Whenever you read about self-cert mortgages in the press, you are almost guaranteed to find reference to two other things in the article.
The first is to liar loans, the accepted alternative name for self-cert. The second will be to mortgage brokers who are blamed for encouraging borrowers to do the lying in the first place.
As a result of the credit crunch brokers have had to get used to this sort of thing, even if they’re not necessarily to blame. being fitted with a microphone for a television interview when the floor manager asked what I was there to talk about.
Mortgages, I replied, in my customary apologetic tones because the subject doesn’t seem that thrilling to the average layperson when other guests are talking about all manner of exciting topics.
But the floor manager seemed pleased. It turns out that he and his wife were applying for a mortgage while she was also planning to take voluntary redundancy. He asked me whether the lender could find out as they had no intention of revealing this information.
After we’d discussed the whys and wherefores, I asked whether he was planning on consulting a mortgage broker. He said he was but asked if I thought he should come clean and tell the broker about his wife’s impending voluntary redundancy.
There is a danger in excessive nannying that you absolve consumers of all responsibility
I don’t know whether he thought the broker had a duty to declare it to the lender and that this would hamper their mortgage application.
But I find it incredulous that he was contemplating seeking advice from a broker while at the same time not telling them all the facts.
I expect it happens more frequently than you would hope but it’s odd for them to expect to receive the best advice if the broker doesn’t have such a key piece of information?
In its Mortgage Market Review, the Financial Services Authority said it wants to protect the vulnerable. That’s fair enough but there is a danger in excessive nannying that you absolve consumers of all responsibility. We’re asking for trouble the moment we stop taking responsibility for our financial affairs and our actions.
Financial scandals and rip-offs happen all the time – that’s life. Regulation usually comes along in the wake of some disaster. Sometimes it’s sensible, as a lot of the MMR is. At other times, it isn’t.
With the abolition of self-cert, there will be a lot of self-employed individuals who are honest about what they earn but can’t prove it and will be excluded from home ownership for some years until they can provide the necessary evidence.
The majority of brokers didn’t encourage people to lie about their income. And I suspect there are plenty of brokers who never got the full picture because clients decided to keep certain facts from them and – judging from my experience with the floor manager – this situation looks as though it will continue.