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apom

Mortgage Fraud.

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http://news.bbc.co.uk/1/hi/business/4436102.stm

In a massive widespread test of 41 mortgage brokers only 3 actively advised the borrowers to commit fraud..

So over 7% of lenders suggested that fraud was the way forward.

Ok, thats fine then. Glad that shouldn't be an issue.

No evidence was found that anyone wishing to commit fraud would be caught..

For in all the others 50% of the mortgages given showed no or minimal checks against ability to pay.

Lie To Buy is common knowledge and in massive use.. No wonder they don't have to suggest it...

The BBC made sure years ago that everyone knew it was going on... Granted at the time it seemed that they presumed it would be stopped.

in 2004 1/3 of all mortgages were income non verified and by that point of all the exisiting lending out there "Lie to Buy" style mortgages made up a total of 1/5 of all of the borrowed money.

So with the average house in some areas costing 9 times the average salary..

and properties still selling..

I guess its all fine..

FSA, once again.. blowing smoke up everyones bottom..

But paint a rosy picture and that means everything is great..

Magic...

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It seems that all that has happened is that the problem has been pushed underground. Everyone knows it goes on, but it would require too much effort to deal with the problem. The effect of this is that the Banks will be able to claim they were defrauded by unscrupulous borrowers as they try to cut there losses.

It is all shaping up to get very unpleasant.

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It seems that all that has happened is that the problem has been pushed underground.

I think the opposite may be the case.

Where in the past 'lie to buy' morgages have been provided by brokers. (with a nod and a wink from the banks).

The banks are now lending high income multiples based on 'affordability'

If people are prepared to take out risky (to the borrower) secured loans, banks will lend.

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This is quite a critical point for a house price crash IMHO.

If the irresponsible lending is not removed from the market then one of its key supports remains intact.

If the FSA and lenders won't crack down on irresponsible lending then it will still stop soon enough.

Even though people have been able to self-cert (lie to buy in many cases), I think that most of these idiots will already have bought (quick, quick before prices go up further :o ).

The market is stagnating (and falling in most areas - albeit slowly) because all of the stupid money is now in the market. What is left are people who could also lie-to-buy (or even afford it anyway) but are too smart to get themselves in so much debt.

This regulates the market by a reduction in lie-to-buy mortgages naturally, rather than by legislation and tighter lending practices. The party is over, but only due to all (most) of the idiots having been suckered in already, not down to anything the FSA or lenders have done.

I think this is borne out by their stats showing lower levels of lie-to-buy.... there just aren't that many fools left... certainly not enough to prop up the market.

Will the last fool in please turn off the lights :lol:

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what is interesting is that over the last rise since 1998 we have seen that IR's control house prices.

Affordability is guaged on the current cost of the loan.

The small drop back in August helped the market.

I found this reasuring... Why?

Well.

The MPC boss has indicated that times are changing, we have inflation and we have the Americans raising their interest rates..

If we don't stay ahead of them the dollar will pull aheead further, as they catch up the pound will actively fall.

With the level of trade we have with the usa and with oil priced in dollars this will cause real world inflation against us in the global economy.

We have to keep ahead of the americans.

Suggestions of a run in the pound if we hit the same IR or less to the USA is a likely outcome also.

As people abandon the Pound for the strengthening dollar and see that higher returns on higher IR's will also happen..

A run on the pound would cause us to have to react to protect it.

Oil prices for example go 20% higher if the pound devalues 20% against the dollar.

The reaction that we saw in 1989 of 14% IR's was to protect the pound in a global economy where it was not performing.

So we either see modest (ish) rises to keep us ahead of the dollar.

Or we see high rises in IR's in order to save the pound if we did not keep ahead.

The dollar is already strengthening.

So, we have a correlation between IR's and property prices.

Logically we would see a drop in property prices with IR rises.

This is not taking into account that people with exisiting morgage debt would be impacted hugely by IR rises.

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It seems that all that has happened is that the problem has been pushed underground. Everyone knows it goes on, but it would require too much effort to deal with the problem. The effect of this is that the Banks will be able to claim they were defrauded by unscrupulous borrowers as they try to cut there losses.

It is all shaping up to get very unpleasant.

Well put FTBargain!

I reckon the HUGE HUGE scandal of "lie-to-buy" - the tip of which iceberg as seen in that fabulous BBC The Money Programme - has been MASSIVELY swept under the carpet. I bet the level of FRAUD has been FAR FAR higher than the VI's and all the rest will ever admit.

It is common knowledge that "Lie-to-buy" has been going on for ages - and it is ENDEMIC - and - rather like we all know of countless people of all walks of life who smoke dope - the number of people who have totally exagerated their income to get mortgages is incredibly huge... I know of many, many cases - even by people who are otherwise straight/as honest as they come!: They were simply persuaded by their lenders to just hike up their income to an amazing extent...... and, so desperate as they are to buy a house to live in - which is of course the Moneylenders failsafe weapon!! - that the buyers/mortgagors succumbed to a "bit of a fiddle" - i.e. FRAUD!! The Moneylenders just can't loose!! Unless of course the rules are changed...... and their evil doings were to be scrutisnised automatically by auditors......

The coverup PR cr@p put out by all the VI's and others regarding this scandal is laughable - the revelation of the ACTUAL numbers of FRAUDS in mortgages would make anyone faint on the spot...... I wonder if there is anyone brave enough out there to really dig down deep and find the truth? ....... Budding Journalists?!! - now's your chance!!

It would make the South Sea Bubble, Tuilpmania, Great Crash of 1929, Capt. Maxwell & Dotcom Bubble all rolled into one look like a game of tiddlywinks.......

Edited by eric pebble

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The sad thing is that those who were suckered in to the lie-to-buy scam will be the ones who drive the crash. As Apom has idicated, the housing market is driven by the interest rates and as he has shown they are heading up.

As the rates go up house prices go down. The further they fall the more lie-to-buy mortgagees will be facing negative equity. At this point the banks become exposed to their risk taking. If the repossion rate continues to rise you can bet your bottom dollar the banks will start to foreclose on these mortgages quickly. These repossions will help to drive down prices further exposing the risks and so it becomes a self sustaining process.

At some point the market will develop enough momentum to continue to fall even if the IR's are cut. The thought I have is if the current rise in repossesions continues we could yet see nominal house price falls even if the IR's do not go back up significantly, because the numbers seem to suggest that the process has already started. It remains to be seen if it has the momentum to keep going without an IR increase. If it does have enough momentum this market could yet prove to be the most delicate in history!!

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  • 334 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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