Self-cert lenders are insisting their affordability checks are robust after CP146 revealed brokers may carry the can for borrower arrears under regulation.
In proposals for regulating the advice process, the FSA says brokers will be responsible for assessing whether a mortgage is suitable for a customer on the grounds of “whether or not the consumer can afford the mortgage” now and in future. Although brokers will not have to verify any information, they should take a “common sense view” of what consumers tell them.
Lenders such as BM Solutions and Mortgage Express have relaxed proof-of-income criteria in a bid to win more customers. But brokers fear this does not promote true affordability assessments.
Bob Riach of Scunthorpe-based Riach Independent Financial Advisers, says: “If a borrower declares a higher income on the application form you're assisting them in telling a lie. This will make brokers think twice about using no-income-proof self-cert.”
But Richard Hurst, communications manager at Future Mortgages, says: “The tick box mentality of credit scoring could create problems potentially.”
And Michael Bolton, head of mortgage marketing at BMS, says: “Borrowers get into arrears across the spectrum of products, regardless of the degree of checking. It is not reasonable to pin on an intermediary a borrower that goes into default next month because they're not working as much.”