21 Aug, 2009
Building society blames losses on mortgage fraud, not greed and incompetence
Posted by: Lance In: News
Is anybody really surprised to hear about the Chelsea Building Society’s £41million of losses to mortgage fraud? It’s hilarious that the building society is painting itself as an innocent victim, claiming that the fraudulent loans were acquired by syndicates of unscrupulous buy-to-let landlords running a scam with crooked mortgage brokers and surveyors. As if Chelsea, along with all the other lenders, wasn’t complicit in the whole grubby scheme…
Banks and building societies were all handing out money hand over fist to anybody who wanted to buy property, all helping to inflate the bubble just a little further. Any financial institution which really believed it could carry on doing business like that is guilty of incompetence at the very least, but there can be little doubt that they weren’t turning a blind eye to all of these dodgy dealings, convinced that a booming property market would gloss over the cracks for years to come.
Unfortunately for the Chelsea Building Society, when the music stopped, it was left without a chair. Passing the losses off as fraudulent smacks of little more than a transparent attempt to mask the building society’s poor business choices during the property boom. What’s especially laughable is that despite these £41million losses, and a further £12million lost in the first half of 2009, Chelsea claims that its underlying performance is still strong.
The most telling thing about this story is that nobody has yet been prosecuted or convicted of this alleged fraud – it’s all just a convenient explanation designed to put a positive spin on some dire news. I wouldn’t be surprised if, once the story has blown over, the whole issue is quietly dropped and no convictions are ever made. And I’d be even less surprised to see other mortgage lenders trotting out the same excuse to explain away their own losses.
