Irregularities in home loan disbursal

With land prices spiralling, the number of criminal complaints is also correspondingly rising, say the police. Land grabbing and cheating are common amongst the offences but in the recent past, more complaints regarding irregularities in home loan disbursals were filed with the Central Crime Branch (CCB) police.

The police officers say scrutiny of the complaints reveal that many irregularities had occurred with alleged connivance of the bank officers in-charge of disbursing loans. After investigating the complaints, the police had arrested three officers including two managers this year. In 2007, two managers were imprisoned after they were found to have allegedly connived with the borrower who had submitted forged documents. In one of the cases, a public sector bank manager confessed to having disbursed loans without carrying out proper procedures before and after the sanction of loans.

In another case, a couple engaged in manufacturing mineral water in Tambaram had taken about Rs 60 lakh home loans from five banks after submitting fake documents. A simple check with the sub-registrar’s office (SRO) would have prevented the banks from losing its funds, police officers said.

In yet another incident, an applicant submitted the land document for home loan and got it successfully processed. When the loan application was later investigated, it was found that the document submitted had 18 pages while the original copy at the SRO office had 20 pages. The document was forged. It was not properly scrutinised.

The Commissioner of Police G.Nanchil Kumaran, speaking to The Hindu Property Plus, said that complaints from public indicated a steady rise in land related crime. The property owners, who possess genuine/original documents should be more alert and shrewd, he felt. The steep increase in land prices, especially, in the last three years had led to offences like land grabbing, forgery and other crimes.
Falsely registered

Narrating some of the complaints, Mr Kumaran said that when the prices of landed properties were less and not lucrative, its owners deposited the original documents with private money lenders and had taken loans for business purposes.

When the prices soared, some of the lenders allegedly registered the properties in their names. Realising that they had been cheated, the original owners filed criminal complaints with the police. Investigations revealed that the accused, at the time of lending money, had obtained signatures in blank papers and some of them had even given a general power of attorney.

In some cases, where legal heirs could not arrive at any reasonable solution among themselves, few persons clandestinely took over the property by forging documents and sold them. Investigations reveal that those who had purchased such properties deposited the title deeds with a bank as collateral security and taken loans, officers at the CCB said.

“Last year, a 45-year-old woman in Chennai let a portion of her house to a middle aged man on monthly rental basis. After some months, she went to the USA for six months to see her daughter. On return last month, she was shocked to find that her tenant had allegedly fabricated a forged document claiming to have purchased the property from her and claimed absolute ownership of the property. Worse, the document was registered with the sub-registrar’s office. He did not stop there. He had sold a portion of the property to a third person who had, in turn, obtained a bank loan after depositing the title deeds.” Investigating police officers were able to observe a few patterns amongst the complaints submitted by the banks.

One of the patterns was where the title deed was forged and not adequately checked. In another the home loan officer deliberately short circuited the loan process and joined hands to cheat the bank. Yet another modus operandi was that in spite of knowing well that the loan documents were colour photocopies, the bank officer had gone ahead and sanctioned loans resulting in loss to the banks, police said.

When contacted, a senior manager of a public sector bank said that they worked under severe pressure to achieve business targets and there could be incidents of oversight. He also mentioned that the banks had the duty to safeguard its funds and procedures are periodically reviewed.

Police officers say that when a property is offered as collateral security and banks sanctioned loan, the mortgage could be registered with the SRO authorities as it would reflect in the encumbrance certificate. Such a ‘simple’ procedure would keep banks away from litigations and also discourage offenders. However, the banks are yet to adopt this precaution, police officers felt.
Checklist for banks

After scrutiny of various complaints from affected parties, Police offer the following check list for the bank officials to consider before disbursing home loan.

•Verify value of stamp paper in the original.

•Cross verify the total number of stamp papers in the document with the SRO.

•Check for Stamp vendor’s name.

• Verify date of registration.

•Verify time of registration.

•When in doubt, verify the signature of the Sub-Registrar at the time of registration.

•Check for the text and language (Tamil/English) used in the sale deeds/documents.

•Verify the names of witnesses.

•Verify the addresses of witnesses.

•Check whether the seals with serial numbers are bound into volumes for easy reference.

source: The Hindu Property

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