Claim Case Study: Mortgage fraud on equity release Background
Solution
The insured is a lender who provided an equity release mortgage to the borrower, [Mrs A]. A charge had been registered against the property to secure the equity release mortgage. Mrs A was subsequently taken into care suffering from dementia and sadly died. Upon her death her relatives became aware of the charge registered against the property and questioned its validity.
First Title investigated the matter fully from underwriting the mortgage to the claim being raised and it transpired that one of Mrs A’s sons [Mr A] had forged her signature on the original mortgage documentation and also on two subsequent drawdowns of funds from the mortgage account and had spent the money on his unfortunate gambling habit.
The insured lender had obtained a title insurance policy with First Title on their mortgage which covered them for a number of risks including fraud and invalidity and unenforceability of the mortgage against the property.
Challenge The Estate of Mrs A raised a claim against the insured lender arguing that the mortgage had been obtained fraudulently. The insured lender immediately raised the claim against the title insurance policy.
Having been found out, Mr A handed himself in to the police. The Estate subsequently made an application to HM Land Registry to remove the insured lender’s charge from the property on the basis that it was obtained fraudulently by Mr A. As there was sufficient evidence that the mortgage had been obtained fraudulently, First Title indemnified the insured lender for the full amount of their mortgage and the insured lender’s charge was removed from the property’s register at HM Land Registry. Mr A was later charged with five counts of fraud and sentenced to serve a term in prison.
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