Bbc File On 4, Tuesday 25 September 2007 At 2000 Bst,

[eric pebble]

So your saying that lie to buy is the root cause of HPI?

YES I AM!!!! Click on "Eric Pebble" top left - and you will see I have been saying this since 2004!!!

[eric pebble]

It is this line of irrational reasoning that has got a lot of poor Americans into some very desperate financial situations. Their lives have not been improved one jot by all this. Infact they are now even worse of than had they just continued to rent.

Offering them a shot at the American dream by allowing them to borrow a stack of cash is akin to offering a one legged man a trial with Man Utd.

Then they are fraudsters. Are you suggesting that the system should offer products that condone what they are doing?

Self-cert serves no useful purpose, other than to line the pockets of salesmen and to assist liars and financial fraudsters in gaining access to borrowed money.

THIS HAS ALL BEEN GOING ON FOR YEARS!!!!! IT IS THE KEY BEHIND STUPID INSANE HOUSE PRICES. IT IS THE DRIVER OF THE WHOLE PYRAMID SELLING SCAM!!!!

[huw]

I am opening a new bank account and have to crawl through hoops of regulations to do so. Proving I work, have a passport and a utility bill. I'm sure I could get a loan of 200k without having to prove a thing. The FSA have shut their eyes to this problem at the behest of the government.

If you tell them that you wish to open multiple accounts in order to process a large number of forged benefit giros, they will waive the anti-money-laundering regulations and expedite your application. It's only honest people that have to jump through these hoops.

[idunno]

What a scoop!! When was that last BBc programme on this 2003?

One day the FSA and the BBc will figure out that this has been going on for years and do something about it

A mate at work was telling this morning that he has just been approved for a mortgage by using fake wage slips

that got from a company online .They cost ten pound per slip and was told by his finantial adviser to keep

away from the big banks or they would catch on,so he has got a mortgage for two years which he will be paying

50% of his earnings into then if he manages to keep up repayments he then intends to change to one of the main

banks and all this was from finantial advisor

[benj]

The timing also is interesting. Yesterday, the sub-prime minister was emphasizing his responsibility and old-fashioned values. This does not sit well with his having presided over a huge housing bubble founded on lies.

LOLOL!

Please can we get someone to use this soundbite on the radio?

But as for the argument about the significance of lie-to-buy on HPI... I think it's hard to underestimate. Remember that a housing bull market is a lot like an arms race. There is a real keeping-up-with-the-Joneses attitude in the UK property market. People don't like to see someone who's probably less well off than them moving into a much nicer house than theirs. It fuels the "if they can do it, so can we" syndrome.

If two people are bidding for one house, and one of them is lying about their income to secure a bigger mortgage and the other is telling the truth, this puts a lot of upwards pressure on selling prices. Because lie-to-buy self-cert mortgages effectively mean that lenders are giving out mortgages of 6x, 7x, 8x actual salary.

It only takes a relatively small percentage of the population taking out these loans to artificially inflate all their friends and acquaintances' expectations of what sort of house they can afford. The availability of self-cert mortgages has been like petrol on the HPI bonfire.

[eric pebble]

LOLOL!

Please can we get someone to use this soundbite on the radio?

But as for the argument about the significance of lie-to-buy on HPI... I think it's hard to underestimate. Remember that a housing bull market is a lot like an arms race. There is a real keeping-up-with-the-Joneses attitude in the UK property market. People don't like to see someone who's probably less well off than them moving into a much nicer house than theirs. It fuels the "if they can do it, so can we" syndrome.

If two people are bidding for one house, and one of them is lying about their income to secure a bigger mortgage and the other is telling the truth, this puts a lot of upwards pressure on selling prices. Because lie-to-buy self-cert mortgages effectively mean that lenders are giving out mortgages of 6x, 7x, 8x actual salary.

It only takes a relatively small percentage of the population taking out these loans to artificially inflate all their friends and acquaintances' expectations of what sort of house they can afford. The availability of self-cert mortgages has been like petrol on the HPI bonfire.

EXACTLY RIGHT!! Nice to see SOMEONE understands how MASSIVE Lie-to-Buy is........ It's effects on driving up prices everywhere....

[Methinkshe]

EXACTLY RIGHT!! Nice to see SOMEONE understands how MASSIVE Lie-to-Buy is........ It's effects on driving up prices everywhere....

Whilst I agree 100%, don't forget that double incomes also have played a part in driving up house prices. Way back in the early 70s when mu husband and I bought our first house, a wife's income was not given anything like the same weighting as it is now. Women full-time in the market place not only doubled the tax base it also doubled the amount of money floating around in the economy, which in turn helped to inflate house prices.

[madasafrog]

YES I AM!!!! Click on "Eric Pebble" top left - and you will see I have been saying this since 2004!!!

People have done self cert in the past as they may be limited companies and pay themselves with dividends. Their PAYE income may only be £6K but their total income may be 20 times that.

These days, mortgage companies have understood that a lot of self employed people pay themselves with dividends and now take this into account and class it as normal income. Self cert has been a route for tradesmen who dont have a normal proof of income. Granted, there are a number of people who have used the self cert as a buy to lie but to state that it is accountable for 80% of the HPI is just downright hysterical. Your barking up the wrong tree or your just barking.

[Dames]

It is available on podcast or download for those who might miss it , like me , who will be , going for a walk , under orders , of 'er indoors , to keep fit.

http://www.bbc.co.uk/radio/podcasts/fileon4/

D

[R K]

People have done self cert in the past as they may be limited companies and pay themselves with dividends. Their PAYE income may only be £6K but their total income may be 20 times that.

These days, mortgage companies have understood that a lot of self employed people pay themselves with dividends and now take this into account and class it as normal income. Self cert has been a route for tradesmen who dont have a normal proof of income. Granted, there are a number of people who have used the self cert as a buy to lie but to state that it is accountable for 80% of the HPI is just downright hysterical. Your barking up the wrong tree or your just barking.

It is a very trivial exercise to verify dividend income. If you can supply of P60 or payslips, you can supply copy bank statements or trading accounts etc.

Similarly for trades people. They presumably submit tax returns, have bank statements etc.

The lenders have gone out of their way not to check this information for reasons that are apparent. Numbers are anyone's guess, but self-cert without documentation is openly inviting abuse.

[bazzzzzzz]

The interesting thing is that BBC coverage of this type puts the issue on to the public agenda.

Not when it's featured on Radio 4.

Radio 4! FFS!

[CrashedOutAndBurned]

I'm with eric pebble on this one. Self-cert fraud and the failure of the FSA or government to act has been a massive driver of HPI.

Many work colleagues went this route, with 6x+ multiples common. Of course, you can now get 6x in the 'mainstream' so it seems odd to go after self-cert fraudsters now 6x is all fine and dandy.

Still, as many self-certers put themselves in self-imposed poverty and took on more debts to make ends meet there will probably be a landslide of repos over the next few years.

[Mr C]

A mate at work was telling this morning that he has just been approved for a mortgage by using fake wage slips

that got from a company online blink.gif

Seems this sort of thing is well catered for! http://www.payslipsp60.co.uk/payslips.asp

[ezekiel]

Oh this is so funny - Paula's losing £120 a month in Liverpool! And she's a manager in an EA - PERFECT.

[Waiting Patiently]

Good stuff.

"Doesn't property always go up in value?" says the reporter sarcastically.

They've started on BTLs now, some scouser who wanted easy money is losing £120pm and some Liverpool estate agent is "flooded" with resales from desperate BTLs who are making losses.

Aaww shame.

[ezekiel]

"A modest business setback made Andy bankrupt" Ha - Wakner

[ezekiel]

Excellent - the silly EA tart fiddled the Land Registry figures and she still can't sell it for "what she paid for it".

I love it. Even the millionaire investor says that prices have to drop 20% to make things "realistic" and not even "desirable".

The sh1t is coming down the tubes.

[Waiting Patiently]

Now they're interviewing a "BTL millionaire" who's offloaded his portfolio and thinks prices will drop at least 20% before it "makes sense" as a business again.

[Waiting Patiently]

Ended by concluding that a 1990 style house price crash will finish Gordon Brown.

Strong stuff. Well done File on Four.

[Killer Bunny]

Brilliant. Absolutely brilliant. There's something for everyone there. Oh my god - it is going to be huge!!!!!!!!!

[Brad Naylor]

That was excellent.

The programme was trailed as being an expose of mortgage mis-selling, but in actuality they covered everything.

The research must have been done by someone on here.

I have never enjoyed doing the washing up so much in my life!

[Waiting Patiently]

It's going t its up in the housing market so the search for scapegoats gathers pace. Mentioning Brown at the end was timely.

[evictee]

Most enjoyable.

Perhaps a few nominations for Pick of the Week mightn't go amiss.

[Bearfacts]

That truely was a bear feast ! I am feeling absolutley stuffed full of bearfood ... where is the vomitorium ?

Some ineteresting snippets that I recall that were new to me and maybe to you lot:

The Land Registery sales price is often not the actual price paid it is simply the price stated and is usually overstated , especially for new build flats to the tune of about 15%. (Can we safely conclude that this has skewed all house price indices ?)

Many BTL speculators have been borrowing 100% of the actual price paid for new build flats, so the bank as well as the borrower have no cushion against falling prices and it seems falling they are.

1/3 of all oustanding UK mortgages can be classified as sub-prime.

Lie to buy is rife but the FSA has said it will stamp down on it - yeah right.

Several interviews with BTL speculators who are loosing money now and are unable to sell their flats for the price they paid for them.

Nice finish with the two 'experts predicting falling prices'. I missed teh start but it seems there was not a property bull in sight - perhaps they are all in hiding ?

Sadly I missed the first ten minutes - did I miss anything good ?

Shame this wasnt on the TV - wonder if it might appear there at as later date ? If the masses heard this they would be c****ing themselves. Wonder how many peopel were listening.

[KevinTheGerbil]

It was so cool and calm and matter of fact - 4 million sub prime martgages - disaster ahead. Not a single good thing to say about the FSA who have fiddled while the property market raged.

Couldn't agree more. The reports about trouble in the housing market was nothing new, thanks to HPC.co.uk. However, the impotence of the FSA was an eye opener - I thought they were supposed to have teeth!