Friday, Dec 08, 2006

FSA fines broker for promoting irresponsible lending

IFA Online: Mortgage intermediary fined for income inflation

The Financial Services Authority has fined Home and County Mortgages Limited 52,500 for inflating customers incomes on mortgage applications and failures in its sales processes.

Posted by jellycaster @ 02:00 PM (631 views)
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1. tyrellcorporation said...

Thanks Jelly... ;)

Friday, December 8, 2006 02:00PM Report Comment

2. Dohousescrashinthewoods said...

I'm slightly stunned, my impression was that inflating incomes is standard practice. When a friend of mine applied for a mortgage, I believe he was encouraged to inflate his salary by the person he was dealing with.

>> Jonathan Phelan, head of retail enforcement at the FSA, says: Inflating customers incomes when applying for a mortgage is unacceptable. It puts customers at risk of losing their homes if they are not able to meet their mortgage repayments. It amounts to making false declarations to lenders on behalf of customers, the consequence of which could be very serious for customers.

When a situation abandons reality in favour of misrepresentation (decoption) it rapidly gets out of control (Enron, Inflation, Gordon's "miracle" economy)

Friday, December 8, 2006 03:24PM Report Comment

3. Anthony_l said...

I wonder if more fines are to follow..

Friday, December 8, 2006 04:03PM Report Comment

4. P. Doff said...

Tip of the iceburg! You wouldn't believe what some of these brokers get up to.

Friday, December 8, 2006 04:29PM Report Comment

5. millard said...

I think it was panarama that did a documentary on this circa 2004, birmingham midshires (aka HBOS) were caught up in it, no fines though as the FSA is pretty spinless. It wouldn't have taken much for legislation to be passed insisting on proof of earnings, but then again gordons little miracle might have not continued.....

Friday, December 8, 2006 07:36PM Report Comment

6. denzil said...

If a lender knowingly inflates a salary then surely not performing a salary check on a customer is nearly as bad. If I lie about my salary on an application form and the lender does not perform any level of due diligence before lending me the money then surely this is grossly irresponsible of the lender. Many big lenders do not and I repeat do not bother to check salary if there is a decent level of deposit in the region of greater than 10%.

As for the blog article this bit stank for me:
"By agreeing to settle at an early stage of the FSA investigation, the firm qualified for a 30% discount under the FSAs Executive Settlement Scheme and the fine was reduced from 75,000 to 52,500."

Friday, December 8, 2006 08:02PM Report Comment

7. Nohpc said...

We are assuming again the it is just the lenders at fault as opposed to the borrowers. Not all borrowers who inflated their incomes are brainless schumcks thinking they are getting an awesome deal. Maybe they should be fined as well.

Friday, December 8, 2006 10:35PM Report Comment

8. monty said...

It's good to hear the FSA are trying to keep things straight and level but please, please, please give me the name and number of your friend's dodgy broker. Every time I've applied for a mortgage it's required the rubber glove treatment which gets a bit uncomfortable after the second time. I'd dearly love to lie about my salary to by my dream Barbie Mansion but every lender (and broker) has required a very serious amount of documentary proof before even giving me the time of day. Where am I going wrong?

Saturday, December 9, 2006 12:18AM Report Comment

9. Disciple said...

Interesting Monty, a couple of friends went to an IFA and he bent over backwards to sort them out. A self cert is what you need. Common practise within the financial world. You may find it harder because banks are starting to get a little savy, they are losing a billion s a year on bad debts. Yep self certs are the way to go, I wouldn't do it. You will end up bankrupt!
The interesting thing I find here, is that the FSA knew about this anyway. They've know about it for ages, common practise, I think they'd be a bit stupid if they didn't, afterall any idiot with half a brain will know, self certs were designed to get around the system. But whats really telling is the amount that the bank was fined! What a low amount, this is clearly window dressing. When things go bad, the FSA can say, we didn't know, but when we did, we fined that company. Yeah, and pigs fly. What a SHAM!!!!!!! THe FSA is just protecting themselves, when times get really bad.
I would love to really get my words out about all this but it will never be put on this site, you guys are too nice. Something really bad is coming and everyone in the city knows, banks the most. What a shame the masses believe them, because their the ones whoose gonna get the stuffing kicked out of them!

Saturday, December 9, 2006 02:29AM Report Comment

10. Dohousescrashinthewoods said...

Hi Monty ,

I believe it was a self-certification mortgage through Mortgage Express (Bradford and Bingley) via an IFA. He was encouraged to cerify the level of income needed to get the house he wanted.

He has worked damn hard to save up a 30K deposit and is still living in shared rented accommodation at the age of 38, having not left home until 33. I gave him all the warning signs and evidence about the market, but his girlfriend wants stability in her man (what savvy woman wouldn't?) and bet him he couldn't be in a house by Christmas.

He went to see a few places and found a lovely house in a village outside of Reading that seemed cheaper than he expected. Apparently the previous buyer had dropped out and the owner needs to sell, so it looks like it's all going through quite quickly (subject to survey). I worry for him as, anecdotally, it sounds like possible trouble in the market.

Saturday, December 9, 2006 12:18PM Report Comment

11. paul said...


Alexander Hall (affiliated with Foxtons) told me that they could get me another 50K over and above what other mortgage lenders were offering. I don't think they do a self-certified mortgage (remember those?) but they do some sort of jiggery-buggery with the numbers to suit the value of the property you're being sold by Foxtons generally.

Saturday, December 9, 2006 02:55PM Report Comment

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