Improvements in Self-Cert Mortgage Practices
New report shows better practice by self-cert mortgage brokers
15th November 2005
A report by the Financial Services Authority (FSA) has noted an improvement in the way self certification (self-cert) mortgages are being sold.
Self cert mortgages are designed for people who have no proof of income, and as such find it difficult to obtain a standard mortgage. Self certification allows them to declare their own income levels to the mortgage lender.
Last year, however, concerns were raised that some brokers were encouraging mortgage applicants to overstate their income levels in order to obtain a larger mortgage. A previous FSA investigation found no evidence of widespread fraud, but also criticised the record keeping of many mortgage brokers.
The latest FSA report has again found no evidence of most brokers systematically encouraging 'income inflation', and has also welcomed increased detection rates by lenders of any fraudulent applications that are submitted.
The FSA noted however that improvements still needed to be made in the area of documentation, with many brokers unable to prove that sufficient income and affordability checks had been made.
Read More: FSA Press Release
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