No more Liar Loans

sarkin1

chucky wrote: »

this would surprise me very much if it were true - we've just had the biggest credit rationing ever and lenders are really going to lend to self-certs... doubt it very much.

Well i can tell you fast track is very much a live and kicking

If they stop this and I/O mortgages, house prices will drop 50%

StevieJ

sarkin1 wrote: »

Well i can tell you fast track is very much a live and kicking

If they stop this and I/O mortgages, house prices will drop 50%

Are you saying that they are turning people away who have proof of income because of lack of funds and then handing cash out to people who they know nothing about, mmmmmmmm OK, I think I have got that.

sarkin1

nearlynew wrote: »

Geniune question -

What does this bit in bold actually mean, in practice?

How does proving less of your income work?

some lenders instead of fast track will ask for last months payslip as a kind of audit.

So say Mr Client just got promoted he may declare to his broker that he earns 45,000, but actually his P60 will show a lot less as he only got the promotion last month.

This also stops brokers from fast tracking people who cant prove income.

sarkin1

StevieJ wrote: »

Are you saying that they are turning people away who have proof of income because of lack of funds and then handing cash out to people who they know nothing about, mmmmmmmm OK, I think I have got that.

eh can you translate that

Pennywise

Pete111 wrote: »

Can I ask how prevailant these 'liar loans' actually were?

VERY prevailant for the self employed. As an accountant, I can't actually remember receiving a "proper" earnings certificate request from a lender during the past decade or so. Every single request that came through has been for a self-cert, not even wanting earnings information - all they ever ask for is confirmation that I was the accountant and that the borrower was self employed. Pretty pointless really - nothing more than box-ticking to allow the borrower to "prove" to the useless regulators that they took references.

Graham_Devon wrote: »

Would this mean though that someone who chooses to go down the self employed route, would simply not be able to get a mortgage until they have at least 3 years books?

Until the end of the 1990's it was always difficult for the self employed to get mortgages even if they had 3 years worth of accounts. The reference requests we used to get were very detailed, wanting the "profits" but also lots of other information, including our opinion of sustainability and confirmation from us as to the borrowers good standing, honesty, etc etc. But even without 3 steady profit years, it was still possible to get the mortgage with a bit more effort - sometimes the borrower would accept forecasts for a business with only 1 or 2 years or where 1 or 2 of the last 3 years weren't good enough. It was a matter of working "with" the bank or building society manager to gain their trust. I can't see that working these days now that the role of manager is so dumbed down to be little more than a position of team leader rather than the old fashioned manager who actually had some power and discretion. When the banks decide they need to lend again, they'll have to lend to the self employed and they'll have to find a way of doing that if the self-cert route is outlawed - somehow they'll do it - where there's a will, there's a way! After all, anything is better than the self certs and nothing could be worse than strict adherence to the 3 year method - a half-way house approach would probably be the best outcome anyway.

StevieJ

sarkin1 wrote: »

eh can you translate that

Well done with the audit I think we need to understand if the fast track mortgages are risky or not, I can't believe that the banks are handing out risky mortgages these days.

sarkin1

StevieJ wrote: »

Well done with the audit I think we need to understand if the fast track mortgages are risky or not, I can't believe that the banks are handing out risky mortgages these days.

You can only fast track with a good credit score and big deposit so this does reduce risk.
However the risk is that applicant over stated their income but to cover this they take out an I/O mortgage.

So what you ended up with a whole load of people with massive mortgages and no way of ever being able to repay it.

ah I hear you say but I am no like that, no but your next door neighbor is.

So if you had the info I had you would be a bear as well, but as you dont your a bull and because none of your mates are going to admit that they are fucwits you still see the financial world as all rosy and nice.

silvercar

So what you ended up with a whole load of people with massive mortgages and no way of ever being able to repay it.

I know a few people like that, either because they took massive mortgages with the intention of paying back the capital with bonuses that are now never going to materialise or because they have MEWed over the years.

The majority of them are contented that they are living in a very nice home now and will happily downsize later in life. As long as their equity is sufficient to buy a home for retirement they will be OK.

There are one or two who have been so effected by the downturn that they worry if they will be able to afford to remain in their home until the kids are grown up.

dave4545454

Pete111 wrote: »

Can I ask how prevailant these 'liar loans' actually were?

pretty widespread i'd guess. i managed to get a mortgage pretending to have a well paid job when in fact i didn't have a paid job at all. i was still able to get mortgage free many years before the mortgage was due to end so well worth the risk.

treliac

dave4545454 wrote: »

pretty widespread i'd guess. i managed to get a mortgage pretending to have a well paid job when in fact i didn't have a paid job at all. i was still able to get mortgage free many years before the mortgage was due to end so well worth the risk.

You were very lucky then!