Tuesday, September 25, 2007

And they say there is no sub prime problem in the UK?

Borrowers told to lie about wages

Industry insiders have described how people have been advised to lie about their incomes to take out loans far bigger than they can afford. It is impossible to tell how many cases there are because few borrowers or mortgage brokers will admit to the practice, but campaigners fear it is widespread and have urged the Financial Services Authority to take action against the lenders and brokers involved.

Posted by scumbag @ 12:19 PM (637 views)
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6 thoughts on “And they say there is no sub prime problem in the UK?

  • Can i ask 2 questions:

    Did anyone not know this was happening- it has been known for years that this was happening and only now when the lenders are likely to lose money do they start to complain

    This is obtaining money by deception which is a criminal offence so we are going to see lots of financial advisors and borrowers (it wasn’t me gov) getting criminal records. OR maybe the Bank of England will bail them all out

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  • the reason they will not asddmit to the practice is because obtaining money by deception is a criminal offence. No doubt we will see loads of cases going through the courts as the lenders will have all the evidence they need on file.

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  • there is a valid side to this…

    What is you are self employed, you know you can afford payments, but you dont want to have to increase your profit on accounts to prove this… then what you are caught between the tax and getting a mortgage… I would rather lie….

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  • I undrstand the concerns, but we must get this into context without getting too worried.

    I am a director of a small Limited company and, as advised by any good accountant, I only pay myself a small salary and take out the rest of what I need via dividends. These dividends do not show up as taxable earnings, so according to my pay slips I only earn about £110 per week. (Hardly enough to buy a decent house).

    I had to go down the self cert route because no bank would touch me based on taxable income, despite the fact that they all knew that I could afford to buy the proprty in question (computer says ‘No’)

    Many self employed people and company directors will self cert to get a mortgage, nothing wrong with that and I would imagine that the VAST majority of deals are done for this reason. It’s not lying, it’s the only way to do it for many people.

    I know 4 or 5 people on self certs and we don’t have any concerns.

    Also bear in mind that in the UK the average loan-to-value of a self cert is around 75%, wheras in the USA it is 85%.

    JB

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  • Jaybee, I imagine for every case like yours there will be several hundred who just used the figure their mortgage “adviser” told them to.

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  • Jaybee, the programme (click “listen again”) wasn’t about legitimate self certs that’s true.

    But even so, the concern you should have is how much all
    such behaviour has led to fantasy prices. What is your property really worth?
    In other words, it affects everyone, and we should all be concerned

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