Mortage applications sub-prime

Shiku_2

Hi guys, I have noticed there are some people on here who are/ were in the Mortgage/financial sector profession....I basically have a question that has been bothering me for quite some time now, why don't banks/building scoieities have access or request access to borrowers tax info from Inland Revenue, in particular where the sub prime industry is concerened.... surely this would mitigate alot of the failures that we have seen emerge in the industry due to this market.... The only conclusion that one can come to is that lenders are aware and willing to take on loan applications when they suspect fraud.....i.e. where a borrower has inflaed their income on an application....

luckyfool

Time, money, paperwork? Its common now for lenders to contact the Inland Revenue to spot check or verify income on audited cases both before and after completion. In the past with house prices increasing and everything hunky dory in the economy there was not the same pressure to have tight underwriting procedures. It takes a hell of a lot more staff and is much more expensive to do a traditional full manual underwriting job on each and every mortgage case, so I can understand to a degree why things got relaxed and automated over time. Obviously things went way to far in that direction and it is natural and correct for these processes to get tightened up.

I also know for a fact that there was an element of a nod and a wink to the reality that these processes were allowing a significant minority of cases onto their books with fraudulent or incorrect figures. At the end of the day when the times were good they were clearly not particularly bothered by it.