The Responsibility of a Self Certification Mortgage

We recently reported the story of a mortgage broker who was fined £10,500 for what was seen as fraudulent self cert mortgages.

The FSA have fined the mortgage broker, following what they have seen as unsatisfactory income checks being carried out on self cert mortgages, which has sparked a debate amongst mortgage brokers and who is really responsible for self cert mortgages.

A mortgage broker will advise you on what you can afford and the risks involved and what will happen if you do not keep up with repayments, so should a mortgage broker really be responsible post-sale? Or should the responsibility be with the lender or firmly with the self cert mortgage applicant?

What is also interesting, and should be considered, is that although subsequent checks may find that the applicant should not really have been awarded a mortgage, they may have been able to keep up with repayments. When applying for a self cert mortgage, you will be expected to sign a declaration stating that you can afford the mortgage, so whose responsibility is making sure that the mortgage is repaid? The lender has to agree the mortgage, so is the broker just the middle man and therefore exempt from any come-back if the mortgage is not successful?

The FSA view it as the responsibility of the mortgage broker as they are the ones who have advised the client when they applied for the loan and that the lender goes by the information supplied by them and therefore rely on to heavily when processing an application.

Many mortgage brokers have spoken out against this, especially as all self cert and fast track mortgages are still authorised by the FSA and not the sole responsibility of the mortgage broker.

The argument will no doubt continue, but what is clear is that when you are applying for a self cert mortgage, and ultimately cannot meet your repayments, it is your home that will suffer.