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FSA 'plans mortgage product ban'
Wednesday October 14th 2009
A mortgage expert has said a planned ban on self-certification mortgages, where people do not have to prove their income, could cause problems for those homeowners with one of the products as they might not be able to qualify for a mainstream loan.
The self-certification mortgages were particularly popular with self-employed people who were without the luxury of income protection that working for an employer and drawing a salary offers.
Ray Boulger, senior technical manager at mortgage adviser John Charcol, said the new market for these mortgages has dried up, with most lenders axing such deals, so a ban will have little impact on prospective homeowners. However, he is unsure of the consequences for the estimated 500,000 borrowers who still have one of the loans, who, without help, could face difficulties.
The Financial Services Authority is reported to be planning to force in a rule compelling lenders to see proof of income from people taking out home loans, according to the Times newspaper.
It would also put an end to fast track loans, under which lenders tend to rely on credit scoring rather than income verification when assessing borrowers.
Copyright © Press Association 2009
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