Official. No more Liar loans. Celf cert banned.

geneer

http://www.dailymail.co.uk/news/article-2075394/No-liar-loans-self-certified-mortgages-banned.html

Self-certified mortgages, which saw more than a million people receive home loans without proving their income, are to be withdrawn.
Lenders will impose tougher tests on borrowers to ensure they can make their repayments, the Financial Services Authority is to announce on Monday, reports the Daily Telegraph.
More than half of all new mortgages taken out between 2007 and the first quarter of 2010 were provided without a customer having to prove their income.



The process, where some mortgage brokers encouraged home buyers to make false declarations about their income to borrow more money, boosted property prices but has been blamed on a large rise of repossessions.

Many borrowers got into trouble when interest rates rose and struggled to meet their monthly payments.



However, the new rules will be relaxed for existing borrowers to ensure they do not become 'mortgage prisoners' trapped in negative equity.
Hundreds of thousands of people are unable to move to a new home because of falls in the value of their properties.
Banks will be allowed to approve loans for trapped home owners even when their loans amount to a high proportion of their property’s value.



In July 2007, before the credit crunch, one in four residential mortgage products – about 860 – was available through self-certification. That has been reduced to almost none.

Details of the FSA's plans came as Lloyds TSB warned that home owners hoping to take their place on the second step of the property ladder face a 'very tough challenge'.
Following falls in house prices, this year will have had the lowest number of annual house moves since 1974, with a nine per cent fall on 2010.
Potential second steppers who bought their first home at the peak of the market in 2007, paid up to 23 per cent more than first-time buyers do now.
At the peak of the market 30 per cent of all loans were interest-only – with no requirement in many cases for the customer to have a plan in place for repaying the amount at the end of the term.


Read more: http://www.dailymail.co.uk/news/article-2075394/No-liar-loans-self-certified-mortgages-banned.html#ixzz1gsajBXRM

shortchanged_2

But in julieq land this never happened.

Dan:_4

I thought that these loans had already stopped.

DervProf

Nobody lied about their earnings when applying for a mortgage, did they ? The FSA would have been knocking down the door of any lender who didn't properly check income figures, because the FSA are a good, solid safeguard against dodgy and fraudulent financial activities in the banking sector.

Hang on a second, did I not see a news article earlier this week about the FSA ? Something about RBS and it's problems ?

geneer

Dan: wrote: »

I thought that these loans had already stopped.

Apparently not.

newDude

geneer wrote: »

Apparently not.

Yes they have, so get your facts strait.

geneer

newDude wrote: »

get your facts strait.

:rotfl:deary me. Righty oh. I'll get "Strait" on that.

Telegraph also reporting the same.

http://www.telegraph.co.uk/finance/8962695/End-to-liar-loans-after-lenders-are-ordered-to-tighten-income-checks.html

End to 'liar loans’ after lenders are ordered to tighten income checks

Self-certified mortgages, which allowed more than a million people to take out home loans without proving their income, are to be banned.

Lenders will impose tougher tests on borrowers to ensure they can make their repayments, the Financial Services Authority is to announce on Monday.
During the property boom the so-called “liar loans”, where banks and building societies fail to make independent checks on a customer’s income, were at the centre of widespread fraud.

Some mortgage brokers encouraged home buyers to make false declarations about their income to borrow more money, boosting property prices. Many borrowers, however, were unable to meet monthly repayments when interest rates rose, leading to arrears and repossessions.

However, the new rules will be relaxed for existing borrowers to ensure they do not become “mortgage prisoners” trapped in negative equity.

Hundreds of thousands of people are unable to move to a new home because of falls in the value of their properties. Banks will be allowed to approve loans for trapped home owners even when their loans amount to a high proportion of their property’s value.

David Hollingworth, a mortgage broker at London & County, said the relaxation of the rules for existing borrowers would help them get better deals. He said: “These people may be keeping up with mortgage payments fine, but end up getting a raw deal if they can’t move.”
In July 2007, before the credit crunch, one in four residential mortgage products – about 860 – was available through self-certification. That has been reduced to almost none. Mr Hollingworth said the mortgages were “effectively dead already, and the FSA is just nailing the lid shut”. Details of the City watchdog’s recommendations came as Lloyds TSB warned that home owners hoping to take their place on the second step of the property ladder face a “very tough challenge”.
Following falls in house prices, this year will have had the lowest number of annual house moves since 1974, with a nine per cent fall on 2010.
Potential second steppers who bought their first home at the peak of the market in 2007, paid up to 23 per cent more than first-time buyers do now.
More than half of all new mortgages taken out between 2007 and the first quarter of 2010 were provided without a customer having to verify their income.
At the peak of the market 30 per cent of all loans were interest-only – with no requirement in many cases for the customer to have a plan in place for repaying the amount at the end of the term.
Ray Boulger, of the mortgage broker John Charcol, said he believed the proposals would scrap the “onerous” original plans laid out by the FSA. “It is clear this was a genuine consultation exercise, contrary to some government so-called consultations,” he said.

Bull go-to guy Ray "prices are unlikely to fall (Sept 2007)" boulger claims victory. naturally.:rotfl:

julieq

shortchanged wrote: »

But in julieq land this never happened.

God, you don't give up, do you?

My assertion is that the so called "liar loans" didn't distort the market by very much. And I can demonstrate that by pointing at what happened since they were removed, which was a very slight correction in comparison to other countries, against a backdrop of seriously bad economic loss of confidence.

Self certs are not automatically "liar loans", and the Daily Mail report is as usual for that paper over egged to tell a particular story to back the prejudices of their readers and sell the newspaper. That isn't to say that there wasn't any misrepresentation of income, but the overall effect at a time when prices are well within historical multiples for a couple was small to negligible and highly localised into areas of very high prices anyway, i.e. London and the South East, which have seen considerable strength in comparison with other places even when "loose lending" has been removed.

The proof of the pudding ultimately is in the eating, and essentially my model of the market has given CONSISTENTLY better predictions than yours. I guess that's why you're bringing in ad hominems based on a misrepresentation of what I've said. It's tiresome, but ultimately the idea that forcing me out of a discussion because you don't like what I'm saying is somehow going to change the outcome is ridiculous and shows the paucity of your own arguments.

If you're wrong on your basic assumptions - which the data indicates - then I'm afraid your conclusions are likely to be way off. As indeed they are. Have you never stopped to think why you never get any of this right, where people like Hamish put up directionally correct predictions year in year out? You're looking at the same data and you know the same facts. How come you ALWAYS get it so wrong?

shortchanged_2

julieq wrote: »

How come you ALWAYS get it so wrong?

Would that be me predicting the impending recession then?

And as for house prices I have never stated they will crash, I think they need to drop and they will continue to drop in real terms as long as the banks don't open the floodgates again.
Why do you think transactions are so low at the moment?

Ultra low interest rates are the current saving grace for the housing market.

geneer

julieq wrote: »

My assertion is that the so called "liar loans" didn't distort the market by very much.

:rotfl::rotfl::rotfl:Right you are then. Jeesh.

nearlynew

The last house price boom could not, and would not have happened if it were not for liar loans, celf-cert and other forms of loose lending.

This is 100% fact and guaranteed.

Only an idiot would argue otherwise.