Two thirds of mortgage brokers have not applied for the authorisation they need come October 31, says UK Mortgage Compliance.
Time is running out for mortgage brokers who wish to be compliant by October 31, and the same is true for their clients, who may well find themselves without a mortgage broker part way through the house buying process. So far, less than one third of mortgage brokers in the UK have applied to the FSA for authorisation to trade.
Pam Burnett of UKMC says that the situation is a ticking time bomb for the mortgage industry and the house buying public. She says: “Sadly, mortgage brokers are sticking their heads in the sand on this one. They represent one of the last professional groups to face strict regulation, yet most of them are currently doing nothing about it. They will have to move fast if they are to be compliant by October 31 and so remain in business.”
UKMC say that it is imperative for house sellers to make sure that their buyers mortgage broker will be compliant by October 31. It is a critical time in the house purchase chain and you don't want to be left in the lurch by a mortgage broker not being able to trade.
Buenett says: “Buying and selling a house is the most costly and stressful thing that a person can do, between now and November is a critical time. If mortgage negotiations span that crucial end of October period and the mortgage broker is not compliant come November 1, clients will have to start the process all over again, which may mean losing both the property of their dreams and the fees they have already paid their broker.”
UKMC has some useful questions that house sellers should ask their estate agent to check out with a buyer's mortgage broker now:
Has the buyer's mortgage broker applied for authorisation from the FSA?
If he has applied, is he ready for authorisation? In other words, can he show the regulator that he can operate his business within the new rules?
If he has not applied, he may have to cease trading after October 31. What will happen to the sale if that happens?
But it is not just house sellers and buyers today that will face a problem. According to UKMC, the failure of mortgage brokers to address compliance will have a number of negative effects on the housing market as a whole