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Self-cert waters safe for the honest

There’s nothing like fear to change a person’s actions, and it appears that the fear factor has contributed to the drop in self-cert mortgages.

While we all have our own take on The Money Programme episode that caused such a stir on self-certs, in the main it should be applauded. Any media event that highlights fraud or potential fraud should be welcomed, as it usually leads to action that prevents reoccurrences. No one could be so naive to believe that the programme, the Financial Services Authority or lenders’ underwriters will stamp out all improprieties in this sector, but an impact has been made. My concern is that many genuine clients won’t get the best self-cert deals because of some brokers’ reluctance to process them.

The FSA has published its findings on the potential mis-selling of these deals, and the report shouldn’t strike fear in those brokers that conduct their business professionally. Following my discussions with the FSA, it was keen to point out that while it cannot promote any particular type of product, it sees no reason why brokers should be concerned about self-cert, providing they exercise due diligence. It is generally accepted that there will always be those who tell the odd porky to get a dodgy deal through. The main concern is when there is premeditated fraud by broker and client, as this minority can affect the livelihoods of the majority.

Lenders have become more vigilant off the back of the BBC programme, if only to stem the tide of criticism, particularly in cases where they suspect the numbers don’t stack up. But I cannot get my head around lenders offering self-cert to full status clients. It beggars belief how a broker can justify their recommendation in an audit. Offering a self-cert mortgage to a PAYE employee is tantamount to inviting fraud.

For those who persist in abusing the system, take heed – the FSA is on your case, and if caught you will be punished. However, the gist of this article is to convey a positive message. There are more than 3.5 million self-employed people, a large target to aim at.

Just as the BBC cast doubt on the credibility of the self-cert mortgage and those that offer it, it is up to us in the industry to restore confidence in both product and practitioners alike. The upshot could prove to be lucrative.

Of course, there is also the irony that many Mortgage Strategy readers are potential self-cert customers. Go spread the word that it is safe to get back in the water. The FSA is behind those that sell the product compliantly.

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Dear delia

Dear Delia Ian and Lesley are looking to buy their first home in London for up to 240,000. They have saved a 5% deposit. They realise their options may be limited due to their credit record – one rental arrears 10 months ago and one CCJ incurred six months ago. Ian earns 32,000 and Lesley 24,000. Ian is paying off a car loan at 250 a month, while Lesley’s outstanding credit card balance is 4,000. What are their options?

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