Self Certification scandal

merlinthehappypig

Whilst not stupid enough to go ahead with this I had a chat with an IFA from a large and allegedly respectable firm a week or so ago (after the Northern Rock saga).

I had to take medical retirement early (in my 40's) and have no prospect of working again. My total income from pension etc is approx £20000 (gross and net are similar)

Care problems with elderly relatives mean we have considered buying a larger house. I have agreements in principle from most of the major banks, using subsidiaries in some cases, to lend me £300000 on a house costing £580000. This is 15x my net income - repayments are approx £400 more a month than I get paid. There would be no problem, apparently, with me borrowing up to £500000 with a £280000 deposit, a small matter of 25X my net income.

I appreciate that the lender is covered because of the deposit I would put in, but I have no prospect of ever being able to repay this. No financial checks are necessary because of the deposit size so I don't even have to lie about income, just sign to say I am aware of the repayments.

I have access to all the best deals on interest rates so am not even paying a higher rate.

Total madness and no wonder people are going to be in trouble.

Dan_Collins_2

chriseast wrote: »

Whilst not stupid enough to go ahead with this I had a chat with an IFA from a large and allegedly respectable firm a week or so ago (after the Northern Rock saga).

I had to take medical retirement early (in my 40's) and have no prospect of working again. My total income from pension etc is approx £20000 (gross and net are similar)

Care problems with elderly relatives mean we have considered buying a larger house. I have agreements in principle from most of the major banks, using subsidiaries in some cases, to lend me £300000 on a house costing £580000. This is 15x my net income - repayments are approx £400 more a month than I get paid. There would be no problem, apparently, with me borrowing up to £500000 with a £280000 deposit, a small matter of 25X my net income.

I appreciate that the lender is covered because of the deposit I would put in, but I have no prospect of ever being able to repay this. No financial checks are necessary because of the deposit size so I don't even have to lie about income, just sign to say I am aware of the repayments.

I have access to all the best deals on interest rates so am not even paying a higher rate.

Total madness and no wonder people are going to be in trouble.

I am sorry but I cant believe you. Either you are making this up or the broker is a crook and has lied about your income. Even self cert mortgage require details of how you earn your money. They also credit check you, if you declare a large salary and your credit file looks good then they are going to lend the money!

Sorry if I sound a little peeved but this issue is begining to wind me up! BBC come along and blame the industry and all the sheep in the country go along with them!

Dan_Collins_2

I now have a rule, if I get a call from a client who asks for a self cert mortgage and they are up front with the fact they dont earn anough then they are asked to find another mortgage broker! I cannot afford to lose my licence.

However in some cases self cert mortgage have helped my clients! They are not alwasy used to lie! Sometimes accounts are out of date and do not reflect a new contract! My accounts for example are a year and a half old! They do not reflect my true income!

I do agree though, if self certs did not exist then I would have paid less for my house and so would most of you!

We will see repo rates increase as people come from low rate deals to current rates! Lenders affected by the crunch have increased rates top over 8%. Northern Rock will bounce back, they are a great lender! If only they had as good pr team as barclays! LOL ;-)

catz1ct

dunstonh wrote: »

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

That is sooooo true. This is what causes a lot of problems in general. People don't/wont take responsibility for their own actions. I gotta say it winds me up. :mad:

regularsaver1

I've seen a customer being turned away from a Halifax branch saying they couldn't borrow enough, and then come back a few months later and they had done a halifax mortgage with a broker. How? I ask. They know how.

for some reasons proof was not needed with the broker, but was in the branch???

They said they knew they could afford the monthly payments - but don't they all??

meme_3

LondonFTB wrote: »

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?

This is not a new phenomenon.

We were advised to do this by a mortgage broker in 1989.

Declined, naturally, but we did go on to get 4x joint salary, with a high street lender (albeit with a guarantor).

Only 4x - fancy that! - in them olden days we were really only allowed to have 2.5x ....

At the outset, our mortgage rate was about 9%, increased to 15% within 2½ years. Made life very difficult.

People should consider - interest rates were indeed much higher, but income multiples were also much lower back then.

merlinthehappypig

Dan_Collins wrote: »

I am sorry but I cant believe you. Either you are making this up or the broker is a crook and has lied about your income. Even self cert mortgage require details of how you earn your money. They also credit check you, if you declare a large salary and your credit file looks good then they are going to lend the money!

Sorry if I sound a little peeved but this issue is begining to wind me up! BBC come along and blame the industry and all the sheep in the country go along with them!

Well, thanks. I finally pluck up the nerve to post what I thought might be some useful information on here after months of lurking and you decide that I'm lying. Can I ask what you possibly think I would have to gain by making this up?

I'm not going to post any details on an open forum, but if you genuinely feel that your profession is being unfairly maligned then send me a personal message and I will give you the name and telephone number of the broker and that of the person with whom I have been dealing. Ring them posing as a disabled potential customer, on about £20000 a year, no debts, perfect credit record, with £300000 deposit who doesn't meet the usual salary multiples criteria and see if they would lend you another £300000 or more. They won't be turning you away.

To be honest we are actually on the same side here. I think that it is wrong as well, but accusing people of lying to hide the fact that these things happen isn't very professional. I originally got in contact with the broker to prove to my wife that we couldn't borrow enough to buy again for the time being, as I want to stay in rented. Unfortunately his answer hasn't helped at all in that respect, so I would actually be very grateful if you can prove that he is lying (though I don't see what he would gain from this) or that he is expecting me to be complicit in some sort of fraud.

Presumably an apology is too much to hope for?

toonfish

chris, I have seen similar with Woolwich/Barclays where individuals have been given a pre approved mortgage limit way, way above what they could possibly repay.

In defence of the brokers is often possible to get a better deal self-certifying than go to the liikes of First National who will do 6x income at high rates.

The only self-cert we do is on a declared affordability basis whereby the client declares their annual or monthly income after all their expenditure.

Dan_Collins_2

chriseast wrote: »

Well, thanks. I finally pluck up the nerve to post what I thought might be some useful information on here after months of lurking and you decide that I'm lying. Can I ask what you possibly think I would have to gain by making this up?

I'm not going to post any details on an open forum, but if you genuinely feel that your profession is being unfairly maligned then send me a personal message and I will give you the name and telephone number of the broker and that of the person with whom I have been dealing. Ring them posing as a disabled potential customer, on about £20000 a year, no debts, perfect credit record, with £300000 deposit who doesn't meet the usual salary multiples criteria and see if they would lend you another £300000 or more. They won't be turning you away.

To be honest we are actually on the same side here. I think that it is wrong as well, but accusing people of lying to hide the fact that these things happen isn't very professional. I originally got in contact with the broker to prove to my wife that we couldn't borrow enough to buy again for the time being, as I want to stay in rented. Unfortunately his answer hasn't helped at all in that respect, so I would actually be very grateful if you can prove that he is lying (though I don't see what he would gain from this) or that he is expecting me to be complicit in some sort of fraud.

Presumably an apology is too much to hope for?

No I will say sorry for being rude, I had the hump last night and I think have come across in the wrong manner.

What I am saying is that self cert mortgages still require you (or the broker if he is up to tricks) to declare and income and how you earn. A while back you could get a self declaration mortgage (I think that is what they called them) and you just declared you could afford the mortgage, no salary details etc.

So either you are a BBC plant or you were lied to. I apologise on behalf of the decent brokers out there. Not many lenders will self cert pension income anymore so he would have either lied or put you on a high rate!

Apologies again for calling you a fibber ;-)

merlinthehappypig

Dan_Collins wrote: »

No I will say sorry for being rude, I had the hump last night and I think have come across in the wrong manner.

What I am saying is that self cert mortgages still require you (or the broker if he is up to tricks) to declare and income and how you earn. A while back you could get a self declaration mortgage (I think that is what they called them) and you just declared you could afford the mortgage, no salary details etc.

So either you are a BBC plant or you were lied to. I apologise on behalf of the decent brokers out there. Not many lenders will self cert pension income anymore so he would have either lied or put you on a high rate!

Apologies again for calling you a fibber ;-)

I'm trying to work out whether being accused of being a BBC plant is better than a liar. Self declaration is what he was talking about and this was only last week. No excuses for not being fully aware of my circumstances as I have met with him once and phoned him three times as I simply couldn't believe what he was telling me. Presumably you are not taking me up on the broker details then?