On March 11, 2008 By Karl Deeter In mortgagesWith 1 CommentTags: Alt-A, CDO, CDO's, collatoralised debt obligation, EFT's Missed mortgage payment? bad debt? How a bad debt caused a crisis
This problem has mushroomed because no-one has put fail safes in to stop it! The FSA have simply allowed this to grow over the last 10 years and the measure they are now takig are way TOO LITTLE and WAY TOO LATE.
1. Too many people being given the impression It’s now acceptable to not pay a mortgage (in many cases people have simply been unwilling to change their spend! lifestyle to ensure they retain their biggest asset)in the knowledge they can then go and get another mortgage albeit at a higher rate.
2. Too many unethical or down right fraudulant brokers who see ££££ signs to line their pockets. Who are not doing their job – which is to ADVISE and create an atmosphere to get the borrower BACK on the High Street lenders radar ASAP
3. Niche lenders offering brokers massive commission/proc fees
4. Niche lenders vying with one another to offer the most competitive sub prime deals – where common sense and EFFECTIVE lending policy measures are continually eroded under pressure from the lender sales teams to allow targets to be met.
5. Lenders employing so called Underwriters who have little or no experience.
6. Lenders placing same underwriters in brokers offices where there is inevitable pressure to say YES or make a case for a loan with few questions asked!
If a greater % of brokers had been “struck” off for committing fraud! (Having worked for lenders and brokers I’ve seen it all at first hand.
If borrowers had been prosecuted in tandem for making fraudulant declarations – albeit in many cases encouraged by brokers and to a degree “leaky” lending policies.
Of course this whole MESS is based on MONEY! borrowers want to get hold of it no matter the cost or affordability, brokers are happy to oblige and in many cases get pair VERY well. Lenders saw an opportunity to make a lot of it – and are now paying the price.
I worked for 2 sub prime lenders and brokers – and I simply steer clear of it now unless I’m specifically asked to HELP for if everyone had HELPED at the right time we wouldn’t be in this mess.