL ringing up a solicitor and the solicitor actually talking to them is unlikely - solicitors generally don't respond unless you are the account holder.

I was thinking that, a very complex begging letter, hoping some idiot will give them £40k. A property version of I've been robbed in Thailand please send me money to get home.

Peter Mandelson narrowly avoided being prosecuted for mortgage fraud. It’s all quite convoluted but dodgy as fuck frankly.

“A damning report from Elizabeth Filkin, the parliamentary standards commissioner, upheld two of three complaints levelled against the former minister Mr Mandelson for not registering the loan and not disclosing another £35,000 loan on his Hartlepool constituency home when he obtained his £150,000 mortgage from the Britannnia Building Society. She concludes: "Mr Mandelson, unknown to the Britannia Building Society, received his mortgage on a different basis from that which would have properly applied to other members of the public."”

No idea how he was able to conceal an existing loan in a property - I suppose credit checks weren’t as thorough back then.

“The report shows that Mr Mandelson did not tell the Britannia that he had a loan on his constittuency home when he applied for the £150,000 mortgage. At one stage Mr Mandelson had loans totalling nearly £600,000 on a salary and MP's allowance of £53,000.”

He also had the nerve to fight fire with fire - basically “DON’T YOU KNOW WHO I AM???

“The report shows that Mr Mandelson took issue with the commissioner when he realised that there could be a critical report, warning her: "I am being accused of fraudulent behaviour... I hope the committee will take into consideration the consequences of upholding such a serious and far reaching complaint on such narrow, technical grounds".”

https://www.theguardian.com/uk/1999/jul/02/davidhencke

The conveyancer works for the Lender and the Buyer, unless the Lender is separately represented (which is a bloody nightmare).
A conveyancer can't withold information from their Lender client to assist their Buyer client. It just doesn't work like that.

Yes this was the first of Mandleson’s resignations as I recall.

Must admit the Reddit story doesn’t pass the smell test to me - the AML checks being done after exchange most obviously.

How would the situation be different if she lost her job the day after completion? Still have a mortgage that needs paying.

The ultimate fuck around and find out, it true.

I am assuming then no one is responsible for irresponsible lending. That's kind of it.

Apart from the potential prosecution (which I hope is an unlikely worst case threat) would there have been any different outcome if they had come clean when the wife was first told about the redundancy? If this was after exchange, I assume the chain would still have collapsed, may have lost the deposit and been liable for the fees. If before exchange then everyone just loses the search fees etc.

I was called 24 hours before completion to send in some more AML evidence, as it had been 10 weeks since we sent in form and first AML evidence.

I would actually turn this around on the solicitor and say that they have failed to complete their due diligence in completing all the checks on the giftor prior to exchange of contracts. It is the solicitors responsibility to ensure that the obligations of the gifted deposit as per the mortgage conditions should be completed prior to exchange. If there was something flagged afterwards the solicitor would be in breach of their obligations to the lender. It sounds to me as though the solicitor has exchanged contracts without doing a full sign off on the file and therefore diverting responsibility to the client. If I was the client I’d be raising it firstly with the conveyancing solicitors supervisor. On a side note the solicitor has an obligation to also inform the client of any action they will be taking prior to doing so - in this case they should have informed the client they would be updating the lender before doing so so that the client could make contact first.
The solicitor hasn’t acted in interests of either party they are representing and I would be seeking damages from them.

@Helpmefindmysoul are you a solicitor?

"we lied to you for two months but we want damages from you because you told us you will speak to lender when you found out and didn't give us enough time to call them ourselves"
Is that a claim?
I don't think the AML was an issue at the end of the day. Compliance would flag it.

Why do you ask?

So, what would have happened if say they exchanged Friday morning, and she was fired Friday afternoon / had a contract terminated with immediate effect, then this call happened on the Monday? Nothing fraudulent would have happened, but could the mortgage still be withdrawn and they lose their deposit etc? Or what if there was a AML issue with the money from MIL? This is one reason why checks are all done prior to exchange! Seems suss

🤣 your slightly shaky grasp of how things work was making me wonder whether some CPD was needed. Now I've re-read your message, it's clear there's risk to the public.

FFS
NO risk to the public🙄
Because you're not a practising conveyancer.

They’ll have to take responsibility for their actions. If they didn’t need Mummy’s money this may never have come to light. A double whammy lesson learnt.

They could even get a criminal record.

I see, of course there’s no risk to the public but it’s evident that you lack the knowledge of the processes which should have happened in the conveyancing process. Don’t have a laugh at my expense or suggest what I do or don’t need.