Self-cert " made up nearly half of all the mortgages offered at the peak of the boom"

carolt

http://news.bbc.co.uk/1/hi/business/8313853.stm

Ban plan

The most striking proposal is the ban on self-certification mortgages - the type where customers do not have to prove their income - as these have been associated with a disproportionately high number of arrears and repossessions.

When the FSA first took over the regulation of mortgage selling in October 2004, it proposed that borrowers who were not self-employed should not be allowed to self-certify their incomes. The mortgage industry lobbied against that idea and the FSA relented.

These loans made up nearly half of all the mortgages being offered at the peak of the housing boom, :eek: but have been at the centre of a number of mortgage fraud inquiries, when incomes were allegedly inflated by rogue brokers looking for higher commissions.

chucknorris

I am struggling to believe this 'nearly 50%' figure, I would like to see more evidence rather than believe it from this one source alone. It just seems too high to me, I find it hard to believe that nearly half the mortgages were self certified.

I would also be interested to know what our resident mortgage brokers think of this percentage.

carolt

Oooh, well it's only a quote from the BBC. Clearly a bunch of second-raters. :rolleyes:

Sounds very likely to me - how on earth do you think house prices managed to get so divorced from incomes without the basic fact that people were buying on the basis of entirely fictitious incomes?

It's the missing link - the bit that makes it all make sense.

And of course once you take out that link...watch the house of cards come tumbling down... :eek:

chucknorris

I'm not saying the BBC is wrong or is not usually a reliable source, I am saying that when I hear of someting quite astonishing I have a reluctance to accept it at face value without further evidence.

I also think that it is strange they that say 'nearly 50%' without quoting the exact figure too (I find that a bit vague). I strongly suspect that this nearly 50% will not be entirely made up of self certified mortgages but include something else.

koexelek

chucknorris wrote: »

I am struggling to believe this 'nearly 50%' figure, I would like to see more evidence rather than believe it from this one source alone. It just seems too high to me, I find it hard to believe that nearly half the mortgages were self certified.

I would also be interested to know what our resident mortgage brokers think of this percentage.

I think it would be fair to say that in 50% of cases , income was not checked..... but that is something different from self certified.

A lot of lenders chose not to bother checking income in those days.... however, they always reserved the right to. This was known as " fast tracking"

Some brokers did indeed collude with potential borrowers and inflate income, in the hope that it would not get checked.
However, most of us didn't..... because if yours was one of the cases they DID decide to check, and you had falsified the figures, the consequences would have been pretty grim :eek:
( struck off, jail etc)

chucknorris

koexelek wrote: »

I think it would be fair to say that in 50% of cases , income was not checked..... but that is something different from self certified.

A lot of lenders chose not to bother checking income in those days.... however, they always reserved the right to. This was known as " fast tracking"

Some brokers did indeed collude with potential borrowers and inflate income, in the hope that it would not get checked.
However, most of us didn't..... because if yours was one of the cases they DID decide to check, and you had falsified the figures, the consequences would have been pretty grim :eek:
( struck off, jail etc)

Thanks, Ahh now that would make more sense, but as you say those are not self certified mortgages. I thought that 50% was too absurd to buy into.

carolt

koexelek wrote: »

I think it would be fair to say that in 50% of cases , income was not checked..... but that is something different from self certified.

A lot of lenders chose not to bother checking income in those days.... however, they always reserved the right to. This was known as " fast tracking"

Some brokers did indeed collude with potential borrowers and inflate income, in the hope that it would not get checked.
However, most of us didn't..... because if yours was one of the cases they DID decide to check, and you had falsified the figures, the consequences would have been pretty grim :eek:
( struck off, jail etc)

My mortgage broker did, or rather tried to get us to (we didn't go ahead with the purchase).

So I know from personal experience how common it was.

1echidna

I remember one item from the BBC quoting the length of Gilbert the whale stranded on Bournemouth beach as 10m whereas in fact she was 10ft long as reported everywhere else. Could it be that the BBC have got their decimal point wrong and mean 5%. Nowhere near 50% of the populace are on irregular income and I can't believe that those on irregular incomes make such a disproportionate proportion of mortgage applicants.

shop-to-drop

I'm not surprised. That is why the prices are so high. I hope this means the prices come down further so that my family can afford the house we need.

chucknorris

1echidna wrote: »

I remember one item from the BBC quoting the length of Gilbert the whale stranded on Bournemouth beach as 10m whereas in fact she was 10ft long as reported everywhere else. Could it be that the BBC have got their decimal point wrong and mean 5%. Nowhere near 50% of the populace are on irregular income and I can't believe that those on irregular incomes make such a disproportionate proportion of mortgage applicants.

Yes I agree it just doesn't seem right, I suspect an error or a miss use of the term 'self certified'

Conrad

The abscence of self cert will resign many to the clutches of landlords.

The single mum holding down 3 part time (to fit around childcare) jobs - LENDERS TEND NOT TO TAKE ALL OF SUCH INCOME INTO ACCOUNT.

Those reliant on overtime or shift allowance - again lenders wont take it all into account so SC was a useful workaround. Shift allowance is integral to some jobs.

The agency nurse who's done it for 10 years. Why should she be penalised? Aagain lender tend not to want to take this sort of income so SC was the only route.

What are we saying to these members of society?

What if they are comming to the end of a SC deal and due to go onto 7% variable. Can they now not remortgage? Is that fair?

Honestly, yet another case of WW1 generals still not being in touch with the front line. When will we ever learn to consult real people instead of academics and middle class (Im alright jack) regulators?