At 4 Walls, we are of the opinion, that since April 2008, there are now no LEGITIMATE ways to construct no money down deals with the present mortgage products.

Why? It's very simple and clear: If the discount or incentive is NOT disclosed to the lender, it is MORTGAGE FRAUD -plain and simple.

In any property transaction, there must be total transparency so that all parties know how the deal is being constructed. Additionally, if you are not disclosing discounts (i.e. having the gross price put on the contract and having the property valued at the gross price), then you are also defrauding the Land Registry and the Inland Revenue and opening yourself up to some SEVERE problems, should you ever be audited. Make no mistake, these are criminal offences.

With one in six property investors set to be audited in the future, it is only a matter of time before these fraudulent deal structures are exposed. I like to sleep at night so I personally will not entertain doing this type of deal, until I research one that is legitimate.

I hope those people claiming big cash backs through "commissions" realise that they will be TAXED on that money as it is technically income. If you are audited by the Inland Revenue I hope you are confident that the money trail will stand up to scrutiny? If a company is offering you a "no money down" scheme, please ask to have it in writing so that you can have it independently approved and verified by the Council of Mortgage Lenders and/or the Law Society. You could also run it past your lender for their approval. If it is a legitimate scheme, the company offering it to you will have no problem with providing this information. However, I think you will find that they are unwilling to provide you with this information. That should tell you all you need to know.

A further nail in the coffin of no money down is the news that, from the 1st September, all developers have to complete a form provided by the CML that states any incentives or discounts offered in the deal. This form has to be copied to the lender and both solicitors involved in the transaction. Whilst this is only applicable to new builds, I am sure it will not be long before this becomes the case with second-hand property.

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It is, of course, your choice whether you structure a deal in a No Money Down format, but at least understand the legal, financial and tax implications of what you are attempting to do.

Another nail in the coffin of "no money down" deals and schemes, as the government launches a new agency to fight mortgage fraud ...

Details from a recent press release:

The National Fraud Strategic Authority (NFSA) has been established to co-ordinate the fight against mortgage fraud - with measures in place to capture the true value of new-build properties, to verify the true income of borrowers, and for lenders to report suspicious mortgage brokers.

However, Sandra Quinn, NFSA interim Chief Executive, said that the UK is boom town for mortgage fraud.

Ms Quinn explained much of the problem has stemmed from the UK not treating fraud as a serious crime.

"Fraud is not a priority in the UK. It is often not reported. That is what we have got to change.

"Some lenders report cases to the police, but for law enforcers it is not a priority and police say they will not pursue the criminals.

This does create an incentive for lenders not to report fraud. And the fraudsters know this.

"UK fraud is now booming. We have to make the UK hostile to fraudsters"

She explained the fall in house prices has now brought more mortgage fraud to light, but the credit crunch will not make mortgage fraud disappear.

"These people are career criminals and as new mortgages dry up fraudsters have not gone away."

Ms Quinn explained in the US, fraudsters are now targeting households facing repossession, and offering people free accommodation in exchange for using their identities to make fraudulent loans.

She added mortgage fraud is not a victimless crime and it does hurt people on the streets.

"Mortgage fraud can bring down the value of property.

"Where fraudsters have pushed up the value of new-build properties, when they disappear prices can then go through the floor. It can also leave people living in empty blocks."

She added, "Where someone's ID is stolen, the fraudster can get false loans and then people find out they owe £150,000 they did not know about."

Ms Quinn also explained one form of mortgage fraud, 'conveyancing take-over', can mean potential buyers lose out on a property as fraudsters take over divert mortgage cash from lenders, leaving buyers unaware until the check up to see why there is a delay.

There is currently no agreement on the scale of mortgage fraud. The Association of Chief Police Officers (ACPO) estimate mortgage fraud costs £700 million annually, while others say it can be as much as £1 billion.

The NFSA has already highlighted a number of weak links in the property chain that can lead to mortgage fraud, such as corrupt brokers, valuers, solicitors and bank insiders, false conveyancers, mortgage mules and new build buy-to-let fraudsters.

Baroness Scotland, the Attorney General, said, "Government has committed £29 million to reduce the harm caused by fraud across the UK economy.

"There is now a far stronger, more cohesive response to fraudsters' actions."

As well as the creation of the NFSA, the City of London police is also leading a number of strategies to take mortgage fraud more seriously and become a UK centre for uncovering the criminals.

A new National Fraud Reporting Centre (NFRC) is also planned to start operating in late 2009.

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