No more Liar Loans

silvercar

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.

treliac wrote: »

You were very lucky then!

Very lucky...to get away with committing fraud.

dave4545454

silvercar wrote: »

Very lucky...to get away with committing fraud.

fraud and lies are what gets you ahead in this world, just ask any MP

it wasn't my fault that no-one would ever offer me a paid job, i've got the qualifications and the strong work drive.

however i've never had the connections and knowing the right people which is the most important factor in getting a job.

carolt

How did you save the 201 grand you have in your signature, then?

dave4545454

by being money savvy and never wasteful. look after the pennies and the pounds look after themselves.

Conrad

StevieJ wrote: »

, I can't believe that the banks are handing out risky mortgages these days.

Woolwich only ask for income proof on 1 in 5 'fast tracked' cases Steve.

Roughly half of thier applications are fast tracked where no income proof is requested.
They will tend to be those borrowing under 75% with clean credit and a stable background (for example long term in job).

This is absolutely happening right now.

As I always say - forget the papers, the real world is a very different place.

I actualy think Woolwich are irresponsible (Barclays).

Loads of brokers abuse this.

Conrad

silvercar wrote: »

Very lucky...to get away with committing fraud.

Silver - fraud is absolutely endemic - you would not believe how wide spread.

Removal of self cert is no barrier at all.

Do a google search right now for 'lost payslips'. For a few quid you can have 3 payslips and a P60 within 24 hours.

Dont think for a second people wont find ways around the system.

Before self cert people just lied - for example they claimed to work for thier uncles firm.
If you were to ask people in somewhere like Romford, you would find just about every single one of them find ways around the system - they will just see it as part of life and they will tell you thier friends and relatives all did it and no one ever got 'done'.

Conrad

sarkin1 wrote: »

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

Most people I know, myself included have pure interest only and just pay off capital with over payments as I go. Having an ISA is not usually sensible as the returns will be lower than the mortgage interest rates (usually).

Classic FSA - out of touch ernest middle class white women - so out of touch that they dont realise people like me make overpays / have other investment property. They just assume an ISA is essential kit.

I invest in other property and tbh I don't really worry about paying down the capital now as I hope to have a couple of million in equity when I retire.

JP45

Pete111 wrote: »

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

According to an article in today's Telegraph:

It is shocking that in 2007 and 2008 around half of new mortgages were approved without income checks. But I was still more surprised to learn that even after the crisis, that proportion only fell to 43 per cent in 2009 and the first quarter of 2010. There is nothing wrong, conceptually, with the self-certified mortgage. But in recent years, these specialist products for the self-employed were so widely abused by overly optimistic – or worse – consumers and banks that they came to be known as Liars' Loans.

In Britain, more than 20 per cent of self-certified mortgages have fallen into arrears, compared with about 6 per cent of home loans to borrowers whose incomes were properly verified. Only two other countries allowed self-certification on a grand scale – the US and Ireland. The end result seems rather predictable, really: dishing money out at random is, indeed, more risky than selecting borrowers on the basis of strict financial criteria.

Even though the housing market has staged a recovery, there is still plenty of trouble stored up. According to FSA research, 46 per cent of households that took out mortgages between 2005 and 2008 have either no money left or face a shortfall every month, after mortgage payments and living costs are deducted.

In other words, there is no leeway for things to go wrong – and that is exactly what they are likely to do. Interest rates are at unsustainably low levels. Even though banks have padded their returns by charging wider margins, the current variable mortgage rate of around 4.75 per cent is very low by historical standards. If that rate rose to 6 per cent – or 8 or 10 per cent – many borrowers would struggle to keep up with payments. On top of that, unemployment may soon rise sharply: it is hard to believe that planned public sector job cuts will be speedily absorbed by the private sector.

The new guidelines may help guard against future fec*lessness but they will not prevent it, and that is as it should be. Banks will still decide how to assess borrowers, and there will be no regulatory requirement for a minimum deposit. Still, not everyone likes the idea of tighter rules. Fast-track mortgages will become, well, slower. It will be harder for first-time buyers to enter the market. (It is already pretty difficult, especially in London, yet the average age for first-time buyers is, nevertheless, a youthful 29). These factors could depress house prices a bit.

"The risk," warns the Council of Mortgage Lenders, "is that the gain will not match the pain in the short term." This is quite true, but seems to me rather a good thing. Surely shifting the attention to the long term is exactly the point of the exercise.

But something more is needed to tackle the underlying problems manifested by the madness of the mortgage market. Britons have an unhealthy compulsion to take on excessive debt in order to buy handbags as well as houses. Credit cards and overdrafts can be as dangerous as mortgages; and the peculiar national obsession with owning one's home seems to have encouraged the view that this is a sensible alternative to investing in a pension.

As the FSA chairman, Adair Turner, pointed out at the British Bankers' Association conference yesterday, most people only take out pensions or mortgages a couple of times in their lives; these products are extremely complex; and by the time they turn out to be duds, they can't be taken back to the shop.

That is why regulation is necessary. We are now beginning to understand the long-term consequences for the broader economy of getting such decisions wrong on a big scale – as well as the dangers of unforeseen consequences when ill-conceived regulations are set in place.

The new mortgage rules should help protect the consumer without removing ultimate responsibility for decision-making from either lenders or borrowers. The problem of pension provision is far trickier, but may also require greater pressure on the consumer to do the sensible thing through the imposition of mandatory contributions from salaries – a policy successfully implemented in Australia.
In the meantime, as a treatment for the nation's dysfunctional obsession with property, I recommend a last stab at self-regulation: we should abjure all talk of local property prices for a trial period of, say, 10 years, especially at dinner parties. It may help prevent new housing bubbles from forming; but if it doesn't, at the very least, it would be good for the soul.

FTBFun

dave4545454 wrote: »

fraud and lies are what gets you ahead in this world, just ask any MP

it wasn't my fault that no-one would ever offer me a paid job, i've got the qualifications and the strong work drive.

however i've never had the connections and knowing the right people which is the most important factor in getting a job.

Well that's a load of rubbish.

The_White_Horse

is telling someone you earn something different to what you actually do really a lie?

if i earn 20k a year and tell the lender I earn 120k a year, am I lying? or am i simply not telling the truth.

and is not telling the truth the same as lying? if your gran is going out for her 100th birthday and she looks rank, like she is rotting, and she says "do i look nice dear?" is it a lie to say "no, you look lovely granny" and if you can lie to not hurt her feelings, isnt that the same as telling a small untruth and exagerating your income by 1000% to not have to let the bank refuse you, and therefore spare their feelings in the same way you have spared your granny's?

you know it makes sense.