Chelsea suffers £41m mortgage fraud

UK's Chelsea Building Society has plunged into a loss for the first half of 2009 after it was hit hard by an alleged mortgage fraud of £41million.

Buy-to-let loans have caused problems for Chelsea, which said the alleged fraud cases occurred between 2006 and 2008. 

Chelsea has blamed third-party professionals like mortgage brokers and surveyors. Chelsea holds them responsible for the artificial inflation of the property values, which is used as a base for providing loans.

It was informed that some self certified borrowers have lolled regarding their salaries.

The concerned fraud has compelled Chelsea to report a £26m interim loss for the first half of the year.

Chelsea also reported a loss of £39 million for the entire of last year because of a £44 million exposure to the failed Icelandic lenders.

The nationalized bank, Bradford & Bingley has said to have suffered huge potential losses due fraud, has set aside £271 million since the start of 2008.

The slump is set to surface a number of cases of such frauds.
The Financial Services Authority had warned that previous year that the problem of mortgage frauds was grim and prevalent in Britain.