Mortgage Industry Finding Solutions
New regulations devised by the Financial Services Authority (FSA) is calling on the mortgage industry to take responsibility for the poor state of the market, and not revisit history with some of the same mistakes.
For example, self certification loans, historically known as "self cert loans" were popular for one reason. Proof of income was as simple as claiming you made any particular amount. Those days are over because of how many loans were defaulted on. Now, years of income must be proven through tax returns. This is just one type of loan which new regulations will change. Bob Young of Capital Home Loans commented by saying: "I am fully aware of the anger that this paper has generated and understand why brokers in particular may be wondering about their future place in the market, especially when there are figures bandied about that lenders could drop the number of brokers they work with by up to 60 per cent." Young believes that making closer checks to see if a borrower can really afford mortgage is long overdue. The ultimate goal is the FSA proposals is to increase the quality of the lender’s portfolio, in exchange for smaller margins in the short term.