My budget wish - less FSA regulation

wotsthat

Graham_Devon wrote: »

Ahh, so thats where we crossed paths before

Knew it would be one of the reasons that you have decided to chip in and start

I was interested in why you have to respond to every single slight (real or perceived) and it's something to do with me voting labour?

Are all your discussions so well constructed or am I getting special treatment?

Conrad

DervProf wrote: »

And possibly saved a few from the nightmare of financial catastrophe.

"Dreams".

So to make a small dent in the repo numbers, the regulator in effect bars millions of hard working Brits a home of thier own.

I'd say having a growing underclass of have nots is a far worse outcome than allowing adults a chance at home ownership, and where the overwhehlming outcome will be that the home is NOT repossessed.

Conrad

DervProf wrote: »

The "light touch" regulation of the financial services arguably left many consumers in a very precarious position,

I agree on tough regulation for Banks at the macro scale, to avoid the packaging and concealment of toxic risks, which incidentaly are primarily made up of US based mortgagees.

Howver, the UK market on the whole was pretty well ordered.
I agree we must not go back to lets say 90% self cert, or 125% mortgages, but the regulation does need to be loosened if we want a meritocratic society where home ownership is within the reasonable reach of most of us.

We are now in a place where perfectly capable adults are unable to access a new mortgage.

EXAMPLE; a self employed person wanting to switch lender without increasing borrowing at a low loan to value, in order for them to secure a competetive fixed rate. She has many years of excemplary credit behaviour and has paid the mortgage on time in full without mishap.
Now you may answer she needs to vastly increase the Tax she pays by declaring lower expenses, but this is completely unrealistic and really would tip us into a depression and lead to many employees of such people being laid off.

I would argue she is a prime candidate for sensible grown - up self cert lending.

Generali

julieq wrote: »

You'd have to show that there was widespread deception, and there is simply no evidence of that. Most people don't lie about their income on a mortgage application because (a) they have no reason to, and (b) because they assume it will be checked.

If a lender doesn't care one way or another what true income is it's not a factor in gaining a pecuniary advantage, is it?

Not true. If you lie and gain financially as a result of the lie then you have committed fraud.

If you claim a higher income than you actually have and get a mortgage that you wouldn't have otherwise been able to get as a result you have committed a crime. The bank's attitude doesn't matter, nor does how widespread it is.

It's a bit like someone stealing a coat from me I don't like very much. I may not be that bothered but it is still theft.

Some examples:

http://www.mortgagestrategy.co.uk/lenders/glasgow-man-admits-self-cert-mortgage-fraud/1009338.article

A Glasgow man has admitted running up more than £250,000 in mortgage frauds using self-cert mortgage applications.....
He claimed he was self-employed and making £48,000, when he was working at a community initiative earning just £20,000......
Speaking after the hearing, Scott Pattison, Crown office director of operations, says: “Edward Lyons failed to disclose accurate information to mortgage companies in a deliberate ploy to defraud them of money.

http://www.novinite.com/art/mortgage/Self+certification+mortgages.html

It is important that if you do decide to go for a self-certification mortgage then you do not inflate your income which is also called mortgage fraud and if found out can come with serious consequences.

http://en.wikipedia.org/wiki/Mortgage_fraud

Income fraud: This occurs when a borrower overstates his/her income to qualify for a mortgage or for a larger loan amount

chucky

Conrad wrote: »

So to make a small dent in the repo numbers, the regulator in effect bars millions of hard working Brits a home of thier own.

I'd say having a growing underclass of have nots is a far worse outcome than allowing adults a chance at home ownership, and where the overwhehlming outcome will be that the home is NOT repossessed.

good point Conrad - the growing underclass expect to own property.

unfortunately not everyone is able to buy property, if they hadn't realised property has always been expensive.

DervProf

chucky wrote: »

good point Conrad - the growing underclass expect to own property.

unfortunately not everyone is able to buy property, if they hadn't realised property has always been expensive.

Property didn't seem expensive when I bought my place, but it does now. Relatively expensive compared to a loaf of bread, yes, always has been.

Conrad

Generali wrote: »

http://en.wikipedia.org/wiki/Mortgage_fraud

Many self cert products allowed the borrower to merely confirm a mortgage payment was affordable.
Others allowed the borrower to self define income, for example 'anticipated income for comming year'.

We need to get away from simplistic hysteria, and once again allow grown adults to make life decisions that in 99% of cases will not result in repossession.

I am not just talkning about self cert anyway. Many classes of hitherto credit worthy capable adults are now unable to buy a home or remo thanks to blind reguation.

In the end we have to choose as a society which is worse;

+ Slightly lower repo numbers but millions unable to buy a home

OR

+ slightly higher repo numbers but grown adults allowed to lead fulfilling autonomous lives.

DervProf

Conrad wrote: »

So to make a small dent in the repo numbers, the regulator in effect bars millions of hard working Brits a home of thier own.

And the BoE drops the base rate to a record low, and keeps it there for many, many months. Yes, businesses need low IRs, but one of the main tools that the BoE have to control inflation are IRs.

These millions of hard working brits will still get their homes, they'll just have to save up a bit longer before they buy one. And when they do buy one, they won't need such a large mortgage.

Yes, those who rent will find it harder to save a deposit, but like everyone else that wants something badly enough, they'll get it if the work/save hard.

Generali

Conrad wrote: »

Many self cert products allowed the borrower to merely confirm a mortgage payment was affordable.
Others allowed the borrower to self define income, for example 'anticipated income for comming year'.

We need to get away from simplistic hysteria, and once again allow grown adults to make life decisions that in 99% of cases will not result in repossession.

I am not just talkning about self cert anyway. Many classes of hitherto credit worthy capable adults are now unable to buy a home or remo thanks to blind reguation.

In the end we have to choose as a society which is worse;

+ Slightly lower repo numbers but millions unable to buy a home

OR

+ slightly higher repo numbers but grown adults allowed to lead fulfilling autonomous lives.

Oh I agree with you. People should, wherever possible, be allowed to enter into a contract freely with another person.

Systematic law breaking shouldn't be a part of the mortgage industry and a clamp down on self cert was overdue.

The system in Aus seems to work very well. You need a deposit of a minimum of 5% (2% from some credit unions*) so you have something to lose if you get repossessed.

You can get a mortgage at any age as long as you can show you have a reasonable plan to clear it. For example, a 55 year-old could get a 15 year mortgage if he was in a job where the retirement age is 70 rather than 65. A 65 y/o could get a low LTV mortgage for a short period if the plan was to sell the house to clear the mortgage in a few years (he'd probably have to jump through extra hoops like being required to state he was in good health/not a smoker and maybe take out expensive life insurance).

You can include things like bonuses and commission as income but you have to prove that you get them pretty consistently with documentation to back it up. You can anticipate next year's income but you have to show it's not pie-in-the-sky.

Basically they look to the borrower to put together a story that stands up to some scrutiny with evidence. It's amazing the number of people that claim to have no debt or access to debt and then try to pay a mortgage application fee with a credit card!



*A credit union is like a building society but with a restricted membership group. For example, I am with the Teachers Credit Union which is a mutual financial services provider only open to teachers and their families. They will accept a lower deposit for a mortgage, probably because teaching is a stable profession with a low redundancy rate.

ILW

Conrad wrote: »

I agree on tough regulation for Banks at the macro scale, to avoid the packaging and concealment of toxic risks, which incidentaly are primarily made up of US based mortgagees.

Howver, the UK market on the whole was pretty well ordered.
I agree we must not go back to lets say 90% self cert, or 125% mortgages, but the regulation does need to be loosened if we want a meritocratic society where home ownership is within the reasonable reach of most of us.

We are now in a place where perfectly capable adults are unable to access a new mortgage.

EXAMPLE; a self employed person wanting to switch lender without increasing borrowing at a low loan to value, in order for them to secure a competetive fixed rate. She has many years of excemplary credit behaviour and has paid the mortgage on time in full without mishap.
Now you may answer she needs to vastly increase the Tax she pays by declaring lower expenses, but this is completely unrealistic and really would tip us into a depression and lead to many employees of such people being laid off.

I would argue she is a prime candidate for sensible grown - up self cert lending.

I canjnot see your point about declared income and true income being very different, can you give an example which does not involve either tax evasion or mortgage fraud?