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Guardian: Financial Ombudsman Proposes Mortgage Compensation

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Yesterday it was revealed that homeowners who have been given mortgages they cannot afford to repay could be in line for thousands of pounds of compensation in what could be the next big financial misselling scandal. Lenders have been helping vast numbers of first-time buyers on to the property ladder in the last few years by given them mortgages up to six times their salary.

Now, the head of the Financial Ombudsman Service says he will not hesitate to give 'significant awards' to customers who he believes have been missold mortgages that many of them are now struggling to repay. 'We see cases where I find it difficult to imagine how the lender could have considered the customer capable of maintaining payments,' said Tony Boorman, principal ombudsman. 'It seems that the advice has been more about generating commission or fee income than a fair assessment of the interests of the customer.

The Financial Services Authority estimates that nearly a third of all mortgages sold in the last two-and-a-half years put the borrower into a high-risk category.

The existence of these mortgages came as a complete surprise to the FSA, of course :(

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The existence of these mortgages came as a complete surprise to the FSA, of course :(

I too have posted a thread on this very point

I think the compensation culture will be after estate agents as well, because they have marketed property in some cases as investments and may in many cases not be authorised to give investment advice.

I think the ramifications of this will be very severe in that underwriting will be strict and multiples will be reduced. Developers will try and tie up deals by offering second charges (as they did in the last downturn) and further pressure on parents to give a leg up by having an increased charge on their home.

But inevitably this will be yet a further driver in pushing down prices to more realistic and sensible prices.

I don’t think cash payments would be made I suspect banks will offer to waiver interest on part of the loan to keep the greedy lying sheeple in his home so they get some income on the loan with a settling up of the debt when the property is sold, possibly allowing it to be transferred over to a new property

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  • 293 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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