Fsa Is To Take Action Against Five Brokers That Sell Sub-prime Mortgages

[judi3]

I CANT FIND INFORMATION WHICH 5 BROKERS

 

 

 

 

UK warning on sub-prime mortgages

 

The regulator has threatened action against five firms

 

The Financial Services Authority (FSA) is to take action against five brokers that sell sub-prime mortgages.

Following a review of the market, it said some mortgage lenders and brokers offer loans to people who should not be given them.

Sub-prime mortgages are those sold to people with poor credit histories and thus a greater chance of defaulting.

The FSA found examples of people being offered mortgage deals they might not be able to afford.

"Poor sales practices in this market may lead to serious wider consequences

 

 

Clive Briault FSA

 

 

The regulator said it was very concerned about its findings.

 

"Consumers in the sub-prime market are vulnerable people who may have high debts or a bad credit history," said Clive Briault of the FSA.

 

"It is therefore important that they are properly assessed and advised.

 

"We will not hesitate to take action where we find bad practice," he warned. SUB-PRIME MORTGAGES

Account for 5-6% of all new home loans

Worth about £16bn a year

Approximately 160 sub-prime deals available

80% sold by mortgage brokers

 

Source: Council of Mortgage Lenders

 

Q&A: Sub-prime lending

 

 

"Poor sales practices in this market may lead to serious wider consequences," he added.

Investigation

The FSA has been investigating the sales practices of brokers and lenders in the sub-prime mortgage market since April this year.

 

Then, it said it was worried that borrowers might not be offered suitable mortgages that were good value.

Its investigation has come against a background of a crisis in the US mortgage market, where rising interest rates mean that some poor sub-prime borrowers are now defaulting on their mortgages, which were clearly mis-sold in the first place.

The situation is very different in the UK, where the sub-prime market is much smaller, because lenders here are much more careful about to whom they lend.

Even so, the FSA's review of 11 lenders and 34 brokers found a worrying level of bad practice.

With regard to brokers, it found that:

• In a third of cases, it looked at there was an inadequate assessment of the borrower's ability to repay the mortgage
  
• In nearly half of the cases, there was no adequate assessment of the borrower's needs and circumstances
  
• More than half of the customers had self-certified their income, but it was not clear why, meaning they could end up paying a higher mortgage rate than necessary
  
• Some borrowers were advised to re-mortgage, thus paying early repayment charges, without the broker being able to show that this was a good idea.

"There is evidence of potential mis-selling," said an FSA spokeswoman.

The regulator's action could involve fines or banning individuals from selling mortgages.

Fraud?

The FSA also found evidence of slack practice among lenders.

For instance, some of them did not check whether or not the information on the mortgage application forms they processed was plausible.

This could lead to applicants getting away with exaggerating their incomes and taking on loans they could not afford.

Mortgage broking firm John Charcol said the FSA's review had found no evidence of widespread mis-selling. But it said it was worried by the high level of self-certification of applicants' incomes that the FSA had uncovered in the market. "As the FSA highlighted in the report, inflating income is a criminal offence and while there is no proof, one suspects that this may well have been the case in some, if not many instances," said Ray Boulger of Charcol.

[rocket1]

I wonder if you are interested in this as it seems related to your post

 

Sent to editor to pitch for possible commission to write story

 

 

 

The way in which the mortgage market appears to have been set up to utterly rip off the home owner.

 

With current mortgage interest rates rising this raises huge implications for the housing market which is likely to be thrown into turmoil because mortgage lenders are far too quick to repossess and do so quite unnecessarily.*

 

This artificially depresses the housing market and forces house prices to tumble, jeopardising the whole economy by triggering a major financial depression as a direct result of the greed of the mortgage lenders.

 

I am a freelance journalist who has spent ten years dealing with my partner becoming severely mentally ill and leaving me as a single parent in charge of a baby.

 

As a result of this, I have had quite incredible experiences in the mortgage market, being constantly forced to re-mortgage and re-mortgage in a manner specifically designed to systematically strip a householder of equity. There have been numerous examples of deviousness from mortgage providers and brokers and clear evidence that main 'High Street Lenders' have a system of deliberately and systematically pushing people into the 'sub prime'* or 'Grey' mortgage market to enable them to increase their profits by charging vastly inflated interest rates and other fees on a scale which they cannot be seen to do as 'High Street Lenders'.

 

Their mechanism is simple. They use every possible excuse to* downgrade a person's credit score to deny an ordinary mortgage at regular mortgage rates. You are then redirected to a mortgage provider on the' sub prime' market who is more than happy to provide a mortgage at inflated interest rates etc and with ludicrous penalties attached.

 

The 'sub prime' mortgage lender is a separate business from the high street lender, but guess what ? The sub prime lenders are all wholly or partly owned by all the various high street lenders.

 

Even the most upright and financially reliable individuals with the highest possible degree of integrity and reliability fall foul of the 'rules' the financial institutions employ to force people onto the sub prime market.

 

My most recent experience is quite ridiculous.* My mortgage provider recently evicted me with me owing just three months of mortgage arrears* totally about £3000 at a time when I was unable to work because of a need as a single parent to look after my child . The DHSS was paying them* half of the monthly mortgage amount and my remaining equity in the house was £100 000.

 

The mortgage provider had every possible kind of security.

 

*- £100 000 of equity in the house to set off against any arrears,*

*- half the mortgage being guaranteed to be paid by the DHSS,

*-*and with annual arrears accruing of only about £6000 with the house also currently increasing in value by somewhere in the region of four times the annual* arrears, there was no possibility of any need to foreclose and force the sale of the house for possibly years and years or certainly for time enough for this particular borrower to get back into employment when there was no longer that temporary need to be a full time single parent.

 

The behaviour of the lender in evicting a borrower who is a single parent with huge equity in the house and good employment prospects, but currently (and only temporarily) forced to be a DHSS income support recipient in order to look after a child, this behaviour to actually evict with only three months mortgage arrears is quite, quite incredible - staggering even.

 

In this case I am making a specific complaint to the ombudsman, and there may be the possibility of legal action because this lender also grossly misled me in a manner why defies belief. The full detail of the story really shows how outrageous mortgage lenders can be. And, how unrealistically quick to evict people from their homes when it is entirely unnecessary . It is quite clear to me that there is what you might describe as rampant 'institutionalised dishonesty' practised by the mortgage lenders (and brokers).

 

There many similar tales out there which I have heard about.

 

There are some quite farcical aspects to this story too - like the judge at the re-possession hearing who told me he didn't think earning a living as a freelance journalist was an adequate or reasonable or* sufficiently reliable way of earning a living so as to be able to pay a mortgage. So on those grounds he would order a repossession, whereas if he had thought it was possible to earn a living from being a freelance journalist he would be in a position to not order a repossession at that time. Err what ?

 

So he granted a repossession order to the mortgage provider because, apparently earning a living as a freelance journalist is not an acceptable way of being able to pay a mortgage, at least not according to this particular judge.

 

With an eviction notice giving me just two weeks to get out of the house before being physically thrown out by the bailiffs, surprise, surprise, I was able to re-mortgage yet again with one of the more dubious and ruthlessly expensive and overcharging sub prime lenders at interest rates which are completely impossible to sustain. All I have done is delay the inevitable eviction because reverting to a normal mortgage is likely to be nigh on impossible owing to the 'rules' - no matter how able I am to pay it.

 

There are hoards of people in similar situations to me as a result of the 'institutionalised dishonesty' inherent* amongst mortgage lenders which is ultimately aimed at fleecing mortgage borrowers as much as possible, regardless of the harm done to them or the economy.

 

In my case I have lost hundreds of thousands of pounds over about eight years as a direct result of the actions of mortgage lenders (currently owning a £250 000 instead of the £900 000 house I had less than five years ago). Most of that £650 000 difference has gone into the coffers of the lenders directly or indirectly. They have certainly deprived me of most of it.

 

It is curious that their self righteous justifications for their actions should logically mean that I should not have a mortgage at all - ac cording to their 'rules’. It seems odd that I have had a mortgage with one lender or another throughout this entire period, and that I will be able to continue to have a mortgage until I have been completely deprived of all my household equity by the dishonesty of the mortgage lenders.

 

I would be grateful if you would let me know if you are interested in doing something on this ?

 

I look forward to hearing from you,

 

 

 

Freelance Journalist

 

 

E-mail

[midge61]

hi rocket

 

What an awful tale I do hope you get some justice from the ombudsman.

This is exactly what they do ,prey on the vulnerable and get pleasure from it.

 

I remortgage in 2005 and only wanted to up the amount by 10k but the adviser I had despite telling me that my credit rating was ok and telling me that the best deal he could find was SPML. By the time his commission etc was added meant I up my mortgage by 15k and when I finally recieved all the documents it stated that he hadn't approached any other lenders!!!!!!

 

So I am now stuck with a mortgage with high interest rate and they don't seem to be able to go a single month without adding charges of some sort or another!!!

 

I hope the editor you have sent this too follows up on it.

Good luck

[tonycee]

Im up to 9.2% APR and rising steadily over the last 5 years......

 

Count me in, give me some knuckle dusters, and point me in the right direction....

 

AAAARRRRGGGGHHHH I could swear...........

[groovycaz]

The lancashire Mortgage Corporation 22% and no adverse credit but because of self employment and the semi commercial property I was buying was quite run at down but still a steal at £15,000, this is the only rate by the broker I was offered and only for £7,500 so after 32 months the £7500 mortgage cost me nearly £14,000, no missed payments, ripped off with early redemption fees...GC

[Stornoway]

About 12 months back I arranged a second mortgage through brokers Loanline - I was financially in a pickle and pretty desperate so took their first offer of £25k loan taking me to 85%LTV but whopping rate of 15%. Last week I arranged a "near prime" remortgage at 90% LTV at 1% over base rate (6.75%). I can prove there is no difference in my credit rating between last year and this year. Have just written to the MD of Loanline seeking repayment of the finders fee I had to pay them of £2k.

[jake44]

We were well and truly taken for mugs by a so called mortgage advisor. We are now paying over 9% !!! We have another year left or we will be charged £6000 to move to another lender. I reported them to the FOS to be told sorry but you signed the deal.............

 

I will be VERY wary when I remortgage next year. Your payments have gone up by £250.00 per month so far . scary .....

[becky723359]

Remember the problem with mortgage advisors are they get paid on commission, best off paying a broker a fee at least you know if you paying them they work for you.