Is fraud propping up house prices ?

silvercar

HAMISH_MCTAVISH wrote: »

I've yet to hear why this is fraudulent as opposed to sensible tax minimisation or inheritance planning.

DervProf wrote: »

As long as he isn't visiting a mortgage broker with the intention of obtaining a mortgage based on income from properties that are not in his own name, then it isn't.

That is an interesting point, if someone is buying a property for him and his family should he be allowed to include the income of said family when applying for a mortgage?

DervProf

silvercar wrote: »

That is an interesting point, if someone is buying a property for him and his family should he be allowed to include the income of said family when applying for a mortgage?

I don't know if he should be, or is allowed to. It would be interesting to hear the views of the mortgage broker who meets people in these situations. A broker should know what is and isn't allowed, and might tell us if people come to him with a view to committing fraud.

I have no issue with people who legally minimise their tax obligations. People who evade tax, or obtain money by lying is a different matter.

chewmylegoff

silvercar wrote: »

That is an interesting point, if someone is buying a property for him and his family should he be allowed to include the income of said family when applying for a mortgage?

Well if I was the bank I wouldnt really be that interested in the incomes of any people who weren't legally responsible for repaying the mortgage debt, as it doesn't really matter if your relative has £1m if he isn't obliged to give it to me when you default on the mortgage.

silvercar

chewmylegoff wrote: »

Well if I was the bank I wouldnt really be that interested in the incomes of any people who weren't legally responsible for repaying the mortgage debt, as it doesn't really matter if your relative has £1m if he isn't obliged to give it to me when you default on the mortgage.

If the family are living in the home, then it is reasonable that they would safeguard the home, so the likelihood is that they would pay the mortgage if needed to.

Anyway, in this case, if the shopkeeper had properties in trust for children, then he would have control of the money and so would be able to use it to pay his mortgage.

silvercar

chewmylegoff wrote: »

Well if I was the bank I wouldnt really be that interested in the incomes of any people who weren't legally responsible for repaying the mortgage debt, as it doesn't really matter if your relative has £1m if he isn't obliged to give it to me when you default on the mortgage.

Which is another issue. Those mortgage applicants who have close relatives with large amounts of cash are less likely to be repossessed than those where there is no-one in the family with a penny to rub together, yet the risk ont hat level is never assessed.

Emy1501

When We bought in 2004 we could only 3x max from normal lenders so got a self cert which were just becoming widespread at a time when the market was struggling. If wasn't fraud but it was an easy way to inflate wages ie use potential overtime, supply work etc. The Mortgage advisor also used the rent from a flat we owned at the time without deducting anything for the mortgage costs, This put our joint wage up from 50k to 75k just like that. I suspect these types of mortgages were widespread up until they were clamped down on in 2008 and were probably a big factor in prices going up from 2005-2007. It was also the same for IO mortgages where brokers would simply say anything regarding how the repayment side was going to be paid at term knowing that the borrower at the time had not even thought of a way to pay it off.

There was also fraud going on at the time the BBC ran programs from what I remember regarding brokers who was make up jobs wages get fake passports etc.

I suspect though that the inflating of wages was more of a problem rather than actual fraud.

FTBFun

HAMISH_MCTAVISH wrote: »

I've yet to hear why this is fraudulent as opposed to sensible tax minimisation or inheritance planning.

If a parent gives assets to a minor child, and this earns income in excess of £100, then generally it is taxable on the parent. I doubt one can own property however as a minor.

chewmylegoff

silvercar wrote: »

If the family are living in the home, then it is reasonable that they would safeguard the home, so the likelihood is that they would pay the mortgage if needed to.

Anyway, in this case, if the shopkeeper had properties in trust for children, then he would have control of the money and so would be able to use it to pay his mortgage.

Yes, he would be able to use it but if he went bankrupt and decided not to, then the bank would have to try to crack open the trust to get at its assets which is very expensive and has a low prospect of success if the trust has been properly set up. The only way any sensible lender would take the trust's income into account in the situation you describe would be if it had a fixed legal charge (which they were certain they could exercise) over specific assets owned by the trust.

chewmylegoff

silvercar wrote: »

Which is another issue. Those mortgage applicants who have close relatives with large amounts of cash are less likely to be repossessed than those where there is no-one in the family with a penny to rub together, yet the risk ont hat level is never assessed.

because if they don't have to pay then they may not. I don't think it's unreasonable for a lender to completely ignore extended family wealth, given the fact that families have fallings out all the time. If a wealthy family member is prepared to sign a guarantee or put their assets up as collateral then that is a different matter.

Conrad

Derv Prof, only just saw the thread here.

The regulator in it's wisdom bought about the end of self cert, but all that's happened is people have migrated to using these fake document sites and then applying themselves direct to lender, not even via a broker!

This is one example of just how daft regulation is here.

BUT, but, but, although I get your annoyance at this, you need to step back and consider the fact that well above 99% of owners sustain thier mortgage. You can fume and rant but in the end 'thickies' with pockets fo cash actualy do in the main make perfectly sensible decisions IN THIER EYES.



I've seen this right accross the board, from the reveared academic forgetting to mention those speaking fees made abroad (and Banked there to), to the myriad white van men with thier cocktail of income streams, massive cars and houses, yet very low Tax bills. You must understand this is endemic and not a fringe thing.

Eventhe Saintly Ken Livingston was submitting income through a company struture, which means he like millions of others will make national average earnings stats pretty much useless.

Think about someone who you might respect. Say, David Dimblby. Well, do a freedom of information enquiry as to his income. You'll find he pays it though various companies in various family names.
So again statistically his numbers would not reflect the reality of his income and wealth.

Is all this dodgy, or is it just Human Beings doing what Human Beings do?

As for subletting council flats while awaiting to cash in on the sale of the former council home, totaly commonplace. You'll never stop it.