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Fsa: Homebuyers Told Not To Lie On Pay

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http://news.bbc.co.uk/1/hi/business/4481818.stm

Homebuyers have been warned by the Financial Services Authority (FSA) not to lie about their income when applying for a self-certification mortgage.

If they do, it said, they risk landing themselves with a criminal record.

Consumers could be committing fraud as well as being left with a loan they cannot afford if they overstate their salary, the FSA warned.

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Hmm, the spin from the Beeb is that it is the lenders that were wholly responsible for inflating borrowers salaries - what about those who misled lenders from the outset? There is no reference to the potential number here or the lie-to-buy culture becoming entrenched.

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About 4 years too late there, FSA.

Don't imagine they'd waste a lot of effort chasing diddies who get themselves in a whole for a couple of hundred grand when there's companies in the City with issues that could net a lot more wedge in fines.

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Just goes to show how shaky the HPI foundation is. Given the cost of houses and the average earnings it must mean the majority of buyers lied on their application forms? Self-certification was an open invitation for truth frugality IMHO.

Criminal sanctions against borrowers will only arise when the house is repossed. It will be interesting to see if the lenders are named as co-defendants in the scheme to obtain money by deception?

This whole HPC is shaping up into an ugly mess and there are going to be a lot of victims after the bubble has popped. The "Great Crash" of 1989-1996 may seem like a mild correction in comparison as lending guidelines were not breached in the numbers and to the degree they have been during this last run up to a crash.

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About 4 years too late there, FSA.

Don't imagine they'd waste a lot of effort chasing diddies who get themselves in a whole for a couple of hundred grand when there's companies in the City with issues that could net a lot more wedge in fines.

Good point. Maybe it explains why the financial services industry has been regulated to death while estate agents can do whatever they please.

Brokers have to pass exams and use cautious language when talking to seasoned investment professionals like pension fund managers.

Estate agents do not have to be regulated but are selling leveraged investments to ordinary people.

When will estate agents have to sit even a basic exam? Even if they were just made to stop lying to people buying housing, that would be a start. Estate agents should be made to spend a week on the HPC site. They should then be asked a basic question "Do property prices always go up?". If they get the answer wrong, they have to spend another week on HPC.

Can you imagine disclaimers on estate agent websites saying "prices can go down as well as up and you may not get back the amount you invested"?

Residential property is at the centre of the biggest mis-selling scandal ever. Who is going to get the blame when it all goes wrong?

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What is interesting is the timing of the FSA's awakening to the problem. They must be seeing the fallout that is coming from an impending market crash. With rising numbers of repos coming down the pike many people are going to be blaming professional advisors and EAs for failing to warn that prices do, indeed, go up and down and more often than not do so in a rather violent fashion. Given that there has never been a soft landing from hyper-inflation the FSA had better have an explanation ready as to why they have not acted sooner.

Edited by Realistbear

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Guest Riser

Timing probably had something to do with this

Barclays flags rise in bad debts

Barclays (LSE: BARC.L - news - msgs) , the UK bank, said on Tuesday that charges for failure to repay debts in its Barclaycard division had continued to rise in the third quarter but confirmed it it was “comfortable” with consensus expectations for full-year earnings.

The bank (NASDAQ: TBHS - news) ’s poll of analyst forecasts put earnings at 52.6p per share in 2005.

Shares in Britain’s third largest bank by assets fell 2.7 per cent to 585 ½p in early trade in London on Tuesday.

The bank’s share price had risen 2.7 per cent this year as of Monday’s close, underperforming the FTSE European Banking index by nearly 15 per cent.

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Maybe it explains why the financial services industry has been regulated to death while estate agents can do whatever they please.

Brokers have to pass exams and use cautious language when talking to seasoned investment professionals like pension fund managers.

Estate agents do not have to be regulated but are selling leveraged investments to ordinary people.

When will estate agents have to sit even a basic exam? Even if they were just made to stop lying to people buying housing, that would be a start.

There is already legislation governing what estate agents can and can't say to clients. The problem is that it is feebly enforced.

http://www.oft.gov.uk/Business/Legal/Estat...enforcement.htm

http://www.oft.gov.uk/Business/Legal/Estat...+to+clients.htm

http://www.oft.gov.uk/Business/Legal/Estat...egotiations.htm

http://www.oft.gov.uk/NR/rdonlyres/E64473B...C0/0/oft662.pdf

http://www.dti.gov.uk/ccp/topics1/facts/estateagents.htm

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What is interesting is the timing of the FSA's awakening to the problem. They must be seeing the fallout that is coming from an impending market crash. With rising numbers of repos coming down the pike many people are going to be blaming professional advisors and EAs for failing to warn that prices do, indeed, go up and down and more often than not do so in a rather violent fashion. Given that there has never been a soft landing from hyper-inflation the FSA had better have an explanation ready as to why they have not acted sooner.

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......

Look at: - 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......

see also - http://www.housepricecrash.co.uk/forum/ind...showtopic=19113

Edited by eric pebble

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Woe betide any financial broker that fails to keep records and tapes of telephone calls. Or use balanced language and disclaimers. Regular inspections by the FSA take place. The financial services community lives in fear of reputational damage.

Regulation of estate agencies and mortgage brokers would be an onerous task but one that could be paid for by an extra tax on these businesses, which have done rather well for themselves for a number of years. Maybe some tax abusers of the week type jobs could be transferred into the FSA. Any breach of regulation would be made public and splashed all over the local press.

If nothing else it would send a signal to people that the property market can be dangerous and that the government is aiming to protect individuals (and the economy) from harm. This would encourage people to think more sensibly before taking on a huge debt.

Instead the government appears to be encouraging people to take on as much debt as possible, or more. It is as if we are protecting them, by borrowing our way out of their trouble.

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Instead the government appears to be encouraging people to take on as much debt as possible, or more. It is as if we are protecting them, by borrowing our way out of their trouble.

the problem, from the government's point of view, is that debt-funded consumer spending has been the main driver of keeping the economy superficially healthy in the past few years.

Politically speaking, better to kill the goose that laid the golden egg after that egg turns out to be tarnished and rotten.

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  • 301 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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