MSE News: Deutsche Bank to pay compensation for irresponsible lending

GMS

littledragon101 wrote: »

I hear that, BUT there is something that the FSA have seen at DB Mortgages which has led them to blame DB Mortgages for not having ensured that the client knew there were cheaper mortgages on offer. Perhaps they only offered their dearer offerings, and never promoted cheaper one, even if they were part of their range (I am guessing here, but there IS something that the FSA have found fault with). As I said, I have NO idea what they have found, but they have found something within DB Mortgages. They are not criticising the brokers.

Yes, I had adverse credit, yes it was self cert - BUT that's the market DB went after......

Where are you heading with this one (and thanks for the engagement, BTW).

I am not heading anywhere with it merely wondering if there was justification in a DB type lender.

It is not a criticism of your situation in any way.

The sub prime market was ultra competitive and DB came in pricing agressively against the competition. If a broker recommended the wrong product then the lender should have informed a better product was available but they are not brokers therefore couldnt advise clients. Procuration fees were on a sliding scale according to product so there were cases of rogue brokers recommending the wrong products.

Hopefully you were provided with all documentation from the broker detailing why a particular product was recommended

littledragon101

GMS wrote: »

I am not heading anywhere with it merely wondering if there was justification in a DB type lender.

It is not a criticism of your situation in any way.

The sub prime market was ultra competitive and DB came in pricing agressively against the competition. If a broker recommended the wrong product then the lender should have informed a better product was available but they are not brokers therefore couldnt advise clients. Procuration fees were on a sliding scale according to product so there were cases of rogue brokers recommending the wrong products.

Hopefully you were provided with all documentation from the broker detailing why a particular product was recommended

Thanks re procuration fees, but you are still barking up the broker tree in that train of thought.....but you MIGHT have "cracked it" with that interesting answer.

There must be something that the FSA have found within DB - I am trying to work out what that might have been (in case it refers to my own cases). They have been censured for having not made sure that the borrower had the cheapest product. Perhaps that may even feed back to your "rogue broker" thing, even - "Are you sure, Mr Broker, that the client wants this dearer loan, when, from the application she made, she qualifies for the cheaper product (which pays you less, however)?" Perhaps they turned a blind eye to that fact (i.e borrower seemed to be applying for a dearer loan than he could have applied-for) - which is the thing that the FSA are complaining about. You might have facilitated my having answered my own question here..... Perhaps my broker knew about the cheaper loans, so did DB, BUT neither of them told me, the borrower, about them. Do you think it could be that which the FSA are onto?

There's def something that FSA are fining them about.

I was "light adverse" apparently..... but might not have been offered a "light adverse" product.

I had no paperwork about other loans which had been considered (but most brokers know who the movers and shakers were in the market at any time - there might only have been three self-cert high LTV BTL products in 2006 / 7.....). I seem to remember that as self cert, and "light adverse", there were few loans available, and the DB was recommended, due to its benefits (which were, I believe, pretty good rates compared (apparently!!) to others, but generous procuration fees might have been very high on my brokers' list of course!!). Cannot remember. Certainly, I got a KFI only on DB, and I am pretty sure that we only went for DB on a second property.

Hmmm - you have been VERY helpful. Thanks. Made me think!!

GMS

If it ws a BTL it should have been 'Full Status' as income was not required.

Products typically went from 'Near Prime' to 'Unlimited' with Light, Medium and Heavy in between (with Medium Heavy and Light Heavy etc in to create more products)

Unlimited may have paid 1% proc, Near Prime 0.7% (as an example)

If your deal was a BTL it would be unregulated and not necessarily have followed the same procedures from the broker (although many did).

littledragon101

GMS wrote: »

If it ws a BTL it should have been 'Full Status' as income was not required.

Products typically went from 'Near Prime' to 'Unlimited' with Light, Medium and Heavy in between (with Medium Heavy and Light Heavy etc in to create more products)

Unlimited may have paid 1% proc, Near Prime 0.7% (as an example)

If your deal was a BTL it would be unregulated and not necessarily have followed the same procedures from the broker (although many did).

Hmm

Yes - I have two DB Mortgages mortgages - both are BTL. So, if you say DB did not ask for even minimum earnings.... then as you say, it's Full Status.... but surely that cannot be relevant - it was BTL, so automatically full status if they never asked for earnings. Surely we are barking up the wrong tree on that one, unless you can see an angle / aha there.

I suspect I may have two loans which are blacker than they might have needed to be. I could have made a full application, DB checked the application and should have gone back to the broker to tell him, asking "Why has applicant applied for mid-grey product when they qualify for silver grey product?" but this is what they never did!! That will be what the FSA are criticising them for - DB turned a blind eye to that misselling, brokers made more money, applicants paid out more money.

Gawd knows which "light" or "heavy" product I ended up with, but (a) I can ask.... and (b) perhaps make a claim against DB, since FSA have clearly picked something up that DB have done wrong about borrowers being signed up to products which weren't the cheapest for their circumstances.

YOU ARE A STAR SIR!!!! THANKS SO MUCH. I'd not have "got it" without your information.

You don't still have the rate cards in a file somewhere do you? I might be able to work out which products I have. They are on slightly different rates (both having endured the initial term, and now on lower tracker rates).

Thanks again

Sue

GMS

I was not a broker during DB time but worked for another lender so cannot say 100% that DB would treat BTL as full status but as it would be based on rental rather than earned income it would make sense and be in line with everybody else.

It would be worth asking DB for the information but the problem you have is that BTL is unregulated and would be seen as a business transaction entered into by somebody with the intention of investment therefore an assumed understanding of what they were doing.

As an underwriter for another lender it was not very often that I came across a product which was a higher rate than another possible but it did happen occasionally. Could be down to customer giving incorrect information, or a CCJ becoming 2 years old during the application process for example. We would go back to the broker instance and make them aware of the better rate available.

Rate cards may be available somewhere. Try google. Do you have a copy of your credit search from the date of application to cross reference?

Suspect you may get nowhere ultimately but it may put your mind at rest if nothing else. Enjoy the low rate you have now. Hopefully you will be able to remortgage when rates rise.

littledragon101

GMS wrote: »

I was not a broker during DB time but worked for another lender so cannot say 100% that DB would treat BTL as full status but as it would be based on rental rather than earned income it would make sense and be in line with everybody else.

It would be worth asking DB for the information but the problem you have is that BTL is unregulated and would be seen as a business transaction entered into by somebody with the intention of investment therefore an assumed understanding of what they were doing.

As an underwriter for another lender it was not very often that I came across a product which was a higher rate than another possible but it did happen occasionally. Could be down to customer giving incorrect information, or a CCJ becoming 2 years old during the application process for example. We would go back to the broker instance and make them aware of the better rate available.

Rate cards may be available somewhere. Try google. Do you have a copy of your credit search from the date of application to cross reference?

Suspect you may get nowhere ultimately but it may put your mind at rest if nothing else. Enjoy the low rate you have now. Hopefully you will be able to remortgage when rates rise.

I think, despite what you say (we must remember that FSA found enough evidence of something to fine DB (the first lender to be fined in such a way), so there must be something) that their range of silver grey to black adverse products is the key here, coupled with the sliding scale of broker commissions. It seems that it would be easy for a greedy broker to "inadvertently choose the wrong product" for the borrower (if he knew that a darker grey product than needed would NEVER be picked up by the borrower, since the borrower would never have access to the lender's criteria for the products). My credit file was actually good, but I had had something WAY back which still bizarrely dogged me, even though it wasn't on the printed file itself. The only thing visible was a bookkeeping error of Orange (I settled an old debt but they booked the payment to the wrong account, so the account seemed to be only settled years after I had actually paid them in full). There was a notice of correction on that, too, explaining the scenario. I did have other BTL borrowings, however. Some lenders did not want to lend to small-time landlords. I had fallen out of BM's criteria, for instance.

To be honest, the rate is not bad now, and now they have been fined (provided they don't sell off the rump of the loan book!), they are behaving pretty well overall. I will fall foul of new LTV rules, I fear, so doubt I could get out if rates rise. Both loans were at 85% and properties haven't moved much in value, so lower LTV would hit me badly.

I hear you that it may not be successful. Just an opportunity that I can now give a try, now you have so kindly "opened my eyes". I will write them today to try to discover what colour my loan is. Then I can work out whether that fits with the "good credit file" I had. I would be shocked if I had "nearly black" for instance.

Thanks once again for all this.

Sue

GMS

It would be worth the cost of a stamp but do not expect too much. The ruling against DB would apply to residential mortgages.

Good luck with it

littledragon101

GMS wrote: »

It would be worth the cost of a stamp but do not expect too much. The ruling against DB would apply to residential mortgages.

Good luck with it

OK and THANKS ONCE AGAIN for the time you have put into this.

BTW - I was asked this the other day and didn't know the answer! Perhaps you might. Imagine someone decided to go live in a property that they had bought with intent to let but they changed their mind, and they went to live in the new place. Surely the lender would have MORE security.... but of course they lent the loan based on prospective rental income which never came in..... Should the borrower have notified the lender, and what is the likely response from the lender when notified? Any other factors come into play here which I haven't thought of? Might it affect interest rates / other T's and C's

Thanks

Sue

GMS

If the mortgage was a BTL then living in it would be a breach of mortgage terms and could lead to the lender demanding repayment of the debt.

As BTL is based on rental not earned income an attempt to live in it COULD be an attempt to bypass affordability rules for a residential.

If a residential mortgage was available it would be cheaper in general so why not use this?

Lender not likely to be happy. This is one reason first time buyers struggle to get BTL mortgages