Action taken against sub-prime mortgages

4/07/2007

The Financial Services Authority are looking to take action against 5 companies which distribute sub-prime mortgage deals.

Looking at recent figures, many mortgage lenders and brokers were offering loans to borrowers who do not meet the criteria for such a loan.

Clive Briault from FSA commented; "Consumers in the sub-prime market are vulnerable people who may have high debts or a bad credit history."

"We will not hesitate to take action where we find bad practice," he warned. The FSA group has been watching brokers and lenders since April 2007.

Regulators are looking to ban individuals and set large fines eliminating them from ever selling a mortgage deal.

Ray Boulger of Charcol said, "As the FSA highlighted in the report, inflating income is a criminal offence and while there is no proof, one suspects that this may well have been the case in some, if not many instances."

Many firms did not check whether or not the data on the mortgage application forms which were processed were true. This was causing applicants to input higher incomes leading them to take on loans which they cannot make monthly repayments to.

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