Should the Government regulate mortgage Applications?

manhattan

After seeing the carnage going on with the credit crunch, stock market and house prices i was thinking that why don't the government regulate and control mortgage applications in the future to control "lie to buy" etc.

No more 8 x salary mortgages and mortgage applications should be checked by an official body to make sure people are not making out they are earning 50k when really they earn 16k.

I am not too clued up on this kind of stuff as you can guess, but shouldn't there be more security checks done when applying for things like this?
:cool:

Generali

manhattan wrote: »

After seeing the carnage going on with the credit crunch, stock market and house prices i was thinking that why don't the government regulate and control mortgage applications in the future to control "lie to buy" etc.

No more 8 x salary mortgages and mortgage applications should be checked by an official body to make sure people are not making out they are earning 50k when really they earn 16k.

I am not too clued up on this kind of stuff as you can guess, but shouldn't there be more security checks done when applying for things like this?
:cool:

It would be relatively easy to pass laws stating that banks have to jump through certain hoops when processing mortgage applications.

You have to prove who you are to open a bank account now under money laundering legislation. It would be simple to pass a similar law for mortgages. I'm not sure it's necessary now though.

Incisor

manhattan wrote: »

After seeing the carnage going on with the credit crunch, stock market and house prices i was thinking that why don't the government regulate and control mortgage applications in the future to control "lie to buy" etc.

No more 8 x salary mortgages and mortgage applications should be checked by an official body to make sure people are not making out they are earning 50k when really they earn 16k.

I am not too clued up on this kind of stuff as you can guess, but shouldn't there be more security checks done when applying for things like this?
:cool:

No, keep government out. Else they will want CRB checks on buyers to add to the madness.

You have correctly identified the problem, but the solution lies with the banks. There is one thing government can do however [and I have suggested this before], they should legislated that a bank can only claim back 95% or 98% of the amount owing on a mortgage after a repossession, the rest going to the mortgagee. That would be a tiny pin prick but banks are so averse to blindingly obvious risks resulting from the behaviour of others that they would probably reign in mortgages quite tightly - although they are almost totally oblivious to the risks resulting from their own behaviour.

poppysarah

The banks have lent to the unemployed. Huge mortgages.Insanity!

We've now bailed the banks out and should be entitled to restrict their stupid lending policies.

baby_boomer

MSE thread - The FSA checks if mortgage brokers have properly satisfied the client's income and ability to pay

e.g. 1) Affordability.
Firms are required to demonstrate that the mortgage is affordable during the initial incentive period and after. Affordability evidence is required in the form of pay slips, bank statements etc.

If you were to suggest that it is a bit late for the FSA to be getting tough on mortgage brokers for breaches of this code in 2008, I'd be tempted to agree with you

The serious damage has been done

ad44downey

Yes, cap them at 3 times certified income. And no exceptions whatsoever, even for city spivs

chucky

poppysarah wrote: »

The banks have lent to the unemployed. Huge mortgages.Insanity!

have the banks really been lending to the unemployed in the UK?

there may be individual cases but does anyone think that a bank would do this!!

if it has been done it's fraudlent and there would be very, very few cases probably done by brokers rather than banks.

poppysarah

Yes there was a page on the bbc about repossessions and one bloke and his wife has been unemployed at the time they got their mortgage
http://news.bbc.co.uk/1/hi/business/7680498.stm

We had to pay interest at 9.8%, which I was advised was the best I could get at the time because of credit problems, as neither my wife nor I were working.



I assume the BBC check their stories.

chucky

poppysarah wrote: »

Yes there was a page on the bbc about repossessions and one bloke and his wife has been unemployed at the time they got their mortgage
http://news.bbc.co.uk/1/hi/business/7680498.stm

We had to pay interest at 9.8%, which I was advised was the best I could get at the time because of credit problems, as neither my wife nor I were working.



I assume the BBC check their stories.

i'm not denying that this was an individual case out there.

but none of these three guys were unemployed. each one had dificulties re-paying the mortgage payments. i think that you need to re-read the article - unless i got it seriously wrong

Incisor

ad44downey wrote: »

Yes, cap them at 3 times certified income. And no exceptions whatsoever, even for city spivs

And what good would that do? Any city spiv worth his salt who wants an 8 times salary mortgage for £2,000,000 on his £250,000 salary will instantly find a way of getting a salary of £666,666.

ad9898_3

Should the government regulate mortgages ?, absolutely, 3.5x single salary, 2.5x joint, no 'interest only mortgages' unless you have a proper investment vehicle to repay it (just like it used to be), no self cert unless you have proof of being self-employed. No mewing unless you are extending your property or adding some real value ( this doesn't mean a BMW X5, holiday to Disneyland or a 50' plasma either)

A minimum of 10% deposit, to prove that you can actually save money instead of p*ssing it down the drain on a credit card.

And last but not least.... absolutely NO mortgage offer without proof of income, i.e 3 months wage slips.

Did you hear that last bit mortgage brokers/advisers ? Proof of income, just in case you didn't.

HPI would then keep in line with wage inflation and this sorry mess could have been avoided.