Tuesday, Nov 18, 2008
More toxic trash thrust on the UK Taxpayer
mortgagestrategy: B&B admits hands tied over self-cert fraud
Bradford & Bingley has admitted there is little it can do to tackle self-cert mortgage fraud where borrowers lie about their income. The revelation emerged during a grilling of B&B’s chief executive Richard Pym and chairman Rod Kent at a Treasury Select Committee session held this morning as part of a wider banking crisis enquiry. Richard Pym says the nationalised lender is attempting to tackle the fraudulent loans held on its buy-to-let portfolio, but says there is little in the bank’s armoury to stamp out self-cert fraud.He says: “One of the emerging issues within our books is mortgage fraud. There is a fraud element in our book and we regret that.
Posted by jack c @ 05:16 PM (1276 views) Add Comment
23 Comments
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1. mark said...
don't forget many people who take out self cert are genuine self employed , whose only route to buy a house is self cert...
2. Puppee said...
yes but they still have accounts like anyone else wageslips profits etc so theres no excue's earnings can still be checked
3. Will said...
Those who fraudulantly borrow money can be dealt with under the Theft Act. The Fraud Office does all the time, and can investigate back over many years.
I have seen several in Court. Infact under UK law in the, B&B are obliged to act when a fraud has occurred.
4. jack c said...
Have to disagree Mark - what's wrong with self-employed proving income by way of a set of accounts or as agreed with HMRC and obtaining a mortgage on full status?
5. mark said...
because Jack many self employed people do not wish to pay high taxes and spend money to keep levels down, however this does not always equate well on accounts......... ...
6. fjcruiser said...
The majority of self certified mortgages which go wrong are not from law abbiding self employed people, they are purely and simply from mortgage fraudsters, applying for multiple mortgages at once and deliberately defaulting on them as well. It gives a bad name to self certified mortgages. The practice of self certification is not new, hence why self employed people have to pay more for their mortgages even if their income is well above the mortgage they have to pay.
Banks always have to blame someone else for their incompetence.I guess most bankers would not even know how to read a set of accounts anyway.
7. Nevanson said...
Are you saying then that self-cert was created because the self-employed are fraudsters ?
8. jack c said...
Mark - I understand what you are saying however self employed applicants are expected to enter genuine net profit on their mortgage application (s) and to do otherwise is an offence. Furthermore if they elect to inflate their income they are obviously at the same time defrauding HMRC are they not?
GMAC have a number of EMPLOYED self-cert borrowers on their books - why would anyone who is employed need to self cert their income when a payslip and P60 will reveal their earnings.
9. mark said...
jack yes i see what you mean, however they are still an essential product for some people, if you have only been self employed for 2 years and normal mortgages would require 3 years accounts etc... in situations like this it is always the nonest people who get hurt the most because of the fraudsters, if self certs vanished many people would not be able to buy a home...
10. mark said...
* honest not nonest..lol
11. little professor said...
Meanwhile back in 2003:
12. little professor said...
And in 2007:
13. jack c said...
mark - agree with yr post (@6) of Tuesday, November 18, 2008 06:24PM - if someone has 2 years accounts and lender requires 3 no problem using self cert (accountant can provide projection for year 3) which is fair enough.
Sadly in many cases self-cert opened up an opportunity for those willing to be economical with the truth on the mortgage application and as always the genuine borrowers suffer.
14. phdinbubbles said...
The *ankers should not to be allowed to get away with shrugging their shoulders and saying they didn't see it coming. There were so many warnings by so many people for at least five years before the "crunch". They really should be rounded up, tried and imprisoned.
15. Tiggerhetiger said...
I`m self employed and applied for a self cert 2 years ago...lies were covertly accepted.My application was accepted...
I did not go through with it, as the numbers just did not add up as a business model..I almost got sucked in to BTL.I`m no angel but the whole process stunk...
16. little professor said...
(Sorry for the multiple posts)
Also in 2007:
17. jack c said...
@little professor - keep em coming as you could be onto something here (LOL)
18. Highland Property Bubble said...
The granting of self-certification, or liar, loans has been rife in this country over the past decade or so.
The first mortgage I was offered in 2001 was with a major Scottish bank by way of a mortgage broker. The broker, who was employed by a very large financial services firm encouraged me to take a loan of six times my then salary with no proof of income or employment status whatsoever. The volume of liar loans processed by this single broker alone during the last seven or so years is anyone's guess.
19. ianbe said...
After reading all the posts here I still fail to see why we need self cert mortgages.
If someone is self employed with only two years accounts and the lender requires three years then just wait another year or try and find a lender who'll accept two.
There's a good reason why lenders usually like to see three years accounts.
No-one has a god given right to be able to access credit.
20. p. doff said...
Ah yes, the self cert application. I have a friend who is a mortgage adviser at HBOS and she had a self cert applicant who was a waiter in an Indian restaurant. According to the applicant, he had an annual salary of £65K!!!
The mortgage adviser is required to assess whether the stated salary is realistic, and in this case it obviously wasn't so the application was eventually rejected. Full marks to HBOS on that one.
It is a completely different story when either of our two well known bent local brokers are involved. They both have a reputation for 'oiling the wheels' on mortgage applications, and some dodgy customers end up with a mortgage with a major lender via the back door, when the application is 'packaged' by the broker.
21. mark said...
ianbe: i assume you are employed, never had the joy of working for yourself and you clearly earn a great deal..... Sometimes people need a little extra help and self cert can do just that.......... ...
22. Tenyearstogetmymoneyback said...
The simple solution would be to allow the Inland Revenue to cross check all mortgage applications against tax records.
Any discrepancy would result in a tax bill for the difference.
People like Mark at 3 would have two choices
Pay more tax so they could have a bigger Mortgage
Pay less tax and have a smaller mortgage.
Millions of us have no choice as our tax is taken at source.
Mortgage Fraud is not a victimless crime as it is Honest Joe
earning a mere £40000 a year who has been priced out of the market
(hopefully not for much longer).
A couple of years ago I had to suffer someone with two buy to lets boasting to me that they had
only paid £400 tax that year !
23. paul said...
Outstanding work Little Professor.