Miles Penfold

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• Miles Penfold
• Professional and Financial Risk Claims Department
  

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• Mortgage Fraud Claims
• A Brief Review

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Mortgage Fraud Claims

• Where are we now and why?
• How do they do it?
• How may I recognise it?
• How can I prevent it?
• Professional indemnity policy considerations

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Conditions for Mortgage Fraud

• Falling property prices
• The end of buy to let
• Rising interest rates
• Pressure on professionals to cut corners
• Imprudent lending
• Recession

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Types of Scheme

• 
  
• Simple fraud
• Back to back sales
• Lettings
• More complex frauds
• Identity theft
• Involvement of other parties

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Types of Scheme 2

• Criminal methodologies change constantly, so you
  should remain alert to transactions that are
  unusual for a normal residential or commercial
  conveyance
• Mortgage Fraud Practice Note - 18th March 2008
• Section 4 - Protecting your firm

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Fraud Indicators

• Number of survey reports by same firm/ office/
  surveyor
• Unusual increase in price
• Geographical discrepancies
• Common introducer
• Non arms-length sale
• Suspicious aspects to transaction
• Secret incentives
• 
  

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Risk Management

• Verify the identity of your client and other
  solicitors
• Question unusual instructions
• Discuss with your client any worrying aspects of
  the transaction
• Check that the true price is shown on all
  documentation
• Do not witness pre-signed documentation
• Verify signatures
• Operate effective internal management/
  supervision/ internal audit/ peer review
• Understand your retainer read and understand
  lenders instructions

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Professional Indemnity Policy Considerations

• Notification
• Coverage
• Representation and investigation
• Number of claims
• Contribution/ recoveries and involvement of other
  parties

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• Mediation
• An Insurers Perspective

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The Law

• Dunnett v Railtrack 2002
• Shirayama Shokusan v Danova 2003
• Halsey v Milton Keynes NHS Trust
• Steel v Joy 2004
• Earl of Malmesbury v Strutt Parker 2008
• Next???

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Halsey v Milton Keynes NHS Trust 2004

• Nature of the dispute
• Merits of the case
• Previous settlement attempts
• Costs of ADR
• Prejudice caused by delay in ADR
• Prospects of success of ADR
• All members of the legal profession who conduct
  litigation should now routinely consider with
  their clients whether their disputes are suitable
  for ADR

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Definition of Mediation

• A flexible, voluntary and private process, in
  which an an impartial party (the mediator) seeks
  to help the parties to negotiate a satisfactory
  outcome to their dispute. The parties
  themselves decide the outcome and the terms of
  any agreement between them

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Civil Procedure Rules

• It is expressly recognised that no party can or
  should be forced to mediate or enter into any
  form of ADR
• Civil Procedure Rules
• Practice Direction - Protocols 4.7

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Mediation Process

• Who?
• When?
• How?
• What Format?

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Advantages

• Cost
• Certainty
• Control
• Confidentiality
• Cathartic
• Opportunity to learn about opponents case - and
  your own

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Disadvantages

• Cost
• Quality of outcome
• Compulsion
• Abuse of the process
• Sign of weakness

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Top Tips

• Be tenacious
• Use the mediator
• Think laterally
• Take a time out
• Continually reassess your position
• Be confident and stay positive

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• Miles Penfold
• Professional and Financial Risk Claims Department