FSA: Large lenders oppose “liar loan” ban

According to Reuters UK:

Large lenders have opposed plans by the financial regulator to scrap so-called “liar loans” for homebuyers, warning the watchdog a blanket ban would hurt the self-employed and prompt a rise in false paperwork.

The Financial Services Authority (FSA) had said in October it planned to force mortgage lenders to check the income of all borrowers, effectively banning self-certified mortgages.

Such loans became known as liar loans after they were widely abused during the housing bubble and were blamed for helping fuel bad debt problems at the heart of the financial crisis.

But the watchdog said in a feedback statement Tuesday that unnamed “large lenders” had opposed the proposal.

“Objections were raised mainly by large lenders, who argued that the proposals would impact negatively on the self-employed, which will trigger an increased usage of fraudulent income documentation,” the watchdog said, adding some said it would also increase administrative costs.

Yeah. I guest they are called liar loan for a reason. No lessons learned then. The game continues.

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