Lie-to-Buy Mortgage Brokers & the FSA.

beer_tins

Some people are seen by lenders as too high a risk and they need some rules to guide them. OK, maybe the rules need to take these cases into account. That doesn't mean you can break the rules.

No one has a "right" to own property. Banks don't have an obligation to lend to someone they consider high risk.

I still think the majority of self employed people can get mortgages, especially those that can prove a regular minimum amount of money going into their account each month. they may not get the best mortgage deals, but then it's the lender's right to offer higher rates to customers it considers more risky. That seems pretty reasonable to me.

Dan_Collins_2

Sorry BOS.

I am thinking no more self cert. The client tells you he cannot prove income. Ok what can you declare as income, client says £xxx you complete the forms all goes through the FSA comes along, why did you not get proof. Broker says cos they said they cant prove it, thats why we went self cert dummy!

I am slowly losing the will to live, and type in a way that makes sense!!

homer_j_3

There is a difference between having proof that the lender will accept and confirmation to why you felt the amount that they disclosed is true.

After all, the last 3 months bank statements should do it, shouldn't it?

If the client comes out with the old chestnut that is "I dont put everything through the accounts" then we should be filling our anti money laundering forms in straight away for tax evasion and telling the clients that you can only work with declared income.

Of course the reality is that brokers pretend to not hear that as we all know tax evasion happens within the realms of the self employed. It is just whether you process the mortgage or not is whether your deafness becomes a noise that the FSA clearly hears....

I am going to apply for a journalist job with panorama me thinks

silvercar

Correct me if I'm wrong, but self-cert came into existence to assist those whose income on paper was low but had high affordability.

For those whose income comprises a large amount of cash, the answer is to declare sufficient income to obtain standard mortgage.

For others the situation is not as simple. To say that you need to show the income in order to obtain the mortgage denies some people (not talking tax evaders) the ability to obtain an affordable mortgage when they are low risk.

Two examples are company directors retaining large sums within their business until such a time as they need the money, thereby reducing tax bills, and those who have a large amount of overseas income who won't bring it into the country until they need it for the same reason.

Kez100

Dan_Collins wrote: »

Sorry BOS.

I am thinking no more self cert. The client tells you he cannot prove income. Ok what can you declare as income, client says £xxx you complete the forms all goes through the FSA comes along, why did you not get proof. Broker says cos they said they cant prove it, thats why we went self cert dummy!

I am slowly losing the will to live, and type in a way that makes sense!!

But they can prove it. With accounts or a tax return. If they don't have one year, or part year in the case of a tax return, then it can't be considered an income for mortgage purposes, surely? Don't brokers guide people? I thought that was one of the arguments Mammamortgage was using in her reasons to support brokers thread.

*MF*

Enjoy reading your comments - so just a thought in passing.

The irony for me, and I mean serious irony, is that after "the risk" is measured, all the FSA rules are followed, every single hurdle cleared, etc etc. etc., and the mortgage is granted, a well paid salaried individual, can leave that job the day after cashing the mortgage cheque, become self employed, in essence become the highest risk ever - but as long as the mortgage is paid each month, everything that came before is history.

Go figure ...

homer_j_3

Self certs are designed for people who are unable to prove their income in a manner that is acceptable on a full status mortgage.

Examples of these are people like me, people who are self employed and do not have the payslips or accounts sufficient for the lender. I can still evidence through my bank accounts the money I am receiving etc but a bank would not accept these.

Another example may be a sales man employed who has his income mainly made up of commissions and bonuses. A lot of lenders will only take 50% of these where they are not guaranteed.

Company directors fall into either of the above categories as such and where you would place the business is dependent on the individual and length of time they have been there etc.

It is illegal to keep money offshore without declaring it to HMRC and therefore this money should be known to them. If no income is being derived from this money then it cannot be considered for affordability purposes.

silvercar

I agree with your post, except for this:

It is illegal to keep money offshore without declaring it to HMRC and therefore this money should be known to them. If no income is being derived from this money then it cannot be considered for affordability purposes.

If you are domiciled overseas you can keep your money offshore. If the money is there to supplement income when necessary (eg when a decision is made to move to a larger property) then it makes a move affordable.

homer_j_3

From a non domiciled point of view though, you are in a different arena as far as mortgages are concerned and will have different criteria from people who reside in this country.

Ultimately, you can only say that a mortgage is affordable based on income that you receive on a regular basis, whether it be work income, savings income or benefits etc. Having 100k sat in an account which can be dipped into is not an acceptable reason for providing a self cert product.

Clearly there are circumstances where you may be able to ethically justify a case over another one but the rules are there to ensure that its not the brokers responsibility to measure what is ethical or not.

Dylanwing

Conrad - In agreement with you. Mine was a slightly unusual, but my choice was either lie or rent, and the mortgage payments were a lot less than renting would have been. We went Near-Prime with SPML, and now that things have improved, we will shortly be moving back to a recognised lender. Our case was not the normal one, but we are proof that not all liar-loans end up in re-possession. In this part of the UK, rents are high, and that is the driving factor behind a lot of the so-called dodgy loans, especially as Private renting is a real pain, and you can never feel at home. Things might have been better, had some fool had not sold all of the affordable rented properties for a fraction of their value........:whistle: