subject: Self Declarations Of Earnings For Mortgages And Remortgages Are To Cease. [print this page] Self 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 hairdessers 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 certs 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 certs, 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 abolitiion of self certs. 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..
by: Liz Moir
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