Help Needed - Was I Mis Sold A Self Cert Mortgage??

sjt202723

Hi guys. Any advise appreciated. In 2004 after being widowed and with the insurance company refusing to pay the insurance policy out I went to a broker for a new mortgage. I didn't have the income or the credit rating to go for a high street lender so I was advised to go for a sub prime self cert mortgage. It was discounted for 2 years, with a further 3 year tie in. I can not maintain the repayments as I have discovered my interest rate is currently 9.6% as it is LIBOR plus 3% for the remainder of the term, being 20 years.

When apply for the mortgage my broker told me the figure I needed to self cert to allow me to get the total funds I needed. I feel guilty that I am party to my own downfall but was led to believe the mortgage company knows people do this otherwise they wouldn't be allowed to market the product. If clients put the correct earning on the form they could probably go to a high street lender and have accounts submitted via an accountant.

I have a major problem with the 9.6% for the rest of the term. I thought after the extended 5 year tie in I would revert to the standard variable.

Am I at fault here for being naive or is my broker responsible for dropping me in it from a great height???

Thanks :rolleyes:

payless

All three- you, the broker and and throw in the lender for having a product that was designed to attrct this type of case

_Andy_

As above. I don't really have any sympathy for people that commit mortgage fraud.

justthisonce_2

You knew you were telling lies about your income, how can it be anyone else's fault?

silvercar

What's past is past. It may be worth investigating whether it would be worth reapplying for a mortgage (truthfully) elsewhere and seeing if the costs of getting out of this mortgage are outweighed by the benefits of a better interest rate.

Come on guys, OP was widowed, thought she had insurance cover and then found herself without the mortgage payments.

It may be that the misselling was on the insurance policy!

and did the advisor point out that the tie-in would be twice as long as the discounted period?

InMyDreams

I disagree in that I do believe that the OP deserves some sympathy. How anyone can think straight after being widowed is beyond me. Then to have all the money worries with the insurance not paying out on top. I can understand how the OP would act irrationally and out of character, doing and saying things she regretted, putting more than appropriate faith in the professionals so as to not have to take any more personal responsibility, however misguided that was at the time.

She also knows (and admitted) that it was her fault which in some ways makes it all the harder to accept now, I'm sure. I think it is perfectly reasonable and understandable to *ask* whether other parties were also at fault for taking advantage of a vulnerable person at a difficult time.

Presumably your tie in will be ending next year though? This means that you should be able to go and look at other products. I think you should go and seek more professional advice (however scary that might be after your last experience) to see if there is anything that can be (legally) done to save your home. If not, then you will just have to hold on to the fact that at least you've had it 5 years longer than maybe you would have done had you been upfront to start with.

My deepest sympathy for your loss, though.

Edit: Silvercar you beat me to it. I agree with you!

minimike2

Its a classic case of abuse of self cert.

Self Cert IS a valid product when used correctly. I have done a handfull this year - the earnings declared are not inflated, its the fact that they cannot be proved through traditional means required for "status" applications.

The unfortunate thing is that both brokers and consumers have abused the product by lieing about thier income. In these cases ALL involved parties have to take responsibility for thier actions. IMO Brokers who have knowingly processed fradulent cases should be de-authorised on the spot and consumers who have commited the fraud should have a demand for repayment issued. As far as the lenders go, its a tougher call. They knew it was going on, but withdrawing self cert totally would cut off genuine applications. Now there are much better checks carried out to "sniff out" the fraudulent applications, which should always have been the case.

If you cannot afford the mortgage then I would suggest a trip to CAB for some debt advise, or a debt counseller - look at ways of reducing your outgoings and raising your income. If there is nothing else you can do then selling the property would have to be considered.

You can still look to move the mortgage elsewhere....you dont have to stay with them. Is it now out the 5 year tie in too?

sjt202723

Many thanks for all your responses, however blunt and to the point they have been. I understand the view point of some who feel I am at fault here. I thought my IFA, who was also a friend, was doing what was in the best interest of me. He said the way for me to fund my repayments was to remortgage every few years, pull out the equity to fund the repayment. He's the expert. AT NO POINT did I think I was commiting fraud which just makes my case 100 times worse!
Again, thanks for your responses and I will seek legal advise on the best way forward.

Toughluck

As silvercar said if you can re-mortgage on a status basis it may be worthwhile you paying the redmeption charge and getting onto another mortgage with another lender if you are genuinely struggling now.

May I ask, who is your current lender (and any other secured lending if appropriate) and the balances to all mortgages and the value of the property?

sjt202723

Current lender is GMAC. Outstanding balance is around 250k. No other loans. Property on market at the moments for 400k with little interest due to current state of the market. I originally borrowed 170k and remortgaged 3 times to pull funds out to pay the mortgage which was my IFA's advice. I don't want to keep deflecting blame here but I thought it was sound advice. I can't get another mortgage, i doubt, as my income is only around 30k with pensions and I have arrears on my mortgage with GMAC. My intention is to sell and rent as there are no other options.

dunstonh

Whilst some advisers did actively break the rules, many did so with client consent thinking they were doing the person a favour as it helped them get the mortgage that they wanted. Not saying that is acceptable but I honestly think many did not believe they were doing any harm and thought they were getting the person what they wanted.