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Abbey Admits To "liar Loan" Activity In The Run-up To The Crash

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http://www.thisismoney.co.uk/markets/artic...e_id=3&ct=5

Abbey owns up to mortgage malpractice

Simon Duke, Daily Mail

4 September 2009, 8:17am

Abbey sales staff doctored their customers' pay details to speed through mortgage applications in the run-up to the property crash, the Mail has learned.

They also flouted internal controls by channelling the most attractive mortgage deals through favoured independent brokers.

According to internal documents seen by the Mail, staff at Abbey's Leeds office regularly 'manipulated' mortgage applications staff during 2007.

Salary details would be altered so that applications came under minimal scrutiny by risk assessors. This would speed up the sales process, helping staff hit their targets and earn themselves chunky bonuses.

The revelations will be a stain on the reputation of Abbey's Spanish owner Santander, which has prided itself on its prudence during the credit boom.

They will also be an embarrassment for the government, which has called on the Madrid giant to shore up large chunks of the UK banking industry in recent times.

Santander rescued Bradford & Bingley's branch network in the wake of its nationalisation last Autumn just months after swallowing ailing Alliance and Leicester.

A spokesman for Abbey, now Britain's second largest mortgage lender, admitted that a 2007 internal probe uncovered sales practices that 'did not meet our requirements'.

'We reviewed all of the activities of all of the staff at the Leeds operation centre and took disciplinary action against two staff members for booking customers onto mortgage rates that had been withdrawn,' the spokesman added.

Abbey closed its Leeds office last year. Neither employee remains at the bank.

Although Abbey insists the malpractice was an 'isolated' event, it highlights sharp sales practices commonplace throughout the mortgage industry during the borrowing binge of the mid-2000s.

Abbey was by no means the only lender to have fallen foul of a devious salesforce and dubious intermediaries. Chelsea Building Society and B&B recently revealed that they have lost tens of millions of pounds each through mortgage fraud perpetrated by crooked mortgage advisors and solicitors.

In Abbey's case the bank's own staff were the ones gaming the system. In July 2007 two employees contacted Abbey's own internal whistleblowing unit. One of the whistleblowers was a senior 'underwriter', whose job was to judge whether prospective borrowers would be able to pay back their loans.

In a transcript of an interview with internal investigators - seen by the Mail - the underwriter alleged that 'manipulation' of applications was rife in the Leeds mortgage centre.

Sales staff would log into the booking system and alter an applicants' salary and employment details so that the loan would automatically be approved by the computerised risk system, said one insider.

One of the cases involved unnamed professional rugby league player, who earned a base salary of £60,000 a year plus a further £30,000 in endorsements. According to the whisteblower, one of the Abbey mortgage advisers revised the rugby player's pay downwards.

This was because a man in his twenties earning such a large amount would have automatically been flagged up by the system, leading to his application being examined by a risk assessor. He would then have had to provide pay slips and bank statements, delaying approval of the loan.

Staff in the Leeds office resorted to other outlawed tactics to keep sales ticking over. During 2006 and 2007 official interest rates were rising and the property boom was in full swing. When Abbey launched an attractive mortgage rate it would typically be sold out in double quick time.

However, not all of the prospective borrowers would end up taking their loans, leaving Abbey with unsold mortgages on their hands. Abbey sales staff would offer these lapsed deals, which were at highly attractive rates, through financial advisers. This breached the bank's internal rules.

Sources claim that the cheap deals would only be offered to customers who also agreed to buy an Abbey household or life insurance product. There is no suggestion that Abbey broke the law. These 'conditional' deals are permitted as long as the lender is transparent with its customer.

A spokesman for Abbey said: 'We honoured the deals to our customers and no customer suffered financially.'

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Not malpractice, fraud on a wide scale - this has occurred right across the banking fraud ring (it is not an industry).

Shareholders should sue for losses. It is impossible that this could be happening without the explicit knowledge of the company and its officials. The stats for applicants would not match up with any of the economic stats for salary levels, it would be utterly obvious.

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Guest DissipatedYouthIsValuable
Not malpractice, fraud on a wide scale - this has occurred right across the banking fraud ring (it is not an industry).

Shareholders should sue for losses. It is impossible that this could be happening without the explicit knowledge of the company and its officials. The stats for applicants would not match up with any of the economic stats for salary levels, it would be utterly obvious.

Which may be why the ONS thinks we're all on an average wage of about £35k

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Edinburgh exceeds Leeds by several megatons in the financial catacylysm first strike scenario - RBS, HBos, Dunfermline BSr just over the forth bridge

Don't be daft , as we all know Edinburgh is special and is immune to the global economic problems I forget who told us that but I believe them...

Even if RBS HBoS etc. all closed permenently this would not affect the economy in Edinburgh one little bit :blink:

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Not malpractice, fraud on a wide scale - this has occurred right across the banking fraud ring (it is not an industry).

Shareholders should sue for losses. It is impossible that this could be happening without the explicit knowledge of the company and its officials. The stats for applicants would not match up with any of the economic stats for salary levels, it would be utterly obvious.

Yup......... Sigh...... :rolleyes: All this is the Biggest Elephant in the Room EVER. This article doesn't even BEGIN to spell out the enormity of the MASSIVE frauds out there............

Edited by eric pebble

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Legal action should be taken by everyone who has bought a house and not lied about income so that they can have their mortgages reduced accordingly.

If I'm feeling mischievous over the weekend I may take this issue up with my lender and just see what sort of a reaction I get.

It would be interesting to see how there legal team would react to this.

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Legal action should be taken by everyone who has bought a house and not lied about income so that they can have their mortgages reduced accordingly.

If I'm feeling mischievous over the weekend I may take this issue up with my lender and just see what sort of a reaction I get.

It would be interesting to see how there legal team would react to this.

Not a bad idea AT ALL mate. If you could organise fellow buyers - and bring a class action, there is NO reason why you should not win. There are PLENTY of Class Action style cases of this sort - particularly in the EC Courts - and the compensation awards against fraudulent companies engaged in illegal price and market fixing are HUGE - in the 10s and 100s of millions.

I have, several times, asked anyone here if they know a competent lawyer to bring a Class Action against perpetrators of MORTGAGE FRAUD and/or LIAR LOANS.

THERE IS mileage in this, I am sure.

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Abbey sales staff doctored their customers' pay details

what did they do, scratch out the details filled in on the customers application and write something else in?

If so then its a Fraud. Its also mis-selling, its putting the client in jeopardy, its a LIAR LOAN.

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Not a bad idea AT ALL mate. If you could organise fellow buyers - and bring a class action, there is NO reason why you should not win. There are PLENTY of Class Action style cases of this sort - particularly in the EC Courts - and the compensation awards against fraudulent companies engaged in illegal price and market fixing are HUGE - in the 10s and 100s of millions.

I have, several times, asked anyone here if they know a competent lawyer to bring a Class Action against perpetrators of MORTGAGE FRAUD and/or LIAR LOANS.

THERE IS mileage in this, I am sure.

I'll try and draft something over weekend, I may play slightly innocent as my lender currently hasn't been caught with this yet so I could perhaps go along the lines of it should be a joint action between ourselves against the other lenders.

However I'm certain they have been at it but I doubt they'll want to admit it.

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Not a bad idea AT ALL mate. If you could organise fellow buyers - and bring a class action, there is NO reason why you should not win. There are PLENTY of Class Action style cases of this sort - particularly in the EC Courts - and the compensation awards against fraudulent companies engaged in illegal price and market fixing are HUGE - in the 10s and 100s of millions.

I have, several times, asked anyone here if they know a competent lawyer to bring a Class Action against perpetrators of MORTGAGE FRAUD and/or LIAR LOANS.

THERE IS mileage in this, I am sure.

I don't see that honest borrowers have lost out here. The losers were the shareholders and (not with Abbey - yet) the tax payers who had to bail out the fraudulent banks.

Anyway there is nothing wrong with fraudulent mortgage applications - ask Lord Mendelson of Britannia

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Abbey sales staff doctored their customers' pay details

what did they do, scratch out the details filled in on the customers application and write something else in?

If so then its a Fraud. Its also mis-selling, its putting the client in jeopardy, its a LIAR LOAN.

Not always.. the case quoted is where the abbey worker actually lowered the clients salary.

You'll find this sort of mis-selling going on in ALL financial institutions , or in fact any company with a large sales force, financial or not.

In many cases where this happens the client has not been put at risk by the agent, they have both conspired together to get it through by gaming the system... in which case I have no sympathy for the client... many of them if abbey had refused them would have found the money elsewhere at worse rates ( so arguably the abbey situation would have been better for them)

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I don't see that honest borrowers have lost out here. The losers were the shareholders and (not with Abbey - yet) the tax payers who had to bail out the fraudulent banks.

Anyway there is nothing wrong with fraudulent mortgage applications - ask Lord Mendelson of Britannia

Er.....; the losers are:

1 - The Shareholders of the Lender;

2 - The Taxpayers who've had to bale out the likes of B&B, Northern Crock o'Shit, HBOS, RBS etc etc. AND who have had to for pay public employees' wages to go up and up -- and local COSTS/RENTS [etc etc.] to go up THANKS TO the MASSIVE INFLATION brought about by house and all property "prices" rising 300-400% in just a decade..... etc etc etc etc.... THINK ABOUT IT!!............... It's MASSIVE......... i.e. INFLATION -- REAL INFLATION - NOT the Governments FIDDLED inflation - i.e that INCLUDES house prices --- IS ABSOLUTELY MASSIVE... MASSIVE!!! Our lives have been SEVERLY affected by all this.........

3 - The purchasers of homes to live in - who paid WAY, WAY more than they would have had to had those with LIAR LOANS not fraudulently and artificially paid MUCH more for property in their local areas - thereby driving up the local prices MASSIVELY - thanks to having "More Money" in the form of a LIAR LOAN.......

THUS - COUNTLESS 100's of thousands of people have purchased properties whose "prices" are artificially & fraudulently GROSSLY inflated by those with EXTRA "FUNDS" - aka LIAR LOANS - & thanks to Comparison Pricing - right across the UK.......

I.E. "Prices" would be FAR, FAR, FAR lower if they had not been driven up/INFLATED by MASSIVE SURFEIT of funny money.....

You only have to have an IQ of 2 to work this out......... :rolleyes:

Edited by eric pebble

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Not always.. the case quoted is where the abbey worker actually lowered the clients salary.

You'll find this sort of mis-selling going on in ALL financial institutions , or in fact any company with a large sales force, financial or not.

In many cases where this happens the client has not been put at risk by the agent, they have both conspired together to get it through by gaming the system... in which case I have no sympathy for the client... many of them if abbey had refused them would have found the money elsewhere at worse rates ( so arguably the abbey situation would have been better for them)

Yes - I suspect they did conspire together - so that the borrower could not renage on the deal through recourse to the courts.

But - I understand that in the absence of laws/regulation - humans in general will lean towards being bad/dishonest.

The regulation in these transactions should have been applied by the lender - it wasn't and they are IMHO guilty of a lack of 'duty of care' with regard to the borrower - after all it's the borrower that bears the greatest risk - until default occurs of course.

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Not malpractice, fraud on a wide scale - this has occurred right across the banking fraud ring (it is not an industry).

Shareholders should sue for losses. It is impossible that this could be happening without the explicit knowledge of the company and its officials. The stats for applicants would not match up with any of the economic stats for salary levels, it would be utterly obvious.

Don't worry I'm sure that the FSA will crack down like a ton of bricks on eveyone who has been involved in this fraud and I have no doubt that any evidence of malpractice will be passed to the CPS for prosecution. :rolleyes:

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Not malpractice, fraud on a wide scale - this has occurred right across the banking fraud ring (it is not an industry).

Shareholders should sue for losses. It is impossible that this could be happening without the explicit knowledge of the company and its officials. The stats for applicants would not match up with any of the economic stats for salary levels, it would be utterly obvious.

Don't worry I'm sure that the FSA will crack down like a ton of bricks on eveyone who has been involved in this fraud and I have no doubt that any evidence of malpractice will be passed to the CPS for prosecution. :rolleyes:

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