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


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I like how they make out it is the broker's fault that these people commit fraud to obtain a mortgage they cannot afford.

I wonder if they'd stick the application up their **** or hand over one of their kids if the broker told them too.

I think the general conversation with a broker goes like this:-

Self Declarer: "I want a mortgage of 200k"

Broker: "You'd need to declare an income of 50k to get that sort of mortgage"

Self Declarer: "I herby declare I ern 50k"

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Here is a rough transcript of what I was told by a broker 10 mins after applying for a mortgage over the internet.

Broker :

How much do you earn.... and you need..... Well you won't get that. Your self employed right ? You need to say you earn this (twice as much as I told him).

Me

I can't do that its fraud isnt' it ?

Broker agressively :

Look you won't get the mortgage otherwise. Who's going to know ? It won't be checked. I'll put you down for this amount OK ?

Me

No thanks.

No sub prime here ? You must be joking ! This is EXACTLY what happened in the US. Our regulator doesn't even know how many mortgages are involved. The FSA are a waste of space.

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I like how they make out it is the broker's fault that these people commit fraud to obtain a mortgage they cannot afford.

I wonder if they'd stick the application up their **** or hand over one of their kids if the broker told them too.

I think the general conversation with a broker goes like this:-

Self Declarer: "I want a mortgage of 200k"

Broker: "You'd need to declare an income of 50k to get that sort of mortgage"

Self Declarer: "I herby declare I ern 50k"

you forgot..........

Self Declarer : I'd also like a plasma tv and a holiday in Australia for me, the wife , the 2 kids and my parents....

Broker: Just declare 60K then. No problemo.

Self Declarer : Thanks mate. I was a bit worried when I came through your front door 15mins ago, but this has been so easy.

:P

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It is simply not credible that a lender would create a category of loan called "self-certification" without being fully cogniscent of the fact that many of the applications would be fraudulent. Everybody is required to pay tax, and thus everyone has proven taxable earnings.

Self-certification is a device to enable lenders to lend at higher rates and wider margins, so it is in their interests to turn a blind eye. It is in the applicants short-term interest to lie to get a home, and it is in the brokers short-term interest to get paid.

If lenders had stringent documentary requirements then this would be out and out fraud by applicants. But they don't. The FSA must be aware of this. As regulator, you have got to conclude they are at best incompetent and at worst complicit.

As with NR, the FSA are beginning to resemble an organisation specifically set up to facilitate lax lending. You have got to ask why they would do that. The only conclusion I can come to is that it is politically desirable to have easy credit, easy mortgages and a never ending rising housing market.

Forget targetting lenders, it is a waste of breath, the target is the FSA and their political masters, messrs Brown and Darling. They of course will be fattening up the FSA at the public flogging in front of the Treasury Select Committee (haha), and their lapdog John McFall in a few weeks time.

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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

It is SO pathetic!! The BBC Money Programme found all this out in 2003 -- and yes -- it's been going on for years and years --- As all of you know - I am CONVINCED that this Lie-to-Buying Scandal is THE KEY behind HPI. It explains 80% of the reasons why property "prices" in the UK are TOTALLY ABSURD.

Below - was 2003!!

--------------------------------

Mortgage customers 'urged to lie'

Housebuyers are being encouraged to break the law in order to obtain huge mortgages, the BBC has discovered.

http://news.bbc.co.uk/1/hi/business/3222053.stm

The Money Programme uncovers massive mortgage fraud

BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages.

And it shows how the illicit cash raised by this method has been pouring into the housing market, boosting prices and leaving many people risking financial ruin.

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

Edited by eric pebble
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Does anyone know whether mortgage brokers have to be licensed and/or registered with the FSA? From what I have heard anyone can set themselves up as a mortgage broker just by calling themselves one.

You have to be licensed since end of 2005 to be a mortgage broker.

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I am under the impression that any financial advisor you go to has to do a complete interrogation of your financial position, your attitude to risk etc etc, surely if they can be seen to have not noticed the lie in the salary box on the mortgage APP, then they are at risk from compensation for mis-selling- however, I am not clear who here is most culpable- the advisor who looked the other way and falsified his interogation, the borrower who signed the APP, or the Bank that accepted the app.

The Bank is bound to say they beleived the FSA approved advisor would have done the checks, so it looks to me its back to the FSA for a reaction- I dont hold out much hope there as they seem to be saying all has been rosey for the last few years

as a financial adviser you do not have to check the clients income. A FA should be happy the information is correct. As a matter of course I ask my clients to provide me with their accounts or P60 to make sure I am not being taken in my any made up income and regularly turn enquiries away when they start with "I need a self cert interest only mortgage" - "Goodbye ... click"

don't confuse self cert with fast track though

http://www.housepricecrash.co.uk/forum/ind...showtopic=57153

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It is SO pathetic!! The BBC Money Programme found all this out in 2003 -- and yes -- it's been going on for years and years --- As all of you know - I am CONVINCED that this Lie-to-Buying Scandal is THE KEY behind HPI. It explains 80% of the reasons why property "prices" in the UK are TOTALLY ABSURD.

I think thats a bit over the top. It has helped HPI but i cant see it adding up to the 80% of reasons. As i can see it, the main reasons are sentiment. If people believe that the house is worth the price and they can afford it and there is the panic buy element thrown in, they will buy.

I was trained in sales many years ago and one of the sales techniques was "panic buy" which goes a little something like this:

"So Sir, you want to buy this new plasma TV?. Well I would buy today as the prices are rising tomorrow" and also "its the last one we have in stock".

There are lots of reasons for HPI including cheap credit, strong economic conditions, low unemployment, confidence in the market, BTL etc etc. Lie to buy is in there but not the main driving factor

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as a financial adviser you do not have to check the clients income. A FA should be happy the information is correct. As a matter of course I ask my clients to provide me with their accounts or P60 to make sure I am not being taken in my any made up income and regularly turn enquiries away when they start with "I need a self cert interest only mortgage" - "Goodbye ... click"

don't confuse self cert with fast track though

http://www.housepricecrash.co.uk/forum/ind...showtopic=57153

Hold on a moment- how is it possible to advise somebody if you dont have the facts- I think the man on the clapham omnibus might think income is pretty damn important- Ok whats the difference between self cert and fast-track- i thought one was for people without a regular pay check tnd the other is- but I will be delighted to find out what they really are- thanks in anticipation

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I think thats a bit over the top. It has helped HPI but i cant see it adding up to the 80% of reasons. As i can see it, the main reasons are sentiment. If people believe that the house is worth the price and they can afford it and there is the panic buy element thrown in, they will buy.

I was trained in sales many years ago and one of the sales techniques was "panic buy" which goes a little something like this:

"So Sir, you want to buy this new plasma TV?. Well I would buy today as the prices are rising tomorrow" and also "its the last one we have in stock".

There are lots of reasons for HPI including cheap credit, strong economic conditions, low unemployment, confidence in the market, BTL etc etc. Lie to buy is in there but not the main driving factor

Yes -- but IF THE "MONEY" to pay the "PRICE" was simply NOT THERE, NOT MADE AVAILABLE [by the Moneylender] - then it simply WOULD NOT BE POSSIBLE!!! Can't people get this??! It's SO weird. People just CANNOT see that none of this would have been possible if the "money" couldn't be got hold of in the first place! And the people behind all this HAVE KNOWN this all along. The "housing market" has been, for years and years and years, a PYRAMID SELLING SCAM!! How many times do I have to tell people this!???

Edited by eric pebble
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Yes -- but IF THE "MONEY" to pay the "PRICE" was simply NOT THERE, NOT MADE AVAILABLE [by the Moneylender] - then it simply WOULD NOT BE POSSIBLE!!! Can't people gt this??! It's SO weird. People just CANNOT see that none of this would have been possible if the "money" couldn't be got hold of in the first place! And the people behind all this HAVE KNOWN this all along. The "housing market" has been, for years and years and years, a PYRAMID SELLING SCAM!! How many times do I have to tell people this!???

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

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Yes -- but IF THE "MONEY" to pay the "PRICE" was simply NOT THERE, NOT MADE AVAILABLE [by the Moneylender] - then it simply WOULD NOT BE POSSIBLE!!! Can't people get this??! It's SO weird. People just CANNOT see that none of this would have been possible if the "money" couldn't be got hold of in the first place! And the people behind all this HAVE KNOWN this all along. The "housing market" has been, for years and years and years, a PYRAMID SELLING SCAM!! How many times do I have to tell people this!???

I heard a member of the public ring into radio 2 the other day, and he said (and I think a lot of people beleivethis) that if the banks did not lend them the money- how would they be able to afford a house at the prices they are currently at- remember , a lot of people are totally financially illiterate, and that if a man in a suit says its Ok to misdecalre your income, they beleive him too.

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For those in the know, of course there is nothing new in this story.

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

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.

I think Gordon is vulnerable to political attack on house prices. He was not comfortable when being subjected to some questions on this on yesterday's Today programme. The questioning was hardly fierce but he was hesitant and had to fall back on claiming that mortgage payments now constitute a lower percentage of income than 'the early 1990s... when we had interest rates of 15 per cent... in the wake of the ERM debacle'. This was an admission that to make this comparison stand up he had to refer to a period of one day when interest rates were indeed at 15 per cent - as others on this forum have pointed out. The previous day Gordon had merely said that mortgage payments were now a lower percentage of income than 'in the early 90s'.

In this interview, Gordon said that home ownership had increased under New Labour (I think he said by either 1 million or 2 million) and that this was a good thing. He said this was the main reason for the 1.3 trillion pounds British personal debt.

These arguments are somewhat undermined if a large number of the mortgages are fraudulent or at the least imprudent. Yes - prudence, Gordon!

Excellent post. Indeed, no amount of spin is going to sort this. By the time Gordo goes for an election he will be swimming in shit. His only chance would be to go now but I'd rather buy NR shares than bet on that happening.

The media tide is changing. They will get to the source (Brown, Greenspan, etc.) in good time.

I'm looking forward to watching the BTL lemmings once they get started. I think, when prices crack, the falls are going to happen very fast. I think we'll see unprecedented downwards momentum for in the the past we did not have so many pure (and very dim) speculators in a game where the blood supply has been cut off abruptly, and no amount of central bank shenanigans can fix that.

Rattling on about how the condtions are different from previous crashes is borderline lunacy for today's conditions are much worse, much worse, but much of it is still hidden; not for long though.

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It is simply not credible that a lender would create a category of loan called "self-certification" without being fully cogniscent of the fact that many of the applications would be fraudulent. Everybody is required to pay tax, and thus everyone has proven taxable earnings.

Self-certification is a device to enable lenders to lend at higher rates and wider margins, so it is in their interests to turn a blind eye. It is in the applicants short-term interest to lie to get a home, and it is in the brokers short-term interest to get paid.

If lenders had stringent documentary requirements then this would be out and out fraud by applicants. But they don't. The FSA must be aware of this. As regulator, you have got to conclude they are at best incompetent and at worst complicit.

As with NR, the FSA are beginning to resemble an organisation specifically set up to facilitate lax lending. You have got to ask why they would do that. The only conclusion I can come to is that it is politically desirable to have easy credit, easy mortgages and a never ending rising housing market.

Forget targetting lenders, it is a waste of breath, the target is the FSA and their political masters, messrs Brown and Darling. They of course will be fattening up the FSA at the public flogging in front of the Treasury Select Committee (haha), and their lapdog John McFall in a few weeks time.

Excellent post. Spot on. I wonder how long it will take before the blame is laid at the appropriate doors? I think you're right that they are all about to turn on each other. It should make for the best soap ever improvised.

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And the alternative is.........

For these millions of would - be borrowers to rent, because them diclosing true incomes will put mortgages out of reach.

So whats worse, lie and get a shot at ownership or forever be condemned to the landlords lair?

Most self employed people I know earn a lot more than thier books reveal and then there are the hoardes who are employed but earn a litlle cash on the side. Let's not get too sniffy about self cert, it serves a purpose.

Edited by dogbox
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I wonder how much of this business went to Northern Rock ?

N Rock are the ONLY lender do have been doing 85% fast track (self cert but at prime ordinary rates - so investors in such securities are DOUBLY SCREWED).

And you wonder why no one will lend to N Rock :lol:

Note all other prime lenders limited fast track to 75% and those such as RBS refused any Fast Track in the last 2 or 3 years

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as a financial adviser you do not have to check the clients income. A FA should be happy the information is correct. As a matter of course I ask my clients to provide me with their accounts or P60 to make sure I am not being taken in my any made up income and regularly turn enquiries away when they start with "I need a self cert interest only mortgage" - "Goodbye ... click"

don't confuse self cert with fast track though

http://www.housepricecrash.co.uk/forum/ind...showtopic=57153

Is it possible to get details of your application sent to you without any problems with the mortgage company? I went self cert as the multiples were a bit more than the historical 3x salary etc. I gave all my correct details, but thinking back my FA went with, I believe a lender which didn't check income. I didn't question this as the rate was good and he didn't raise any problems with wifes or my salary

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And the alternative is.........

For these millions of would - be borrowers to rent, because them diclosing true incomes will put mortgages out of reach.

So whats worse, lie and get a shot at ownership or forever be condemned to the landlords lair?

Most self employed people I know earn a lot more than thier books reveal and then there are the hoardes who are employed but earn a litlle cash on the side. Let's not get too sniffy about self cert, it serves a purpose.

Indeed. A good counterpoint to make when the programme tonight, etc., seems to assume that if anything self-cert customers only earn less than stated on the mortgage form.

The fact is, you can slap £1m in cash in a briefcase right down on an estate agent's desk and it still won't be enough to ensure you can rent a shoebox for six months!

This simple fact, that there is no such thing as a self-certification rental contract, plainly skews or even destroys the buy-rent choice balance in the case of all self-employed. So even without buy-to-lie, that creates its own upward pressure on HPs.

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Indeed. A good counterpoint to make when the programme tonight, etc., seems to assume that if anything self-cert customers only earn less than stated on the mortgage form.

Black cab drivers and mini cab drivers earn $$$$ I'm sure they don't declare it.

Yellow cab drivers in new york went on strike because they didn't want a black box in their cab tracking movements - sure they don't want the IRS having a look

A lot of tradesmen don't declare, or underdeclare - some claim unemployment / housing benifits whilst working

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Yes -- but IF THE "MONEY" to pay the "PRICE" was simply NOT THERE, NOT MADE AVAILABLE [by the Moneylender] - then it simply WOULD NOT BE POSSIBLE!!! Can't people get this??! It's SO weird. People just CANNOT see that none of this would have been possible if the "money" couldn't be got hold of in the first place! And the people behind all this HAVE KNOWN this all along. The "housing market" has been, for years and years and years, a PYRAMID SELLING SCAM!! How many times do I have to tell people this!???

You dont have to tell me again, this needs to be understood by the sun/DMail/Expres/Times readers out there, have tried explaining to friends and tribe that the price of a house is a direct function of the avaliabity of borrowed money that buyers can borrow, however this does not compute nor register in their interior skull matter, the vast majority think that 'The price has gone up, because it does' and that helping FTB'ers is a matter of more finance, not less finance which as we know would be the answer. The big VI's in the background know this but most punters, MP's, news pundits, EA's etc etc are totaly clueless. (Untill it bites them on the ringpiece that is, then they will understand 'House prices for plebs') What realy p*sses me off it that not one political party will say 'how it realy is' which by implication means 'Thats how we like it', ie there is no one to vote for on this issue, nothing short of regulating lending practices in a big way will provide a long term fix.

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What realy p*sses me off it that not one political party will say 'how it realy is' which by implication means 'Thats how we like it', ie there is no one to vote for on this issue, nothing short of regulating lending practices in a big way will provide a long term fix.

Actually I have found that the Libdems are pretty good on these issues. Vince Cable in particular. The only libdem policy I don't agree with is on joining the Euro.

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