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Mortgage brokers offer unmanageable home loans

27/11/2007

Mortgage brokers have been accused of selling mortgages to their customers who can not afford the mortgage and repay on time. An investigation by the Financial Services Authority –FSA found that applicants brought forward false earning figures to obtain an unaffordable loan.

Watchdog stated that the investigation exposed senior management not taking notice to adequately check and control their firms’ execution to guarantee they were treating clients reasonably.

All failings emerged after the 4th review throughout 345 mortgage brokers, which were operating in both the sub-prime and prime markets between June and September.

FSA adequate, Stephen Bland said during the reviews they witnessed a number of brokers who were meeting the mandatory standards and they were being diluted by the carelessness or wilful non-compliance of people. Nevertheless there are still an intolerable number of companies unwilling to change, which is damaging the rest of the industry.

The Council of Mortgage Lenders (CML) have welcomed the reassess but confirmed it needed to be as transparent and unequivocal as possible. Michael Coogan from CML added saying that the findings are a cautionary to brokers who are behind the regularity.

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