Sub-prime scandal warning

Cartel managing director Carl Wright is warning the sub-prime market is in crisis and runs the risk of becoming the next big mis-selling scandal.

He says the recently announced Financial Service Authority investigation into the market will discover that a significant number of brokers are wrongly advising clients to take out sub-prime mortgages when 50% of them could take out a near prime mortgage.

Wright says: “A significant number of intermediaries are putting customers onto sub-prime mortgages when 50% of them could go on a near prime deal. When the FSA investigates sub-prime it is going to realise that this is not treating customers fairly and is going to want to know why advisers recommended this.”

Wright says debts and arrears have increased over the past 10 years but people have reacted by borrowing more, not spending less. He says this is also contributing to a sub-prime crisis.

Wright warns that while some lenders have realised they have taken on business that could be placed elsewhere, others have still not put their houses in order and will fall under the FSA spotlight when the investigation is carried out.

Broker heads for sun courtesy of BM SolutionsDavid Wood (left) of Milton Keynes-based Castle Mortgages scooped BM Solutions’ luxury break to the Sandy Lane resort in Barbados.

Wood was picked at random from brokers who have submitted cases on the One Minute Mortgage application system since January this year.

Martin Reynolds, head of sales at BM Solutions, took Wood to lunch at Langan’s Brasserie in London to present the prize – a week for two at the luxurious resort including business travel.

Wood says: “I was stunned to win. My first reaction was to check it wasn’t a joke! For me, BM Solutions offers outstanding support and service, a great underwriting process and competitive products.

“Through BM Solutions I can advise my clients with certainty as to the the timescales for valuation and mortgage offer. I am never let down by it, therefore I never let clients down.”