Truth will out as City regulator prepares to kill off ‘liar’s loans’

[BrilloPad]

he multibillion-pound self-certification mortgage industry, in which customers are not required to provide proof of income, is set to be banned by the financial regulator.

Dubbed “liar’s loans” by critics, self-cert loans were blamed for playing a large part in the housing bubble and ensuing financial crisis.

The Financial Services Authority (FSA) is effectively planning to kill off self-cert home loans by introducing a rule compelling lenders to insist that customers provide evidence of their income.

The initiative will be part of the FSA’s keenly awaited mortgage review, which will be published early next week. The sweeping report will cover all aspects of the mortgage market and is intended to set the regulatory environment for years to come. The FSA may also regulate mortgages for landlords for the first time.

Experts believe that self-cert accounted for one third of new loans in 2007, or about £100 billion of the £300 billion loans granted that year. Buy-to-let accounts for 12 per cent of all properties, or more than three million homes.

More here: http://business.timesonline.co.uk/to...cle6872004.ece

They wont want to kill off liar's loans until the housing market recovers. And after that they will not see the point.

[Doggy Styles]

how will this affect me?

In about a year me and the mrs want to buy a house (depending on the market). She doesnt work (looking after the kid) so our sole income is my Ltd co (of which she is a salaried shareholding director)

Does this mean we can only borrow by taking into account our "meagre" salaries and not our divvies or company accounts?

if thats the case we wont get a mortgage big enough to pay for the stamp duty!

Provide your accounts going back a few years to demonstrate your deemed salary.

Hmmm. Deemed salary. Where have I heard that before?

[shaunbhoy]

Cheeky so and so, i am in business i'll have you know.

[NetwkSupport]

Looks like you are screwed then. The picture might become a bit rosier if you stop dodging taxes so blatantly.

HTH

Cheeky so and so, i am in business i'll have you know.

[NetwkSupport]

dont they self cert you or is it on day rate?

[shaunbhoy]

how will this affect me?

In about a year me and the mrs want to buy a house (depending on the market). She doesnt work (looking after the kid) so our sole income is my Ltd co (of which she is a salaried shareholding director)

Does this mean we can only borrow by taking into account our "meagre" salaries and not our divvies or company accounts?

if thats the case we wont get a mortgage big enough to pay for the stamp duty!

Looks like you are screwed then. The picture might become a bit rosier if you stop dodging taxes so blatantly.

HTH

[Moscow Mule]

how will this affect me?

In about a year me and the mrs want to buy a house (depending on the market). She doesnt work (looking after the kid) so our sole income is my Ltd co (of which she is a salaried shareholding director)

Does this mean we can only borrow by taking into account our "meagre" salaries and not our divvies or company accounts?

if thats the case we wont get a mortgage big enough to pay for the stamp duty!

You want one of them brokers that get mortgages for contractors...

[NetwkSupport]

how will this affect me?

In about a year me and the mrs want to buy a house (depending on the market). She doesnt work (looking after the kid) so our sole income is my Ltd co (of which she is a salaried shareholding director)

Does this mean we can only borrow by taking into account our "meagre" salaries and not our divvies or company accounts?

if thats the case we wont get a mortgage big enough to pay for the stamp duty!

[sasguru]

Don't you have a business to run? Run along now junior poster

[DimPrawn]

Does this mean I have to prove I am a millionaire now?

[AtW]

he multibillion-pound self-certification mortgage industry, in which customers are not required to provide proof of income, is set to be banned by the financial regulator.

Dubbed “liar’s loans” by critics, self-cert loans were blamed for playing a large part in the housing bubble and ensuing financial crisis.

The Financial Services Authority (FSA) is effectively planning to kill off self-cert home loans by introducing a rule compelling lenders to insist that customers provide evidence of their income.

The initiative will be part of the FSA’s keenly awaited mortgage review, which will be published early next week. The sweeping report will cover all aspects of the mortgage market and is intended to set the regulatory environment for years to come. The FSA may also regulate mortgages for landlords for the first time.

Experts believe that self-cert accounted for one third of new loans in 2007, or about £100 billion of the £300 billion loans granted that year. Buy-to-let accounts for 12 per cent of all properties, or more than three million homes.

More here: http://business.timesonline.co.uk/to...cle6872004.ece