When I was a mortgage broker I was close to the problem, I was able to get mortgages for 98% of everyone who walked through the door , ex bankrupt , self employees, 8 times income , self cert , anything , the banks would help by manipulating the process to make sure everything went through .
I am not an economist but why if I could see that this was a process that would eventually cause disaster was it not stopped by the powers that be , FSA turned a blind eye and they have the full power of govt to stop what they want , I was doing mortgages were it came to light the client was fraudulent , I informed the lender they still completed the mortgage , client got no grief whatsoever the police could not be arsed total mortgage fraud being ignored . 6 months before the credit crunch hit we were up to 95% self cert if you had a pulse you got a mortgage.
The biggest UK player for adverse mortgages was the Lehman brothers, they owned 75% of the adverse lenders here, every 100-200 million of mortgages sold were securitized and sold off to bigger investment banks, Goldman sachs etc etc , all looked good high interest rates big profit margins , all lovely jubilee on the surface, but property prices were getting out of control , I had people buying garden sheds just to own another property . It is a common fact people with bad credit don’t change their spots they are used to not paying so the slightest problem they stop paying. The moor corrupt brokers were doing 200k mortgages to unemployed people fucking accident waiting to happen.
Abbey national would pass any mortgage as long as they took insurance, great underwriting that isn’t it , banks were lending on any type of dogs hit property towards the end high rise , prefab everything , ten years of this , combined with credit cards so easy to get it was a joke , 0% balance transfers etc etc I had clients who were part time cleaners with £125k credit limits explain that one .
Anyway shit hit the fan all in one go everyone stops paying as it has reached the limit, an absolutely obvious problem brewing for years, but allowed by the authorities to continue total bollocks. Suddenly 100’s of billions of pounds went bad, and the credit system fell off a cliff. No more securitisation fuck that the investment banks were not interested overnight in any more mortgage securities. The old way of lending had been replaced largely by securitisation, banks used to lend money they had on deposit etc but were lending money they did not have. Bang Lehman brothers gone in heart beat, I came back from Tenerife and within 3 months the adverse mortgage business was finished , the cleaner lenders were fucked by self cert and to high income multiples and fucking piss poor underwriting .
So we see meltdown , total meltdown if the govts did not bail out the banks we would have seen UK possible bankrupted , the bailout has created the false economy for last 2 years , but the problem is bubbling , lenders are not going to go back to lending like they did before for a f...ing long time , the housing market as not dropped due to this false economy people holding prices but not selling , the the second kick comes the property market is going to drop like a sack it has to get back to 3.5 times the average income as this is what’s safe for banks to lend as it had always been in the past average income in uk 30k so 30k times 3.5 times £105k , avg property price is still £175k so something is wrong , I know a lot of mortgage brokers and they are fucked the banks will only lend to the perfect candidate , so something got to give a possible 75k drop in price , fucking mass repossession and mass shortfall .
Im a b2b telecoms broker I see all types of business and mostly all of them are in trouble to some extent so were the coming out of recession bit from, if we get the second kick the injured ones are fucked.
They are now setting up govt agencies like SOCA to combat fraud, the FSA is going to renamed and there out there fining people 100s of k to fucking lat don’t you think .
Luckily telecoms works as it is a necessity for business and if you are saving clients money it makes it easier as I don’t have to take money of anyone , still hard because a lot of business are depressed , i ve had guys sit and cry in front of me when i ve been to see them etc etc .
Simmon Dunn