FSA has "Self Cert" Lenders in its sights.

[CoverItAll]

Self-Cert Lenders are in the spotlight following a Financial Services Authority review into their conduct.

The regulator says it may refer several lenders to enforcement as a result of its inquiry, which found cases where Self-Cert was used without adequate justifications being recorded. The review involved 23 firms and cases completed in June 2007.

Self-Cert lending has been plagued by controversy because borrowers can obtain loans without proof of steady employment.

A spokeswoman for the Council of Mortgage Lenders says: "Self-Cert is perfectly reasonable for borrowers who do not have conventional means of paying their mortgages."

A key finding of the FSA review is that Lenders have failed to establish a process for assessing the reasonableness of declared consumer incomes.

The FSA says good practice would include third party confirmation of employment and income and comparing employment data against figures from the Office of National Statistics.

A spokesman for the Intermediary Mortgage Lenders Association says: "Lenders must satisfy themselves that consumers can afford repayments."

[kallis3]

Interesting.

One of my work colleagues did a self certify mortgage on a £325,000 house even though he is only about £15,000 a year and his wife just earns childminding fees. Don't know how he had the cheek to do it when he is earning a regular salary and has payslips to prove it.

There is no way he would have got one otherwise.

[Andrew Graveson]

Such a key point on the affordability of a mortgage arrangement whether it is self-cert or not. Comes back to the "just because a mortgage is available it doesn't mean it should be sold/taken" that has been often discussed on the site before.

There's a responsibility here for lenders, brokers and borrowers to only enter into an arrangement that is sustainable.

[Skippy]

Is this going to have an impact on those who already have self cert mortgages? Our mortgage is in Dave's name (for obvious reasons!) and as he is self employed he took out a self cert interest only mortgage.

[Andrew Graveson]

Hi Skippy,

Self-cert mortgages are still available as it's generally understood that some people have genuine reasons not to be able to verify their incomes in the normal ways.

I think the FSA are concerned where self-cert appears as though it might be being used to inflate income.

[Skippy]

Thanks Andrew.

So I presume that when the fixed rate ends next year we should be able to continue with Abbey? I'm also worried as someone on here was told they couldn't continue with their interest only mortgage and had to change to repayment.

Why do I keep finding things to worry about?!?!?

[Andrew Graveson]

I think Skippy that the whole market could look completely different next year and it isn't really possible to predict what individual lender policies will be.

In general if your mortgage if being paid each month on time the lender may be more inclined to retain your business.

One newspaper has led on the frontpage today that the mortgage market recovery has begun, and there is some evidence of some better deals being available over the past couple of weeks. This might be a bit premature but at least it's not all doom and gloom out there.

[Skippy]

Fingers crossed - I don't fancy being homeless next Christmas! Seriously, Dave has only missed one mortgage payment in the last 6 years so hopefully we'll be ok.

[Soulgrowth]

Such questions are relevant to me also Skippy. My mortgage was a self cert, sub-prime mortgage with "Preferred" motgages who have been excellent all round. It was probably one of the very last ones given!!

September 2009 however it comes off the fixed rate and goes on to 10% interest rate.

Debbie

[Skippy]

Hopefully we'll both be ok Debbie! I'm hoping that Dave will just get a letter offering him a new interest rate when the time comes. This is what has happened in the past when he was with Natwest, although that wasn't self cert.