Lying for lending

Freecall · 12 October 2016 at 1:16PM

Many news sources are covering the uSwitch survey of 1,000 mortgage applicants with children under 12.

The Independent interviewed one who accepted that she had lied in order to secure a mortgage of the size they wanted. She offered the following comment in support of her actions :

'We could actually afford the mortgage but only just.'

With a sub 2% rate on offer that 'but only just' bit has to be a serious worry not only for those that obtain these mortgages but the economy as a whole - if the practice is as widespread as the survey would suggest.

Thrugelmir · 12 October 2016 at 1:22PM

Lenders checks are very thorough. People have always lied. That's the nature of the human race. All very well until things go wrong. Then they go really wrong. As impacts future credibility as well.

As I often quote. This organisation exists for the very reason that no lender wants a bad apple. So while competition is fierce. Data is freely shared.

http://www.nhunter.co.uk/

kingstreet · 12 October 2016 at 1:36PM

If we get payslips or bank statements which show any outgoing the lender will take into account in setting affordability (childcare/student loan/season ticket loan etc) and we weren't aware of it before, we won't submit any application until we've investigated what it is and how it impacts affordability.

We would not submit an application if we believed there was any attempt to deceive.

muhandis · 12 October 2016 at 1:48PM

Yeah, from what I'm heard from friends and colleagues, withholding pertinent information is quite common among mortgage and remortgage applicants, the common ones being -

1. Getting a mortgage/remo while pregnant or with a new born child but not declaring this on the application.

2. Getting a mortgage/remo just before going on parental leave, career break, sabbatical and not declaring this.

3. Not declaring elderly dependants living at home.

4. Lowballing commuting costs or not showing any.

5. Borrowing from family for funding the deposit

I'm sure there are many more things that people could lie about or withhold information on to improve their chances of getting the mortgage they need. And I think it's gone up a lot in the last couple of years after the new tighter regs came in. It's also likely much more prevalent in places with high price-income multiples like London, Bristol and other parts of the SE. It's hard for the lenders to do much though, how would you police all this in a cost effective way.

With all the detailed affordability calculators out on the internet, it's quite easy for a potential borrower to see exactly what impacts affordability in the lender's eyes.

Freecall wrote: »

Many news sources are covering the uSwitch survey of 1,000 mortgage applicants with children under 12.

The Independent interviewed one who accepted that she had lied in order to secure a mortgage of the size they wanted. She offered the following comment in support of her actions :

'We could actually afford the mortgage but only just.'

With a sub 2% rate on offer that 'but only just' bit has to be a serious worry not only for those that obtain these mortgages but the economy as a whole - if the practice is as widespread as the survey would suggest.

spadoosh · 12 October 2016 at 1:53PM

Do mortgage lenders not ask to see bank statements? Mine certainly did.

Unless you live your life in cash theres always a trail. It really cant be that hard to find a discrepancy.

Is it not a case of the banks being aware of it and willing to take the slight increased risks in that they should be protected with a secured mortgage. If the borrower falls foul, on their head be it?

Pixie5740 · 12 October 2016 at 1:55PM

No doubt if it all blows up in her face and she can no longer keep up the mortgage repayments it will be the lender's fault.

regprentice · 12 October 2016 at 2:08PM

Childcare is extraordinarily expensive nowadays - my wife quit her job when our second was born, as at cost of £50 a day per child she would have needed a salary of £32k a year just to break even after Tax and NI. There really doesn't seem to be awareness in younger people of how much this costs. In many cases, its basically knocking a single salary out of the affordability equation.

Bearing in mind that the survey referenced in the article looks at the last decade as a whole i'm sure many will find it harder to remortgage now that the new affordability rules have come in and I suspect that will become a bigger story over time.

Thrugelmir · 12 October 2016 at 2:20PM

Pixie5740 wrote: »

No doubt if it all blows up in her face and she can no longer keep up the mortgage repayments it will be the lender's fault.

Won't change anything though. Self inflicted. So will have to live with the consequences for a very long time.

No different to avoiding the taxman. One day. Matters come to light.

stator · 12 October 2016 at 2:22PM

It's a bit silly to include childcare costs in affordability checks because if things get bad you can always sell them to work down pit.

kingstreet · 12 October 2016 at 2:39PM

spadoosh wrote: »

Do mortgage lenders not ask to see bank statements? Mine certainly did.

Unless you live your life in cash theres always a trail. It really cant be that hard to find a discrepancy.

Is it not a case of the banks being aware of it and willing to take the slight increased risks in that they should be protected with a secured mortgage. If the borrower falls foul, on their head be it?

As a broker, even if the lender doesn't request bank statements itself, we are expected to check the outgoings to ensure we don't contribute to a fraudulent application - deliberately, or by accident.

Thrugelmir · 12 October 2016 at 2:40PM

stator wrote: »

It's a bit silly to include childcare costs in affordability checks because if things get bad you can always sell them to work down pit.

No pits left around here. So it's chimneys instead.

Lying for lending

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