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Borrowers told to lie about wages

A BBC investigation has found evidence of serious mis-selling in Britain's sub-prime mortgage market.

Industry insiders have described how people have been advised to lie about their incomes to take out loans far bigger than they can afford.

Half of all sub-prime mortgages in the UK are self-certification mortgages, where borrowers state their income and lenders do not necessarily check.

No-one from the Financial Services Authority was available for comment.

A former broker in the industry told BBC Radio 4's File On 4 that some advisers in the sector tell clients with low incomes to inflate their earnings on application forms to get outsize loans, which they often cannot afford.

'Inflated income'

Inflating the client's income is seen as an easy way for brokers to get the deal passed.

One borrower whose real income was £25,000 told the BBC he was advised to double that on his mortgage application.

He got a loan of more than eight times his salary.

His monthly re-payments take up most of the family's income and he has been threatened with re-possession.

It is impossible to tell how many other cases there are because few borrowers or mortgage brokers will admit to the practice, but campaigners fear it is widespread and have urged the Financial Services Authority to take action against the lenders and brokers involved.

Source: bbc.co.uk

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This absolutely infuriates me – as responsible mortgage brokers we NEVER inflate some ones wages – we have had lender BDMs ask us; why not? as everyone else does it..

Reason being is that is a person cannot afford a mortgage they are likely to default, if they default and can prove that the mortgage broker has committed or aided an applicant to commit mortgage fraud the broker could be liable to pay the remaining outstanding balance of the mortgage and the advisor could lose his job and the ability to offer advice for life.

On many occasions we have had clients phone back into the office, with pleasure in informing our advisors that; although we had recommended that a product was not in the ‘clients best interest’ due to affordability, they had managed to get it placed with a ‘one man band’ broker.

I wish these newspapers would name and shame these firms or at least name the firms who refuse to lie on the applicants’ behalf!

I welcome mystery shoppers as a method to catch out unscrupulous mortgage brokers and lenders and wish the FSA would take more action when a company is caught out. I find it hard to believe that they (the FSA) have not commented on this story or demanded details of the firms involved.


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I couldn't agree more, the over inflation of income and the resulting product selections being show to the end client is doing nothing to help their understanding and implications of the affordability of what they are purchasing.
The broker's duty is due care and best /most appropriate advice for the client. After all a client who is sold to correctly and remains financially in control will still be a business prospect in the future. Someone who is over indebted, with a lack of equity and is having difficulty in making their existing payments prove to be little or no use as a prospect now a days.
To add to your initial point I also agree that the FSA has to make a stand, uphold their own rules book and shame those that don’t adhere to it. After all, fines can be paid and business can move on but naming and shaming surely will have a greater impact on a business and therefore act as a greater deterrent.