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eric pebble

Mortgage Fraud Is Massive: Don't Believe Otherwise

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The heavily biased PR put out by the Vested Interests [VI's] regarding the "lower" amount of Mortgage Fraud" is laughable!! If they were to sample all mortgages over the last 5-8 years - an ENORMOUS scandal would be uncovered.

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.......

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Guest Charlie The Tramp
I've just turned down an instruction to act as an expert witness for some mug trying to sue a valuer for over valuing his flat. He's in deep do-do now and looking for someone else to blame (watch out for lots more of this). I read between the lines and realised this was a mortgage fraud (on the plaintiff's part) and thought 'Tough'. I think the market has been propped up by fraud at all levels, not just self cert.

From surveyor`s post of 28th September.

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From surveyor`s post of 28th September.

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I remember that thread. 'surveyor' made some real top points in his post. I wonder if he has any more news. According to his details he has not been on the forum for at least a month.

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Hi Eric,

What are you basing this on? Is it just your gut feeling or do you have links to facts and figures to back up these assertions?

Phaedrus: 1st of all - see - http://business.guardian.co.uk/story/0,16781,1642622,00.html This is just the tip af a HUGE HUGE iceberg - no one is so far willing to really dig deep - probably becasue the implications are just so scary!! It would cause a national heart attack!! Result: Many hundreds of thousands out there are just living miserable lives struggling to live after they've paid their monthly mortgage secured over last 4-6 years - and encouraged by the Moneylenders to just LIE.

Over the last few years - I have discussed this whole topic with a large number of friends, aquaintancies, fellow workers etc etc. - and ALL of them had stories to tell of how they/huge numbers of their friends/co-workers etc. had been strongly "helped along" in their mortgage applications (especially in the last 4-5 years) to just "exagerate" their income.

Just like in The Money Programme Mortgage Fraud programme - Did you see it!!!??? [9 out of 10 times the undercover guy was just told to double his salary on the application form!!!] - Around 2002/2003 a lady I know in London was just told not to worry about unaffordability when she wanted to buy a flat in Paddington: "Just put your income at £59k" she was advised - even though it was in truth less than £30k!!! [she declined].

Then, a few weeks later, her co-worker (in a framing shop!!) - who earned under £25k - was persuaded to lie and state on the form she earned £50k - and together with another friend who was "advised" to do the same - they bought a London flat for over £300k!! As far as I know now, it is in the process of being re-posessed - as the 2 of them have (as so often happens) parted their ways - and there was just no way they could keep up with their mortgage re-payments!!! I suggest these are just 2 of that huge and ever-rising massive anonymous crowd of "bankrupts" or IVA's ar whatever...... whom we are reading about in the last 6-12 months....

Then, very soon after - another lady I know in London - a decorator/cushion scatterer - earning £35k tops - she was persuaded to "up" her salary to £52k. She then went on to buy a Flat with her friend..... And they are holding out - large mortgages making their lives a misery.....

I discussed this whole subject several times with mates at the pub over the last 2 years - and ALL of them had stories to tell of countless people/themsleves - in the same boat! The numbers involved are HUGE - I just know it!!

To all of you out there - if you can possibly do it - look at that amazing BBC The Money Programme on Mortage Fraud.

Also - if you read in between the lines even of this - http://news.bbc.co.uk/1/hi/business/4436102.stm - can you not smell a really huge rat!!??? I mean - the bit that says "However, at the 39 other firms visited by FSA staff, there was widespread evidence of poor record keeping"

- WHAT A JOKE -!!!! i.e. - the actual documents relating to the mortgage and the applicant just aren't there!!!!!!!

It is all MUCH bigger than they [the VI's] are letting on!! Just understand that!!! This is one of the biggest ever Pyramid Selling Scams /FRAUDS of all time!!

It is stunning!! You borrow money off the VI's to buy properties off the VI's!!!!! Incredible!!! It all goes a long way to explain the annual 20-30% rise in prices between c.1998 & 2003.......

Edited by eric pebble

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Guest Charlie The Tramp
This is just the tip af a HUGE HUGE iceberg - no one is so far willing to really dig deep - probably becasue the implications are just so scary!! It would cause a national heart attack!! Result: Many hundreds of thousands out there are just living miserable lives struggling to live after they've paid their monthly mortgage secured over last 4-6 years - and encouraged by the Moneylenders to just LIE.

As the powers that be would say, it is not in the Public interest. <_<

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Hmmmm. Interesting. I think I must be a bit strange, as when I was buying, there was no way I would have stretched myself on my salary at the time, even though I knew I was in for a substantial increase in income 2-3 years down the line. I just did not want to take any risk whatsoever on such a huge purchase.

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Surely it would be quite an easy exercise to work out:

Mean Average Salary of FTBs who have bought during the last year

Mean average Price of Property Purchased by FTBers during the last year

Mean average deposit paid by FTBs over the last year

You could then get a reliable multiple that is being used.... or you could work backwards from the nationwide figures (if you trust them!).

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From Nationwide figures:

2005 figures are for Q1 to Q3.

2005 Average HPER (House price to Earnings ratio): 5.8

2004 Average HPER: 5.725

Average house price 2005: £157315

Average house price 2004: £149637

Average FTB house price 2005: £127939

Average FTB house price 2004: £120990

Average gross income 2005: £27035

Average gross income 2004: £26010

So most people have to extend past 3.5x income to get a house, unless it is a very cheap house or they already have a huge deposit/equity.

Assuming an FTB had no deposit (very common these days), and earned average wages (usually FTBs would earn below average I would assume) then to buy the average FTB property:

127939 / 27035 = 4.73 x salary

So if the FTB earns average, and buys the average FTB property (not even national average) then they would have to extend themselves well past 3.5x salary multiple.

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I could not believe the reports in the Media about this in the past 24 hours. I hope the BBC's Money Programme relooks at this after their excellent programme on the subject.

When this bubble bursts a whole can of worms will be opened just like what happened after the dot.con crash. As with the dot.con crash I believe that business people, journalists, financial advisers and even politicians will be implicated. It is going to get really messy.

Self certs are something that you could not make up - but they did!

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Eric, for once, you are absolutely spot - on.

I honestly can't think of anyone I know that has'nt exagerated thier earnings or not revealed other mortgages they hold etc.

People are so sanctimonious, what a laugh. Even Peter Mandleson did a fiddled mortgage. My Accountant just took a 90% £400k mortgage and told me he had to get another accountant to err 'verify' his earnings as his real Tax returns did'nt show the whole picture.

Lenders are well aware what goes on, its all a ig game. They play lip - service to the FSA and plaster thier applications in warnings and caveats in the way airlines plaster this on bags of nuts - 'warning, this bag contains nuts'.

Edited by dogbox

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I used to own a Mortgage brokerage a few years ago, when Self Cert was less widespread.

I am not surprised at its abuse - most employees should not need it (it was intended for the self-employed who could not always know their exact income).

Perhaps what does surprise me is the lenders' connivance (allegedly) - it cannot be in their long term interest.

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Someone from TMF has obviously been eaves-dropping this afternoon...

'Dodge These Dangerous Mortgages!'

http://www.fool.co.uk/news/comment/2005/c0...m?ref=foolwatch

No, that'll be the thread I started last night on TMF, called Clueless FSA or evidence of fraud/malfeasance

http://boards.fool.co.uk/Message.asp?mid=9657437

I agree with eric, the whole self cert thing has been the driver for the HPI over the last few years, its fed on itself, necky prices caused by estate agent snotbox wideboys, requiring ordinary folk to oversextend (lie) about incomes, meaning prices rise again to take advantage, and so on and so on until the multiples have got too rich for some people and the so called M day of last year when the FSA supposedly took control of mortgage regulation.

And one things is for sure, the lenders have seen fit to step down on the brokers wild salary figures, last year the average salary according to mortgage applications was 72k, that when the real average salry is nearing 24.5k no wonder house prices are three times what they were, building socs and banks think that salaries have risen to 3 times what they actually are.

Doesn't anybody really think that this whole ponzi scheme wont collaspe ? of course it will and it will be fantastic, unfortunatley its will also mean the greatest first world recession ever, possibily leading to the demise of the west as a major force in the world for years to come, a bit like China in the 14th Century, imagine that 600 years of the majority of the population living hand to mouth and all because of the likes of Kirsty and Phil, its an absolute tragedy !

<')))>{

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figures for 2004..

1/3rd of all mortgages were income non verified.

1/5th of all outstadning mortgage money had been lent via income non verified mortgages.

Now not all of this will be fraud.

but as £800,000,000 exists as mortgage debt.

then

£160,000,000 was in 2004 the sum of outstanding mortgage debt leant via income non verified mortgages.

How much of that is fraud...? that can only be speculation..

Sorry.. missed out some zeroes..

£160,000,000,000

£160,000,000,000

now you would expect the police to investigate fraud that was say.. £1000,000

A million...

This is likely to be in the hundreds of millions..

likely to be in the billions..

But the Police. When I asked them to investigate..

Refused, saying it was not in the public interest..

Thats just say..

My respect for the police has gone.

100%

I will never let it come back.

not ever.

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Can anyone get the stats on whether an increase in self-cert has been matched by a similar ise in slef-employment?

No one in a bog-standard salaried job has any reason to self-cert. Heck, the rates aren't even as good. You only get one of these if you are genuinely self-employed and find it difficult to establish income formally or because you are a lying fraudster.

If there has been a far higher increase in self-cert with no rise in general self-employment, it's pretty safe to speculate that most of the extra is fraud.

I have to agree with the general idea of this thread - self-cert fraud is massive! A work colleague self certed at almost six times their income - this is a complete 'square' who's probably never had a parking ticket.

'But it was the only way I could buy!' they said as if no one should put up with the injustice of not being allowed to borrow huge sums on demand! At least in the couple of years since buying they've increased their income a fair bit. Still a huge debt, though.

We were offered lie-to-buy by a mortgage broker, and 'get your employer to lie'. He checked our incomes, found we could borrow bugger all and then was straight onto the forbidden fruits of fraud. The first broker we ever saw!

The thing is, taking on silly loans is cutting off your nose to spite your face. A couple we know that took on a large, non-fraud 'affordability' mortgage are finding it tough paying for a modest life, despite having very good incomes for their age.

Any FTBs that aren't stinking rich should realise that anything above 3.5x income single or 2.75x income joint is tough if you have an 'average' life to pay for. Buying using a huge loan is going to make your life at best tough, at worst a nightmare.

Edited by CrashedOutAndBurned

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Didn't the FSA only look at Self Cert? What about INV (Income Non Verified) fast track loans? The beeb also mentioned it in the money box report:

http://news.bbc.co.uk/2/hi/business/3750603.stm

"Self-certificated loans, which allow borrowers to declare their own incomes rather than providing documentary evidence of them to the lender, accounted for 12% of all second-half lending.

o.gif

Fast-track loans are another kind. They accounted for 16.3% of loans. A condition of this type is to provide proof of income but, in practice, lenders do not seek to verify it for some lower-risk loans. "Why not mention of this in there latest report of the FSA findings? Hmmm...

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Hi Eric,

What are you basing this on? Is it just your gut feeling or do you have links to facts and figures to back up these assertions?

Facts and figures don't exist, because of the very nature of dodgy mortgages

I have no exact figures, but anecdotally, I know about 10 times more people doing it this time than last time

back in the 80's, the only people I knew that got these sorts of mortgages were developers and 'business' people

This time the majority of people I know that have less than 'straight' mortgages are for want of a better word 'regular people'

Edited by 88Crash

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Fast-track loans are another kind. They accounted for 16.3% of loans. A condition of this type is to provide proof of income but, in practice, lenders do not seek to verify it for some lower-risk loans. "Why not mention of this in there latest report of the FSA findings? Hmmm...

I think we are also forgeting about the regular mortgages offered by the major lenders, that are not properley checked

For example, are pay slips, checked against bank statements so that the amount on the pay slip/P60 matches the bank account?

Do they even ask for a pay slip or do they just use verification from employee (or friend) or will just a lasered letterhead be enough

The same appplies to credit cards

The vast majority NEVER check income

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This is brilliant! Brain-storming I think they call it. Between us, we can deduce most things a lot quicker and more accurately, not to mention, solve many problems.

Is this what the VIs are all worried about? The entire 'House of Cards' collapsing due to its Ponzi foundations that are now beginning to crumble having been exposed to the light of day?

Of course, INVs! You're quite right, well done Jason, this is a very significant omission indeed!

This sure gives HPCers plenty of ammo when next confronted by those that ask, "why haven't you bought yet?".

Imagine the sheeples' faces when you let them in on this little secret about high house prices. At first they'll just try and dismiss you as a crackpot.

Though, should you then follow up with the question, "how many people do you know that have self-cert mortgages or INVs then?" They may well wince a little or may be even a lot depending which skeletons they're hiding in their own closets...

Hope I'm not suffering from Group-Think!?

:)

I rarely believe anything the BBC say anymore (unless it's about bird flu :o ). I always go and search for the same story with other online media outlets! Then I can see both sides of the coin!

Edited by Jason

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Someone mentioned this before but why, with their sweeping powers, does the Inland revenue not get involved in this. There must be millions in unpaid taxes on these "fictitious"earnings. Either you get the mortgage you are after but have to pay the requisite tax or you tell the truth and dont get stung for the tax, but hey you will only get a piddling mortgage! Is it not in the Revenues interest to open up this can of worms? my instincts say that it is not!!

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Is it not in the Revenues interest to open up this can of worms? my instincts say that it is not!!

T'would be funny to watch though. Schadenfreud(sp?) isn't it?

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Although not in the spirit of the thread, I just want to explain the phenomenom as I see it.

Prices started rising from their 1995 lows in the normal cycle.

Then property shows (initially the makeover shows) got people more interested in housing.

Then we started seeing an inflation busting boom.

Then the stock market collapsed.

Then more money went into property.

Then a bubble formed.

Then people started to lie on their applications.

And prices kept rising.

THen more people were encouraged to lie because everyone else did it.

Then we started seeing shows where people were making so much from property, even people who got it wrong could give up "real work"

Then people had to start lying more, just well, because it was now "acceptable" though still illegal.

Then all the building societies that used to be mutual now were answerable to shareholders and had to make more money than last year, or the directors would face the push. SO they overlooked the lying.

Now people still lie because it is engrained that property always rises, so you can borrow more than you can afford because the "worst" that can happen is having to sell it if you can't repay the loan. And well you will probably have a little profit at the end to buy a new car or something.

Except it goes down like it goes up.

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Guest Bart of Darkness
now you would expect the police to investigate fraud that was say.. £1000,000

A million...

This is likely to be in the hundreds of millions..

likely to be in the billions..

But the Police. When I asked them to investigate..

Refused, saying it was not in the public interest..

I wouldn't ask the modern police for the time of day.

They remind me of the robot police in George Lucas's first film, "THX 1138".

They are closing in on THX (Robert Duvall) but are forced to give up the chase as they've exceeded the budget allocated for his capture.

If there was some way for the police to investigate fraud without leaving their cars or by using CCTV, then we might get somewhere.

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  • 302 Brexit, House prices and Summer 2020

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      • down 5% +
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