Tuesday, November 27, 2007

The easy way to an unaffordable mortgage

During the last ten years, as Brown has continued to remind us, we;ve had low interest rates. As a result we've seen lots more people leaping on to the housing ladder in order to take advantage. In the case of Northern Rock and some others we also saw irresponsible lending to people who should never have been given mortgages.

How did these people get mortgages? Well for a start there is self-certification where you just say "I promise that I earn this much" and if the banks is stupid they lend you money and then probably repossess at some later date. However, I've just learnt about something else that has probably helped out a bit for those not self-certing.

A website that will create "genuine" payslips for you (at a price) with whatever salary you fancy. They can also provide you with a "copy" of your P60. Just tell them how much you want earn and bingo!

Now you might think this is illegal, but as far as I can tell it's only fraud if you actually use them for such purposes. Mind you, given the current mess that HMRC seems to be I bet you could probably get away with submitting fake P60's to them and they wouldn't notice.

Some other sites include Office Slaves, Payslips 4 You, and Wage Slips 4 U. The last one has a brilliant line that says "whilst we will NEVER condone any form of fraud; we pride ourselves on adopting a pragmatic view in preparing replacement wage slips / P60’s." So it's not about fraud, it's about pragmatism. Hmmmm. How long before we have our own credit crunch?


Howard said...
27 Nov 2007 04:06:00  

Well done! I hope that this post is given wide circulation and gets picked up by the wider press. If proven, and if this has been used, some people will be having a not so Merry Christmas!

Alex said...
27 Nov 2007 09:18:00  

If people want to be that stupid...

...my local shop sells knives. Some people are so stupid that they buy knives and then stab themselves in the eye with them. Do I care? No.

So what am I missing?

Reactionary Snob said...
27 Nov 2007 13:31:00  

It's almost certainly not illegal. You will be able to get around this by saying that your payslip is a novelty and, as you say, only becomes illegal when used in a fraudulent manner.


27 Nov 2007 13:33:00  

But let's cast the net much wider: what have the Government and the banks faked, to create, lend, borrow and spend as much money as they have? Surely what's sauce for the goose is sauce for the gander.

Anonymous said...
27 Nov 2007 14:53:00  

Whilst there are always people who will abuse any given situation or service, there is however a genuine requirement for a printed payslips service, as a lot of small business only provide handwritten pay packets, like us. These are not generally accepted by Mortgage companies, as we found out when one of our staff wished to purchase a property, and we used just such a service, and enabled him to complete the purchase.

Small Business Owner

flashgordonnz said...
27 Nov 2007 16:29:00  

People have been shot for holding novelty guns. I'm not sureI'd want one of these novelty P60's in my possession. And gbp38! Crikey.

adam said...
27 Nov 2007 16:33:00  

The UK doesn't need a 'credit crunch'; the US will hurt everyone anyhow.

The situation here has been rather odd, a bit like it was in the UK before the negative equity disaster of the early 90s. It's probably made worse here because realtors' (estate agents') costs can be 5-6% of the value of the house (when I sold my place in London, I think that I paid 1.5% or 2%). You need a 5-6% increase in value just to break even; less, and you're up against it. The expansion in house prices also meant that the stable mortgages that most Americans have, backed by Fannie Mae of Freddie Mac (and which have stricter controls on your lendability) topped out too early to let people buy a house, so even creditworthy and relatively sensible people with decent money could get into trouble navigating the (for Americans) unfamiliar business of adjustable rates.

In some places here, there is fiscal carnage going on. The UK, whilst its credit habits have certainly followed the general trend set by the US, isn't there yet, I don't think. The UK has already had some mis-selling scandals and a chastening experience before. For many Americans, this seems to be a heartbreaking surprise, that house prices can go dooooown as well as up, not to mention the dangers of increasing interest rates. Additionally, the demand for these mortgages, sliced and diced into financial products with an unwarranted 'AAA' grade stamped on them, was huge, driven by world demand. One wonders if that was a fair part of the apparent willingness of brokers and immediate lenders to effectively abet fraudulent applications, at least in some cases.

Also, in other news, I believe that you owe us a summary post on our blog. Eh, eh?

Andy said...
27 Nov 2007 18:39:00  

"In the case of Northern Rock and some others we also saw irresponsible lending to people who should never have been given mortgages."

This just isn't true. I like your blog but do you understand what is at the bottom of Northern Rock's problems - lack of access to short term credit in the money markets rather than lending money to unsuitable cases. Northern Rock have an enviable credit rating for their mortgage book. Its all about liquidity. Geddit?

dizzy said...
27 Nov 2007 19:05:00  

This just isn't true.

Errr yes it is. What isn;t true is your interpretation of what I said being about the current Northern Rock problems. I said in full:

"During the last ten years, as Brown has continued to remind us, we;ve had low interest rates. As a result we've seen lots more people leaping on to the housing ladder in order to take advantage. In the case of Northern Rock and some others we also saw irresponsible lending to people who should never have been given mortgages."

This has NOTHING to do with the problems of liquidity of Northern ROck. The criticism is of something else about Northern Rock. You have simply conflated my comment to the liquidity issue because you've seen the words "Northern Rock" and assumed I mentioned it because of the liquidity issue. I did not. I mentioned it because it has played a massive role in increasing mortgages for people who cannot afford them.

I first heard of Northern Rock just over four years ago when I was a leaseholder of a flat conversion and the freeholder of property was a self-certed Northern Rock customer who was facing repossession because they should never have been given the loan. I spoke to a number of financial advisors at the time and was told they were a bank who gave money to literally anyone.

So yes, I "geddit" about liquidity, but it is irrelevant because this post is about "Northern Rock and some others" that have been "lending to people who should never have been given mortgages." Separate issue entirely. Geddit?

Andy said...
28 Nov 2007 08:55:00  

I get what you are saying but if you were to pull up a league table of sub-prime lenders, Northern Rock would be way down the bottom. They are relatively well respected as holding good collateral compared to many high street names.

mike power said...
28 Nov 2007 13:56:00  

As any reader of Exchaneg and Mart could tell you 'replacement' payslips and P60s have been available for donkey's years (as has self-certification). But why would anyone want to send one to HMRC anyway? A P60 is a record of PAYE deductions and the taxman has already got a copy, sent by the employer. As we all know, false statements on a mortgage application can lead to serious trouble. Look what happened to Mandy Mandelson..oh, hang on, scrap that last bit...

dizzy said...
28 Nov 2007 14:01:00  

I'm not so sure self-cert mortagges are that old. And you might be sending a P60 if you are filing yourself or requested too perhaps?

AntiCitizenOne said...
30 Nov 2007 10:26:00  

Those of us watching the crash in shelter affordability call them "liar loans"

Anonymous said...
9 Feb 2008 12:50:00  

If any person uses this form of verification of income for the purpose, for example, of obtaining a mortgage and can afford the payments, then there is no problem. If they cannot afford the payments then the Mortgage company end up with the property,so who is hurt here?

Anonymous said...
25 Jun 2008 20:31:00  

How about the person who holds the mortgage. I am a broker...and i do not sell mortgages mto anyone other than those who can afford it. But I have just left a client that has a mortgage that is 2x as high as he can afford. He was in a council house and was called upon by a mobile broker who promised he could get a mortgage for the person. He was quite right, the person did get a mortgage for him. The mortgage is for £93,000 but after chatting to him he can only afford a mortgage of £50,000. The broker submitted the application and documentation to state that the client could afford it. He provided payslips to show that the clients was earnming in excess of £25,000. This person is now about to be repossessed, just so that the mobile broker can put an extra £500 in his pocket....it just goes to show that it is not just you in control of who get conned into thinking you have a bigger wage. sales people can do it too.....sayinmg that, this client must have signed to say he waas happy with his mortgage, he must have been at least 50% complicit with it...but now he is paying the price


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