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Self-certification Mortgages

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I have seen this topic discussed a few times on US RE fora, but not here.

According to resident posters, in the US there can be all sorts of problems if you get foreclosed on, or declare bankruptcy, after you've taken out a self-cert where you've fiddled the numbers. All of a sudden that 'little white income lie' you wrote down to get the mortgage becomes FRAUD.

If it's a bankruptcy, debts incurred as a result of money obtained by fraud are NOT extinguished. You've got them for the rest of your life, like in Dickensian times.

If it's a foreclosure, the bank via the courts can come after any and all other assets you may possess to make up the loan shortfall, even if the loan is non-recourse. (Mind you, does the UK even have non-recourse loans in the first place? In Australia these tend to be only available for businesses.)

Does anyone know the legal situation in the UK?

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if you lie on a mortgage application then you are obtaining money by deception.

this is a good thread subject.. since the ramifications are seldom considered.

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A remember some TV programme found lying was rife , yet I haven't heard of a single prosecution, my guess is because there haven't been any.

It was the BBCs money box program. Remember "self cert" is also called "non income verified", so if you ever ask a bank about self cert info, they say it only accounts for a very small percentage of the market. Add on INV and it's a massive proportion of the market.

Still, I don't think it's in the lender interest to prosecute at the moment. That would stir the hornets nest.

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It was the BBCs money box program. Remember "self cert" is also called "non income verified", so if you ever ask a bank about self cert info, they say it only accounts for a very small percentage of the market. Add on INV and it's a massive proportion of the market.

Still, I don't think it's in the lender interest to prosecute at the moment. That would stir the hornets nest.

So long as the lender gets their money back if you default then there's no reason to go back and look at the supporting documentation. If house prices stop rising, then there's more likelihood of the banks taking a hit & referring people to the police. (The actual crime is "Obtaining a pecuniary advantage by deception" IIRC.)

As you say, whether the banks will actually do this is another matter -- not exactly good publicity, but I guess if they're being pilloried for repossessing peoples houses then accusing the borrowers of fraud is a good way of shifting the blame...

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Guest muttley

I thought you had to put down a substantial deposit before you could go down this route. I was told 25%. This would give the banks a cushion against defaults, and I can't see them prosecuting if they get their money back.

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As you say, whether the banks will actually do this is another matter -- not exactly good publicity, but I guess if they're being pilloried for repossessing peoples houses then accusing the borrowers of fraud is a good way of shifting the blame...

Plus, of course, they're in business because they want your money in their pockets. If the choice is having all your money, or being liked by you, they'll be reaching for the debt collection agency speed-dial button so fast there'll be a sonic boom as their dialling finger reaches maximum speed.

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Guest Shedfish

would i be right in guessing you're self-employed? seems a popular reason for self-cert at least...

if that's the case i'd be inclined, if anything, to underestimate, rather than over-state, due to the sporadic nature of cashflow for self employed folk

(self employed myself, no intention of buying anything unless it's right in my 'comfort zone')

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I thought you had to put down a substantial deposit before you could go down this route. I was told 25%. This would give the banks a cushion against defaults, and I can't see them prosecuting if they get their money back.

a 15% deposit is usually required for self-certs.......

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With house prices so high and average wages no where near enough I suspect that massive numbers of people have used self cert as a backdoor means of getting a huge mortgage.

Most people I know earn about 30K which at a 3 times multiple is under 100K- in this area you can't buy ANYTHING for this amount.

But people are still getting mortgages- so self cert seems the likely route.

I'm self employed so self cert is the way for me to go- what I expect to happen is the banks will clamp down on self cert when things start to unravel with the genuine self employed people getting penalised when they try to get a genuine self cert mortgage.

With the hysteria I hear about housing I'm left with the feeling that people will leap on the boat anyway they can- fair means or foul.

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I don't think there are many lenders out there that would taking legal action for deception on a mortgage application. The fact is they don't care, you don't pay they take your home and all thats in it.

Self Certification often means having a large deposit, higher fees and higer interest rates therefore if you can't pay the company has a healthy 15% deposit, 1,500 in fees, your home plus an insurance policy to cover any short falls.

The only company likely to take action against you is the insurance company that your morgage company uses. Then it will be fraud and you'll never get insurance or a mortgage ever again. A lot of people don't realise that banks insures your mortgage and the fees vary depending on risk.

The lender always wins.

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I have seen this topic discussed a few times on US RE fora, but not here.

According to resident posters, in the US there can be all sorts of problems if you get foreclosed on, or declare bankruptcy, after you've taken out a self-cert where you've fiddled the numbers. All of a sudden that 'little white income lie' you wrote down to get the mortgage becomes FRAUD.

If it's a bankruptcy, debts incurred as a result of money obtained by fraud are NOT extinguished. You've got them for the rest of your life, like in Dickensian times.

If it's a foreclosure, the bank via the courts can come after any and all other assets you may possess to make up the loan shortfall, even if the loan is non-recourse. (Mind you, does the UK even have non-recourse loans in the first place? In Australia these tend to be only available for businesses.)

Does anyone know the legal situation in the UK?

No one gives a damn in the UK; lenders simply want to lend more and more of their 'magic money' and increase their market share.

Lenders knowingly collude with the crime because it's in their interest to turn a blind eye.

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No one gives a damn in the UK; lenders simply want to lend more and more of their 'magic money' and increase their market share.

Lenders knowingly collude with the crime because it's in their interest to turn a blind eye.

Self-circumcision mortgages...

:lol::lol:

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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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