FSA Rules Meant to Aid Borrowers
Much talk has been in the news lately about the new Financial Services Authority’s regulations and fast track loans. The regulations call for complete proof of employment income with the burden on lenders to verify the information. While the regulation is not set to be enforced till April of next year, many lenders are following the guidelines now.
The new regulation will make it difficult on new home buyers who are in new jobs or those that planned on having financial aid from parents or other family members. The self employed will have to show years of constant income to be approved. Lenders have argued the new process will add weeks of time before approval of loans. The intention of the FSA is not to make things more difficult, the intention is to keep people from getting into financial problems and lenders from holding so many defaulted loans. The FSA’s research revealed that 46 per cent of household’s either were completely without money or had a shortfall once mortgage payments and living costs were deducted from their income. The requirements for income proof will keep consumers from pushing beyond their financial limits. Lesley Titcomb with the FSA says: "Mortgage companies need to get back to the basics of responsible lending and ensure there’s no repeat of the boom period. Problems must be prevented before they get out of control. "We are determined to protect vulnerable consumers by making sure everyone who takes on a mortgage can afford to pay it back."