The mortgage minefield

Published in Economia

Life needs to be made easier for accountants who provide references on their clients’ financial status, says Sally Percy

There’s a saying that goes: “If you think nobody cares whether you’re alive or dead, try missing a couple of mortgage payments.” As we have learned to our cost over the past five years, missing mortgage payments can lead to a lot of problems – not only for the borrowers who are struggling to pay their bills, but for the entire global banking system.

Given that the roots of the !inancial crisis lie in the securitisation of sub-prime mortgages, it is hardly surprising that reforming the mortgage lending industry has been a priority for both politicians and regulators. Last year the Financial Services Authority (FSA) tightened rules to prevent irresponsible lending and borrowers taking out loans that they can’t afford to repay. Under the new measures, which come into effect in April 2014, lenders must consider borrowers’ income and expenditure, while interest-only mortgages will only be offered to people who have a credible repayment plan.

But it’s likely the clampdown won’t end here. Accountants will be called on to provide more information, particularly in the case of the self-employed, as the FSA (soon to become the Financial Conduct Authority) tightens up existing rules.

Of course, accountants already provide mortgage references on behalf of their clients, but as the FSA continues to put pressure on lenders, they will almost certainly see an increase in the number of mortgage reference requests that they get.

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