exaggerating your income to get a mortgage

Yes, they could face criminal prosecution. Unlikely, if they are keeping up payments. However, there was a case a few years ago (Hells Angels, IIRC) where initially the Building Society said it would do nothing as the payments were not in arrears, but did finally cave in after public opinion forced it to cancel the mortgage.

In message , dave blacker writes

There would be an offence of "obtaining by deception" but I doubt the mortgagee would take any action as long as the repayments were being met. When the mortgagor can no longer keep up the repayments, the mortgagee will take possession of the property. The reason for the "X times income" rule is so that borrowers don't over stretch themselves - if they borrow too much, they can't afford to repay it so they lose their homes.

This originally arose from a complaint about noise from the Angels' parties. Yes, their mortgage was fraudulent and they were about to be repossessed, but they appealed to other members of their organisation around the world and the money was quickly found to pay of the building society - much to the chagrin of the neighbours who'd originally complained.

Anyway, back to the original point. The borrower who's discovered to have lied about his income on a mortgage application will generally face an immediate demand for repayment of the whole outstanding sum. Criminal proceedings are down to the policy of the individual lender.

"Mike" wrote

But surely, if 3-3.5 x income is "OK" when interest rates are in double digits (eg 10-15 years ago), then 4-5 x (or more) should be OK when interest rates are half as much - below 6% - and fixed rate deals are available for as long as 10 years??

Thanks for the clarification. I had forgotten about the "whip round" - although I knew that the locals were not happy with the outcome. I was living in Windsor a the time, and this happened nearby.

Surely though anyone charged with obtaining a pecuniary advantage by deception in such circumstances could argue that since an employee of the bank they are alleged to have deceived told them to exaggerate their income, they have not committed any deception. After all, if the bank told them to lie on the form, the bank knows full well that the information given on the form may be incorrect. If the bank knows that the information on the form is incorrect (which, through its employee, it does) and nonetheless goes ahead with the mortgage arrangements, there has been no deception to induce the bank to proceed with those arrangements, as they knew already that the details were, or may be, false.

IANAL

Its a beautiful argument, but I still cant see it working ;o)

In message , Tim writes

I don't know what the current multiplier is but it's always something of a gamble. With low interest rates, certainly the multiplier can be larger but what happens when interest rates go up? The fixed rate deals offer some stability so I would expect the multiplier to be a bit higher. Nevertheless, exceeding that limit would still be risky.

In message , mja writes

Nice argument. I suppose it *could* go that way but OTOH it could be seen as a conspiracy between the applicant and the employee. This is probably academic anyway - why should the BS/Bank want to prosecute if the repayments are being made?

That is unlikely to save the applicant from a criminal charge, but would implicate the employee also.

It is unlikely that the mortgage underwriter knows that the applicant has falsified his/her income.

themselves -

Whilst I agree with your second statement, I would suggest that it would be difficult to prove the requsite fault element against a defendant who had been invited by a representative of his bank to do the act which is the subject of the charge.

But it would be needed to be shown that someone more senior was aware of what was happening, IMHO.

Well I don't see it that way. It's a prima facie case of conspiracy and may well end up getting the customer into even more trouble.

Paul Burridge wrote in news: snipped-for-privacy@4ax.com:

OTOH, unless the account goes into arrears, it's a little unlikely that the mortgage lender would ever be any the wiser....

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Back in the halcyon days of the 1960s, the BS rule was that your monthly payments should not exceed 25% of your gross income. There was tax relief, of course.

That still seems to me to be a sensible rating, as it allows quite a bit of headroom should rates rise. Further, for those on the early rungs of the promotion ladder, they should be able to count on annual increments until they reach the full scale points.

You have to consider what they obtained by deception, in monetary terms absolutely nothing as they will have to repay about 3 times what they borrowed. All the bank cares about is making money, and as the borrowers probably had to pay an insurance fee (mortage indemnity guarantee? mig?) to ensure the lender does not lose out, then I cannot see why the lender should care about the financial status of the lender. You have to remember you could loose your job the next day and that noone can guarantee their income over the next 25 years, indeed 25 weeks in most cases.

In the 'old days' people would eventually be bailed out by inflation rates of with wage inflation at 10% in 3 - 4 years you mortgage will be much more manageable, however with wage inflation at 2-3% you will be paying a huge proportion of your earning on mortgage payments for most of the life of the mortgage.

themselves -

Very true - which is why the crash could be much worse this time.

Legally, they have obtained "a pecuniary advantage" by deception - i.e. the loan.

Although I have not read a MIG policy recently, I doubt it covers the dishonesty of the lender.