MSE News: Regulator admits 'mortgage prisoner' problem as Martin meets George Osborne

dunstonh

Part of the problem is liability.

lets say a mortgage broker did a mortgage sale in 2011. The person is off the deal now but goes to the lender to ask for a new deal.

1 - if its a new deal with amount/term unchanged, then no problem with the same lender.
2 - if its a change in amount/term, then it becomes a new advice event. The liability for the advice transaction stops being the original mortgage broker but is now the lender.
3 - if its a change of lender, then its a new advice event. If a broker is used, then it is the broker that takes the liability. If its direct to lender then the lender takes the liability. In both cases, the new lender takes the borrowing risk.

In these days where people complain about anything and many of those complaints are generated by claims companies, why would a lender want to take risks which are above a certain level. Claims companies are out there generating mis-sold mortgage complaints which are completely bogus but do it knowing that a few will stick.

So, if you were a lender that had someone with a mortgage that you have no advice liability on, why would you want to take that on with someone that is already pushing borrowing criteria?

Leafeysurrey

dunstonh wrote: »

Part of the problem is liability.

lets say a mortgage broker did a mortgage sale in 2011. The person is off the deal now but goes to the lender to ask for a new deal.

1 - if its a new deal with amount/term unchanged, then no problem with the same lender.

Actually that is exactly the problem. Amount/term unchanged and the lender won't put you on cheaper deal citing the new ruling is stopping them.