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F S A Slams Uk Sub-prime Mortgage Market

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Guest Charlie The Tramp
The Financial Services Authority has slammed sub-prime mortgage lenders and advisers in a damning new report which accuses them of failing in their responsibilities to vulnerable borrowers who already have high levels of debt.

Amid rising interest rates and increasing concern about the amount of debt borrowers are taking on, the financial watchdog also warned consumers that they could be prosecuted if they lie about how much they earn in order to secure a bigger mortgage than they can genuinely afford.

Sub-prime lenders offer loans to those with bad credit ratings or substantial personal debts but charge a hefty premium for this service.

The sector is worth around £30bn or 8pc of the total UK mortgage market. The FSA's review of 11 lenders, which represent more than half of the UK's sub-prime market, found that none of the firms "adequately covered" all of their responsible lending considerations in their policies.

In addition, many of these lenders were not even applying their own inadequate policies, with some companies failing to carry out basic checks on the plausibility of information supplied by their customers.

FSA slams UK sub-prime mortgage market

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Guest Charlie The Tramp

Now a News Item on BBC News 24.

http://news.bbc.co.uk/1/hi/business/6268754.stm

The Financial Services Authority (FSA) is to take action against five brokers that sell sub-prime mortgages.

Following a review of the market, it said some mortgage lenders and brokers offer loans to people who should not be given them.

Sub-prime mortgages are those sold to people with poor credit histories and thus a greater chance of defaulting.

The FSA found examples of people being offered mortgage deals they might not be able to afford.

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from the news 24 article

""

The FSA also found evidence of slack practice among lenders.

For instance, some of them did not check whether or not the information on the mortgage application forms they processed was plausible.

This could lead to applicants getting away with exaggerating their incomes and taking on loans they could not afford. ""

No Sh1t

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from the news 24 article

""

The FSA also found evidence of slack practice among lenders.

For instance, some of them did not check whether or not the information on the mortgage application forms they processed was plausible.

This could lead to applicants getting away with exaggerating their incomes and taking on loans they could not afford. ""

No Sh1t

....re "some of them did not check whether or not the information on the mortgage application forms they processed was plausible"...........how do you check self certification........and if the lender manages to do so do they report applicant to the police if it is not feasible...........?

Mr Briault, warned that individuals could face prosecution for lying about how much they earn.

"Consumers should not be tempted to inflate their salary, which is a criminal offence," he said.

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Guest Charlie The Tramp

BBC News 24 a Financial Guy being interviewed said it is estimated that 50% of sub-prime mortgages are self cert compared with 15% standard mortgages.

It`s the same old story with sales staff, got to achieve my targets or no job, then, I can`t pay my mortgage. If they want to lie it`s no skin off my nose, we all have to survive.

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Too little too late I am afraid.

The FSA, despite what they may admit publicly, knew this was going on and allowed/tolerated it, no doubt with some political pressure applied by banks and the government.

Funny how when there are signs the market might be turning a bit iffy the FSA start bleating.

Just smacks of convenience to me and provides some pretty powerful people in this country with excuses as to why this mess is not their fault.

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The Financial Services Authority has slammed sub-prime mortgage lenders and advisers in a damning new report which accuses them of failing in their responsibilities to vulnerable borrowers who already have high levels of debt.

Amid rising interest rates and increasing concern about the amount of debt borrowers are taking on, the financial watchdog also warned consumers that they could be prosecuted if they lie about how much they earn in order to secure a bigger mortgage than they can genuinely afford.

Sub-prime lenders offer loans to those with bad credit ratings or substantial personal debts but charge a hefty premium for this service.

The sector is worth around £30bn or 8pc of the total UK mortgage market. The FSA's review of 11 lenders, which represent more than half of the UK's sub-prime market, found that none of the firms "adequately covered" all of their responsible lending considerations in their policies.

In addition, many of these lenders were not even applying their own inadequate policies, with some companies failing to carry out basic checks on the plausibility of information supplied by their customers.

I would class this as credit tightening.

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Too little too late I am afraid.

The FSA, despite what they may admit publicly, knew this was going on and allowed/tolerated it, no doubt with some political pressure applied by banks and the government.

Funny how when there are signs the market might be turning a bit iffy the FSA start bleating.

Just smacks of convenience to me and provides some pretty powerful people in this country with excuses as to why this mess is not their fault.

...agreed...they are only covering or attempting to cover their backs now as the whole sub prime is about to explode this side soon.....

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the financial watchdog also warned consumers that they could be prosecuted if they lie about how much they earn in order to secure a bigger mortgage than they can genuinely afford.

Will the financial watchdog be prosecuting banks for lending more money to people than they can genuinely afford i wonder?

One time the banks used to say you can afford 3.5x your salary, then it went to 5x then 6x then .......

F

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http://business.timesonline.co.uk/tol/busi...icle2028674.ece

From The TimesJuly 5, 2007
Sub-prime mortgage lenders fail FSA review
Christine Seib
Five mortgage intermediaries face punishment after the City watchdog uncovered widespread problems in the way home loans were sold to people with poor credit histories.
Announcing the findings of a six-month review of the sub-prime sector, the Financial Services Authority (FSA) admitted yesterday that it was surprised by the number of sales errors made by both lenders and brokers.
Mandy Spink, head of mortgages at the FSA, said:
“It was worse than we’d hoped. We’re concerned by the findings.”
The watchdog found that “significant numbers” of consumers had been advised by intermediaries to remortgage their houses, incurring early repayment charges, without good reason. Half of intermediaries did not check whether their customer could afford to repay their mortgage.

Just a few weeks ago some of the Neithers/Bulls were saying the sub-prime problem was confined to the US. As we all know, Great Crash 2 is busy in the US.

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Announcing the findings of a six-month review of the sub-prime sector, the Financial Services Authority (FSA) admitted yesterday that it was surprised by the number of sales errors made by both lenders and brokers.

They weren't errors, they're part of the business plan to drum up more business you ignorant twits.

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Will the financial watchdog be prosecuting banks for lending more money to people than they can genuinely afford i wonder?

One time the banks used to say you can afford 3.5x your salary, then it went to 5x then 6x then .......

F

I find this amusing. People go on and on about wanting freedom of choice and the ability do decide for themselves. When things go well, it is down to their choices and they pat themselves on the back. When it goes wrong, it is never their own fault and is always someone elses and that someone else should pay.

If people want freedom, then it is up to them to decide what they can and cannot do. If people want someone else accountable when it goes wrong, then they cannot reasonably expect the same freedom. To think otherwise makes you a lemon.

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