MSE News: FSA plans self-cert mortgage ban

Leon_W

I had an argument today with an mortgage underwriter at RBS today. It went something like this.

I had submitted an application for a self employed client of mine and RBS wanted to know the inside and out of his accounts. I'd sent 3 years accounts, accountant references, bank statements etc etc and they just kept umming and ahhing for weeks on end.

The loan to value was less than 75% and his income, as evidenced by bank statements and accounts was more than enough to cover the mortgage but yet they still procrastinated. Now, other brokers will know what I mean when I say you just get a feeling that they are looking for any old reason to decline the application but haven't the balls to tell you because the excuse would be so flimsy and ridiculous as to make the most sensible person just laugh at its idiocy.

I had that phone call today. Last years net profit had gone down from £70k to £63k and as it had declined they wouldn't do it.

What an absolute bunch of jokers ! Had they not heard that there was a recession ? Sorry no can do. But the guy has been trading for 20 years !

After quite a bit of tooing and frowing I posed this little problem. If you Mr Underwriter were to apply for a mortgage would you expect it to be granted ? Err, yes was his reply. OK, but your employer posted the biggest loss in corporate history last year and had to be bailed out by us taxpayers did it not ? Err, yes I suppose so. So who is the greater risk ? Err, let me take this one higher for you.

Phone rings half an hour later. Mortgage granted !


What I am trying to illustrate here is that plenty of people who do not get a regular, employed wage slip are going to find it incredibly difficult to get any mortgage facilities at all, become an underclass of mortgage have nots and have knocked out of them any entreprenurial spirit they once had.

brit1234

mortgage-adviser-now wrote: »

Perhaps I did not make my point clear.

The Banks caused the problem, not the British mortgage borrower defaulting on mortgages.

There is nothing wrong with "High multiple, self cert, fast track, high multiples, interest only, buy to let" in themselves - only in how they were traded by banks.

Yes there is because all this cheap credit fueled an unsustainable housing bubble accross the world. The regulation, the products became ever less risk concerned creating a vulnerable property market.

Remember it was when these people start defaulting that the crises happened. If there debt wasn't as high the strength of the crises would have been weakened.

These are dodgy products that fueld unsustable prices and caused the credit crunch. It was these products here in the UK as well as America which were sold as mortgage backed securities. We wouldn't have 0.5% interest rates if they didn't think people would be repossed here in large numbers.

NPowerUser

Mortgagehelper wrote: »

I have had several new clients come to me over the last 2 years whose previous broker had gotten them a 'Fast Track' mortgage. Now most people didn't realise why they couldn't get a remortgage 2 years later....there are a lot about to have a shock soon..

Fast Track was the next step of Self Cert - mainly for the employed, if you put down 25% deposit, lenders wouldn't ASK for confirmation of your income - basically self cert in all but name. If you see 'Fast Track' now, you will now have to confirm income.

Funny you should mention fast track, I went to an IFA 4 weeks ago and he fast tracked me with no proof of income. Thankfully, I never want to move again but I am guessing it could prove trouble if I wanted to remortgage or move?