Self Certification scandal

LondonFTB

There was a programme on BBC Radio 4 last night which covered self certification mortgages in the UK and how millions of people have lied on their applications (exaggerating their income to a grotesque level) to secure large mortgages.

Just wondering if anyone here has done this or know of people who have? People must be concerned about this now with interest rates having risen and the northern rock collapse causing a credit crunch? Are people going to have big problems when their fixed rate or discount runs out soon and they can't get another lender to refinance their loan?

dunstonh

I didnt catch the programme but heard about it.

How balanced was it? I saw a few preview articles referencing it said they were concerns that the BBC would take it's typical approach that the consumer was the totally innocent party here and they were forced to buy the mortgage.

I am not saying that these were not mis-sold and the advisers involved in telling people to lie should be brought to task. However, on something like this, I have no sympathy for the consumers involved because they know they are telling lies to get the mortgage and they know the full costs and repayments before they agree to it. They were lies that suited them and got them what they wanted.

Conrad

Everyday I have the same conversations with prospective clients;

ME - I can get you £130,000, and afterall this is the affordable amount given your budget.

CLIENT - But we want a house, £130k will only get us a flat.

ME - I want an Aston Martin but I cant afford one

CLIENT - Then we'll try elsewhere


All this stems from the must have it now culture. Of course brokers turn a blind eye to assist clients for whom the alternative is to rent and make a greedy landlord rich.

Why do we think lenders have Sefl Cert products? They know whats going on, it's all a big game.

Clients want everything now, so brokers tell them the hows, they do not however force people to aspire to a bigger property than that which is truly affordable.

undercoat11

I think that this is quite common actually. My brother did it and I know someone else who did it too. The increases in house prices have been ramped up by this type of scandal.

On the other hand, there was a programme on the BBC a few years ago pointing out that EA were asking how much people wanted to borrow and falsifying income earned - so it is no surprise and has been ignored for years. The miracle economy has ploughed ahead on the back of all this borrowing, so why would anyone want to stop it? It is a scandal, I agree. If you search on the internet you will find companies that sell pay slips/P60s etc - now why would you want to buy one of these?

Sarahsaver

I have done some undercover work on this.
It was suggested to me that I put down a certain 'allowance' form my husband and maintenance from my ex...
The interview was recorded. I will not know the outcome.

Gorgeous_George

Obtaining money by deception m'lud. Guilty as charged - take him down.

I hope that those who lied get lucky. A quick promotion at work or sudden inheritance should help some of them out.

As for greedy Landlords - rubbish. If people cannot afford the house that they want they have a choice. Rent one, buy cheaper or commit fraud.

I liked the valuers who complained that the Land Registry figures were mis-leading. It won't come as a great surprise that the valuer uses the LR figures when doing a valuation. Any schooldkid could do that or write a programme that would do it for them. Why do we pay these people?



GG

fiveyearplan

Its up to you to pay the mortgage and to make sure you can afford it - yes, I lied to get mine and my mortgage payment is always paid.

dunstonh

The problem with the UK nowadays is that there is a lack of personal responsibility and too much blame culture.

pamaris

I am just now listening to this:
http://www.bbc.co.uk/radio/aod/mainframe.shtml?http://www.bbc.co.uk/radio/aod/radio4_aod.shtml?radio4/fileon4

I definitely thought that the consumers were being portrayed/ portraying themselves as victims. However, their brokers seemed very complicit in what they were doing.

EDIT A borrower explains how he lied about his earnings
"
Hope that works

dunstonh

Thanks for that link.

He was told that his income was not enough and the only way to get a mortgage was elaborate. So, he was clearly told and was aware that if he wanted a mortgage, he would have to lie. He was willing to do that and agreed to do it as he wanted the mortgage. It doesnt mean the adviser should get away with it but it takes two to tango.

Another bought their council house in 2000 cheap so benefited from price increases yet continued to borrow more and more. They then ended up with more and more debt BY CHOICE. In the end they borrowed too much then they could afford. They then remortgaged using a sub prime broker and went on to borrow more and more until they used their equity up.

In that example, they and the article were blaming the sub prime advisers who entered after the debt had been built up. Why not blame the woman who kept spending money they didnt have?

pamaris

I totally agree with you dunstonh. First of all, the couple who bought on the right to buy scheme probably got their house for what 80k (if that)? Now their outstanding mortgage is 205k. Come on, what changed in their lifestyle from the time they were a council tenant paying a pittance rent in 2000 to the time they are living large in 2007? Why do they suddenly need 100k+ to live on?

I don't know if these people are just greedy, or ignorant, or both. To be fair it was mentioned in typical BBC style that their daughter was stricken with cancer but I am not sure how that should translate into them needing another 100k, since the state pays for the treatment.