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certification remortgages and remortgages have been around for
a long time.
The self
certification of income for self employed remortgages and
mortgages applicants was very common and also very popular.
Self cert.
income means that no official proof of income is required
and that the mortgage applicant simply declares what he earns.
The self
employed stated their own income on a letter head.
Many self
employed applicants such as tradesmen are paid in cash by
the private individuals whose homes they decorate, whose kitchens
they fit, etc.
Other
trades such as hairdressers frequently receive cash in hand
for their work.
They should
all of course have been honest and declared all these cash
payments to the Inland Revenue, but human nature being what
it is this was frequently not what happened.
Some of
these individuals were actually earning the income that they
claimed they were on their self declarations, but being a
little dishonest simply could not prove it officially.
For these
self employed self certifications were alright when applying
for mortgages and remortgages as they had the earning capacity
to support the repayments to the remortgage or mortgage.
The problem
arose was when the mortgage and remortgage applicant lied
about their profit and augmented it way above what they in
fact did earn.
Self certifications
lead to people being unable to meet their mortgage payments
and some fell into mortgage arrears and suffered from the
repossession of their property as a result.
Since
the start of the credit crunch most mortgage lenders of their
own volition have abolished self certification of income without
any legislation advising them or in fact ordering them to
do so.
There
are still two lenders who accept self certifications, but
even they deserve the right, even at the last moment to ask
for further income proof in the form of an accountant's certificate
or even full accounts.
The FSA
desire the complete abolition of self certifications. and
the mortgage lenders must comment on this by the end of January
2010.
Before
the credit crunch the FSA truly believed that the mortgage
industry would regulate itself in a decent and honest way.
This did not happen and it was the rash lending of these very
lenders which precipitated the credit crisis to profit themselves
and to receive big bonuses many financial fat cats cared nothing
about whether those borrowing mortgages and remortgages from
them could afford the repayments.
Before
long this self certification will stop for good.
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