An IFA believes that fast-track mortgages could be leaving the mortgage industry open to unscrupulous brokers.
Andrew Oliver and Co managing director Andrew Oliver says he is very concerned about what he considers to be the abuse of fast-track mortgages.
Oliver says a former client who wanted a mortgage for £210,000 on a salary of £13,000 with around £13,000 of other income went to another broker and was given an agreement in principle with Abbey.
This would represent over eight times all income and 16 times the client’s salary.
He says: “Someone is grossly overstating their income. This is a practice that needs to be exposed and the public are acting with complete ignorance in some cases and some mortgage advisers are acting with complete disregard to the principles of affordability and responsible lending.”
Oliver cites another case where he claims that an adviser in an estate agency told a prospective borrower to apply for a fast-track mortgage with Abbey as it does not ask for proof of income. This client wanted a mortgage for £111,000 on an income of £11,000, an income multiple of 10.
Abbey for Intermediaries managing director Ricky Okey says: “We take concerns like this very seriously. However, there is no evidence at this stage to suggest Abbey has fully accepted these applications. Agreement in principle is in no way a guarantee that the mortgage will be accepted in full.
“We ensure there are barriers in place to deter mortgage fraud and that processes are followed to ensure that all AIP applications are reviewed prior to being accepted in full.”
Robert Sterling managing director Kevin Duffy says: “This kind of behaviour is by no means endemic or systemic within the industry but lenders, brokers and regulators alike are operating with their heads in the sand if they do not think it is going on.
“In a pressurised market, where broking opportunities have been reduced, desperate times are producing desperate measures.”
An FSA spokesman says it is not planning a separate look at fast-track mortgages.