| FSA warns consumers against overstating their incomes |
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LONDON - The Financial Services Authority (FSA) has warned homeowners not to cover up their exact income while applying for a self-certification mortgage. The financial regulator said that homeowners could be labeled as criminals if they lie about their income.
The FSA said that overstating income would lead to a fraudster charge on the consumer as well as saddle them with a loan than cannot be paid out of their actual salary. This warning comes as the FSA found that several mortgage brokers were in collusion with consumers as they lied about their income.
Earlier this month, the financial regulator found that 3 out of 41 firms surveyed were ready to discuss how to overstate the consumers' income. Lenders usually lend three times of what a client earns by the way of his salary. The practice of overstating the incomes makes it easier for the consumers to obtain bigger and better home loans. But when it is payback time, the client is saddled with huge repayments, which cannot be afforded on his/her actual salary.
The FSA wants to make sure that consumers are aware of the legalities involved in lying about their incomes and also warn consumers to be vigilant about brokers who are willing to help them overstate their incomes.
The regulator is also asking consumers to reveal all about their financial state of affairs so that a correct assessment regarding their affordability can be made. The FSA's website www.mortgageslaidbare.info focuses on mortgages and explains the problems that a consumer will have to face if they choose to overstate their incomes.
Posted
on : Fri, 02 Dec 2005 06:45 GMT | Mortgages News
By : Pippa Fielding
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