July 13 (Bloomberg) -- The Financial Services Authority plans to ban self-certification mortgages as the regulator moves to crack down on risky lending. The FSA found that 46 percent of households in the U.K. had either no money left or a shortfall after mortgage payments and living costs were deducted, the FSA said in a report. The regulator, which published a consultation paper on the 1.2... [more]
July 13 (Bloomberg) -- The Financial Services Authority plans to ban self-certification mortgages as the regulator moves to crack down on risky lending.
The FSA found that 46 percent of households in the U.K. had either no money left or a shortfall after mortgage payments and living costs were deducted, the FSA said in a report. The regulator, which published a consultation paper on the 1.2 trillion-pound mortgage market, may issue final rules next year.
Self-certification loans don't require consumers to validate their income. By 2007, customers' incomes weren't checked in 45 percent of new mortgages in the U.K., the regulator said in October as it called for a ban on the home loans as part of a crackdown on risky credit in the country's mortgage market.
"We are determined to protect vulnerable consumers by making sure that everyone who takes on a mortgage can afford to pay it back," said Lesley Titcomb, the FSA director responsible for the mortgage market. "While it is clear the mortgage market has worked well for many, we need to build a strong new framework to protect mortgage customers and to ensure that the problems we have seen in the past do not happen again, particularly as the mortgage market recovers."
The London-based regulator also called for imposing affordability tests for mortgages and making lenders "ultimately responsible for assessing a consumer's ability to pay."
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/13/AR2010071300234.html[less]
