Wednesday, May 27, 2009
45% of mortgages were dodgy
BBC News: Tougher rules to ban 'liars' loans'
Slightly old story this one, but seemingly missed until now. Would anyone have taken out a liar loan if their income had really been adequate? Looks like a timebomb in waiting, when interest rates take off..
Posted by uncle tom @ 11:36 AM (860 views) Add Comment
10 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. ketha said...
This is still going on. Nothing much has changed bar around 'self cert'.
The title is misleading. 45% might be dodgy, probably weren't. some clearly were. I see no reason why employed people should not be able to provide a payslip. Self employed people complain because they're trying to fiddle tax but it works both ways.
2. paul said...
What really makes my cack hang is that in 2007 we were told by both the FSA and MSM that the UK had a tiny percentage of subprime loans, just like we were told that Northern Rock's nationalization would not result in significant losses for the taxpayer.
The question that the media really really really should be asking right now is "Does this mean that someone was lying to us?"
3. uncle tom said...
Ketha,
Virtually all self employed people are able to provide proof of earnings by means of tax returns. Arguing that these loans were 'for their benefit' was no more than a feeble excuse to justify a lax lending system.
4. Gooders said...
I would agree that all people need to provide some proof of earnings before obtaining a lmortgage but of course this would never be made a legally binding requirment. It would expose the fragile underpinning of the whole "properdee larder" (deliberate mistake). Resulting in a further decline in the house prices. This in turn disables the availabilty of credit secured against a home resulting in reduced spending and further economic downturn and that just would not do would it!!!!!
5. Eric Pebble said...
This is the biggest elephant in the room, EVER. And, as others have commented, the FSA and others - notably the CML - a disgusting/REPULSIVE organisation - tried to tell us there was no subprime problem in the UK. This whole LIAR LOAN phenomenon is going to bring the UK to its knees. Just watch.
6. Bobby9983 said...
In the boom self cert was a way of lenders offering mortgages to people without easily provable income such as self employed or multiple jobs. It was massively abused. You can count the number of self cert lenders left now on one hand. The other type of non verified mortgage is the fast track. These are being heavily monitired by the FSA in the government owned banks so I doubt there is any abuse in this area either as brokers and bank advisers are very aware it is a honey trap.
7. mander said...
Is FSA going to do someting about the 3.5 salary loan to income, an extremely important measure to avoid future bubbles or is waiting for inflation to take off because after inflation there will be no more jobs to have an income at all.
8. rm96696 said...
Why should people have to give proof of their earnings since house prices always go up? After all, the banks have the property as a guarantee.
9. jonb said...
Tax returns are not proof of income. People can and do overstate the income on their tax return in order to get a bigger loan. It's the bank's money that is used to pay the additional tax, so they aren't too worried about that.
For non-liar loans, banks generally ask for an accountant to certify their earnings.
10. Tenyearstogetmymoneyback said...
jonb at 6
Point taken but it would make the scam far less attractive or affordable
To use a real example uisng the type of figures talked about in the BBC mortgage madness program about five years ago.
Do you really think that a person earning £25000 a year would really be prepared to or be able to afford to pay tax on a
decalred income of £75000 in order to secure a £250000 mortgage.
If people were the next step would be to take the avaerage declared salary over the last two years, which would be no hardship
at all to someones whose salary grew by a few percent each year.
:- Duncan
p.s. I still reckon what should be being done right now is cross checking all the mortgages at Northern Rock etc against
peoples tax returns to make sure they hadn't underpaid their tax on their "incomes".