Divorce Leads Former Magistrate to £360k Mortgage Fraud

A former Burnley magistrate has been found guilty of seven counts of mortgage fraud committed against her ex husband whilst going through divorce. Hussain, signed property documents during their acrimonious split, according to the Lancashire Telegraph. She was spared a jail after the resident judge ruled the behaviour was “wholly uncharacteristic”. It appears the Court agreed she had acted totally out of character as she sought to secure the matrimonial home for herself following the breakdown of a 20-year marriage.

Defence lawyers proclaimed she was a “pillar of the community” and as former company director, Hussain was given a 1 year prison sentence, not to be served unless re-convicted within 2 years. She also received 300 hours of community service.

In pronouncing sentence, Judge Cornwall said: “Having achieved so much you find yourself having fallen to the ground from a great height.” He felt it was not in the public interest to award a custodial sentence allowing her to escape jail.

Peter Birkett QC for the Defence advised the Court that the loss of her professional standing and reputation was a “huge punishment” for Hussain.

The case provides further evidence of the myriad of issues, to which lenders and financial providers should be alert, when considering all applicants including those seeking divorce mortgages

Dragons Star Duncan Bannatyne Comes Out

Duncan Bannatyne, serial entrepreneur and Dragons Den panellist comes out on Twitter this morning and offers all his online followers a free night at his Somerset hotel for those who tweet his request for jokes. Capital Fortune, never a company to miss such a challenge are happy to support this endeavour and would ask all you Tweeters to re-tweet this message.

As followers of Duncan and having recently read his book How to be Smart with Your Time, when Duncan comes out with something like this, it is sure to gain international coverage. In the event Capital Fortune was to be the unlikely winner; we would as always raffle the free hotel night at our next charity event! Who knows we may even invite the man himself.

Good Luck Tweeters and Tweet Away

Fraud Enforcement Gets Tough

The Insurance Fraud Enforcement Department (IFED) opened on 3^rd January this month and aims to combat fraudulent claims, a criminal threat estimated to be costing the UK economy £3 billion per year – adding on average £50 to each insurance policy.

Capital Fortune report that the IFED is an operationally independent unit run by the City of London Police and supported by the Association of British Insurers (ABI).Police detectives and financial investigators are already reviewing a number of cases including claims for buildings insurance, following referrals from the insurance industry at the end of 2011.

Nick Starling, the ABI’s director of general insurance, said: “Insurers are determined to protect honest customers by reducing insurance fraud particualtly in contents only insurance. This police unit is an important initiative as insurers intensify their crackdown on insurance fraudsters. The message could not be clearer: now more than ever everyone making a dishonest insurance claim is not only more likely to get caught, but risks getting a criminal record and certainly more expensive and harder to obtain insurance and other financial products in the future.”

November’s lending hits £8.2bn

November High Street Banking data report from the British Banker’s Association (BBA) reveals positive news for the mortgage broker and mortgage market. Mortgage lenders increased its amount gross mortgage lending to £8.2 billion in November, slightly higher than the figure recorded in October. On an annual scale, this figure was 5 per cent higher than in the same period last year (November 2010).

The British Banking association puts this figure down to a slight upturn to increases both house purchase and re-mortgage approvals, which has led to the slightly stronger gross mortgage lending within the general mortgage market and though us as a large London mortgage broker. However the BBA says capital repayments continues at a high level, which therefore has led to net mortgage lending only rising by only £0.3bn in November.

The report illustrated, annual growth of the Bank’s net mortgage lending was 1.4 per cent compared with annual market growth of 0.6 per cent in October for mortgage lending by all lenders. Doubts over the global banking system were reflected by a contraction in the amount of unsecured credit, shrinking by 1.2 per cent over the past year. In the first eleven months of 2011, deposits and savings have increased by £15.8bn compared with £30bn in the same period of 2010. The BBA believed the incentive for holding bank deposits has given way to paying down debt and using cash for household expenditure.

Statistics director at the British Banking Association, David Dooks says the gross lending statistics reported shows banks remain key to household finance provision. He added “But until there are clear signs of improvement in the economy and stability on the international front, households and businesses lack the confidence needed to seek credit for spending or investment. Stocks of bank lending therefore continue to be driven down, as repayments dominate over the absence of any material rise in borrowing demand.”

MPC votes to keep Interest rates at 0.5%

The Bank of England’s Monetary Policy Committee (MPC) voted unanimously to hold the Bank Base rate at 0.5 per cent as well as maintaining the level of quantitative easing (QE) at £275 billion, following October’s decision to inject a further £75 Billion into the economy. This comes as good news to the mortgage broker and the mortgage market as whole, with a number of best value mortgages entering the market with competitive low interest rates.

The Committee agreed that a change in policy was not warranted against the background of continuing weakening in labour market and the magnitude of uncertainties with the international economy. Minutes from the MPC’s December meeting revealed that some committee members thought the outlook for the economy had deteriorated during the month and further money printing would be required in due course.

UK economist at Capital Economics, Vicky Redwood said “December’s UK MPC minutes reiterate the committee’s view that there is little point in trying to fine-tune policy, but nonetheless suggest that the door remains open to more QE before too long.”

The Bank published its quarterly inflationary report last month, in which it forecast the heightened risk of a double-dip recession and paved the way for another spell of QE. Inflation remains well above the 2% target because of the temporary impact of the VAT increase and higher energy and import prices according to the MPC. However the MPC noted that inflation was likely to fall sharply in the first part of 2012 as the impact of those temporary factors faded.

It said “There was greater uncertainty about the pace at which inflation would continue to fall thereafter but the Committee’s central view remained that downward pressure from elevated unemployment are spare capacity would continue to restrain domestically generated inflation.”

Number of Vacant Houses Rises

The number of empty houses in England has risen by nearly 12,000 over the year to stand at 662,105, according to the latest figures from Halifax’s Annually Empty Homes survey, pushing down prices in the worst affected areas.  The figure indicating a 1.8 per cent increase is said to have a “significant impact” on the housing market and in particular opportunities for applicants seeking First time buyer mortgages to enter the mortgage market according to the mortgage lenders report.

The number of long- term empty (vacant for above 6 months) homes in England has however fallen to 292,313 its lowest level since 2008, accounting for about 1.6 per cent of all private homes in England. Stephen Noakes, mortgage director at Halifax said “At a time when first time buyers are still facing numerous obstacles to getting on the ladder, it is imperative we look further as an industry.”

Areas which have the highest proportions of empty houses had their prices pushed down as a result with houses in the ten most affected districts being 15 per cent (£23,493) below the regional average. The North West was reported to have the highest number of empty properties at 63,696 accounting for nearly a quarter of the total across England.

This figure is in contrast with the southern regions in England, which have a below average number of long term empty private homes, with a low of 1% in the South East, which is encouraging news to us as a London Mortgage Broker. Properties in areas such as Pendle in the North West were trading below the average house price in the region at 29 per cent (£38,831), said to be as a result of the 4.8 per cent total of long-term empty homes there.

Martin Ellis, housing economist at Halifax said “Whilst it is encouraging that the number of private homes in England that have been empty for at least six months has declined over the last few years it is still at a high level particularly in the context of the country’s ongoing housing shortage.” He adds that in some areas, the number of empty homes is “more than double the national average.”

FSA Unveils Mortgage Market Shake Up

The Trade body’s latest Mortgage Market Review has unveiled a wide ranging shake up for the mortgage broker and mortgage market yesterday. The new proposals released as a deterrent to the return to irresponsible lending seen in the previous boom and to stop borrowers taking out mortgage deals which turn out to be unaffordable in the long term.

The Financial Services Authority (FSA) said that while current low interest rates have aided some borrowers, there are “real dangers” that problems are being stored away for the future, with home owners unable to meet repayments when rates start to go up. Its Mortgage Market Review suggested loans should only be progressed where there is reasonable expectation that the customers can repay the loan without relying on uncertain future house price rises.

The report added that income of applicants would have to be verified in every application processed as well as mortgage lenders placing greater attention to regular expenses like childcare, recreation, clothing costs and household bills with could affect affordability. The new proposals will bring about the end of “fast-tracked” mortgages, an accelerated approval process under which verification of income may not be asked for at the lender’s discretion.

Explaining the reasons for changes the report said “While risky, lower-quality lending may currently be restricted, there is a real danger that, as funding comes back into the market and lending starts to pick up again, there will be increasing pressure on firms to consider higher-risk lending and focus more on market share than maintaining lending standards.”

The Financial Services Authority said mortgage lenders will be able to provide new mortgages to some existing customers even where they do not meet new affordability requirements however also expressed concern about borrowers who are “trapped” into paying a high interest rate by their current lender because they are unable to take advantages of the best value mortgages available elsewhere.

FSA views vary over lending to Over 50s

The Financial Services Authority (FSA) warns over lending to over 50’s and plans to implement new plans to stop irresponsible lending. The regulators Mortgage Market Review which was published today illustrated that more than half (53 per cent) of borrowers aged over 50 have current mortgages stretching past the age of 65. The MMR also revealed, an even larger proportion (65 per cent) of those over 50 hoped to borrow into their retirement.

Many of those over 50 planned to downsize to smaller properties however rather than repaying their mortgages, many planned to increase their borrowing to sustain their quality of life in retirement and help the struggling younger generation get on the property ladder.

According to the report, the Citizens Advice Bureau had reported seeing mortgage lenders carrying out poor lending decisions to older proportion of the population, including a recently retired man who had fallen into arrears and therefore led to the lender applying for passion in the courts despite been granted a £135,000 mortgage 18 months earlier with the lender being fully aware of his age and approaching retirement.

The Financial services authority said “We recognise that retirement age is becoming increasingly fluid, as state pension ages are put back. We also recognise that it is not possible to accurately predict retirement income, particularly where consumers are many years away from retirement.”

“However the proportion of consumer who work beyond state pension age is not high, with, for example, 11% of men aged 65-69 working full time, falling to 1.4 per cent aged 70 or over.”

Following analysis of the whole sector, the FSA plans to introduce new proposals, which are intended to block any return to the risky mortgage lending seen at the height of the last boom, prior to the financial crises. Today’s news shows the growing difficulty which individuals seeking mortgages for pensioners face in the current climate.

The report added “The degree of scrutiny that the lender applies may vary according to the period of time remaining to state pension age. The closer it is, more robust the evidence of the level of income in retirement should be.”

Lending Forecasts Downgraded for 2011 and 2012

Latest projection figures from the Council Of Mortgage Lenders reveal a more pessimistic outlook for the mortgage broker and mortgage market than previously expected, the trade body has downgraded its forecasts for gross mortgage lending for both this year and next. The CMLs new forecasts for lending in 2011 has now been reduced to £138bn from the £140bn previously predicted.

For 2012, the trade body previously forecasted lending of £140bn has now also been slashed to £133bn, representing the weaker economic backdrop which now seems likely. The CML expects net lending to total £9bn in 2011 and £5bn in 2012. The weaker economic backdrop is also said to cause a fall in the number of housing transactions carried out next year to 825,000 compared to the slightly more positive figures previously predict of 825,000.

The CML continues to expect the current economic uncertainty to inflict negative effects into the housing market with a rise of 21.6 per cent in the number of repossessions next year. It is forecasting 45,000 repossessions in 2012, up from an estimated 37,000 this year but still fewer than the 2009 figure, due to the increased  pressures on the household sector to unwind with improvements in mortgage arrears and repossessions experienced over the past two years.

Chief economist at CML, Bob Pannell said “The weak state of the wider economy and household finances creates a challenging and highly uncertain backdrop for the housing and mortgage markets.

“Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture, for both mortgage lending and property transactions, at least until real incomes show signs of stabilising as inflationary pressures recede.”

He adds to say mortgage lenders will face challenging conditions in the wholesale funding market as a knock on effect of sovereign debt concerns and this could have negative effects on the coat and availability of UK residential mortgages through some or all of next year.

Mortgage product availability grows in 2011

The number of mortgage products obtainable through the mortgage broker and intermediaries has rose significantly over the past 12 months, according to data from Mortgage Brain’s Monthly Product Analysis this month. Mortgage product availability rose by 87 per cent over the last year, boosting the total number of mortgage products on its sourcing system to 14,052 from the 7,515 recorded last year.

The substantial rise in the range of products available in the mortgage market was a result of the ten consecutive monthly increases throughout 2011 with increased number of best value mortgages entering the market through us as a large London mortgage broker. October and November saw slight declines however the overall yearly performance for 2011 has been the best in over three years with product availability falling three times in 2010 and five times in 2009.

Mortgage Brains Monthly Product analysis data revealed variable rate products were the best overall performers in 2011 despite representing the least number of mortgage products out of the three main product types in the mortgage market. November illustrated a third successive increase by 3 per cent in the product type, which in turn contributed to a massive 120 per cent increase in product availability during the past 12 months. The current figure as of 5th December 2011 now includes 2,329 variable rate products in contrast to the 1,058 that were listed this time last year.

Fixed rate products, which remain the most popular product type, accounting for 8,294 of all available products within the market, displaying a rise of 72 per cent in relation to the same period last year, following the 3,481 products introduced since December 2010. Tracker products saw little movements last month however overall product availability rose by 108 per cent also illustrating positive progress of the long term performance of this product type.

Mark Lofthouse, CEO of Mortgage Brain said “Our long term analysis clearly illustrates that the UK intermediary mortgage market has shown a real and significant improvement in terms of product choice and availability over the past 12 months.”

He added “There are now over 6,500 new products available and with strong rises being seen across all of the main product types, intermediaries now have more opportunities to source and advice on a greater variety of products.”