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Titcomb thunderbolt rails at ‘mortgage myths’

FSA director slams reaction to self-employed loan plans and criticises poor-value intermediary products

The FSA says its proposals to introduce income verification on all mortgage applications should not exclude self-employed borrowers from the mortgage market.

Speaking at the Mortgage Business Expo in Olympia, London last week, FSA director of small firms and contact centre Lesley Titcomb also challenged the extent of dual-pricing by some lenders, questioning why lenders bother to market some intermediary products at all as they are such poor value.

Titcomb said those who questioned the need for the mortgage market review “should take their heads out of the sand” and argued that the financial crisis has shown that existing FSA rules are not enough to prevent irrespon- sible lending or borrowing, nor to secure the fair treat- ment of customers.

She said: “This is also a good opportunity for me to dispel some of the myths that are out there about our proposals. Does anyone really think that we really want to stop self-employed people – over three million people – from ever getting a mortgage again?

“And do we really want to make all lenders ask their customers how much they spend on cigarettes and alcohol? The answer to both, of course, is no, but you could be fooled into believing otherwise by some of the comments we have seen so far.”

On dual-pricing, Titcomb insisted it was a commercial issue and not an area where the FSA would intervene.

However she added: “Where an intermediary product is of such poor value compared with a direct product from the same lender, we question why lenders would continue to market that product.”

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Well it just goes to show – sometimes the Regulator gets it right.

    Mr Wyles has said that regulators see consumers as wanton children….etc and that mortgage advisers are like drug pushers outside school.

    Well you’ve got that right. Why do you imagine that the UK has the worst personal debt in the world – about 170% of income? (The US has ‘only’ about 140%).

    How many advisers told clients that they can’t have the mortgage they were after? The banks didn’t shovel the money to the defaulters on their own – mortgage advisers were complicit.

    This channel is less qualified, less regulated with more sanctions against them. (I have the records – hardly a week goes by without 2 or 3 mortgage advisers getting expelled or fined). The FSA is finally waking up and tightening up and not before time.

    Ms. Titcomb is also perfectly correct – everyone can verify income – if they can’t it only means one thing – they haven’t got it. The past practice of self cert was nothing more than money laundering.

    Yes Mr. Wyles you have been ‘banged to rights’. No more crocodile tears – just try and remember the regime in the late 60’s – that’s probably where we are headed and I think that’s a good job. It will certainly stop the mad escalation of prices and people may once again realise that their home is where they life – if you want to invest – consider something else.

  2. I agree with the comments. The author is wrong. When it comes to shopping in the real estate market, monthly payment is king. The 4.5% trick could have a lasting effect even if the rate itself is temporary. Any home purchased under a temporary low-rate program will be more likely to become a “heirloom property” than being resold in a few years. With new construction already a thing of the past, the reduction on the number of available homes for sale will be long-lasting, ultimately leading to sustainable higher prices.
    http://www.financemetrics.com/common-mortgage-myths-resulting-in-serious-mortgage-mistakes/

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