Fear of being sued makes lenders toughen criteria
Mortgages lenders are tightening their qualification criteria on the back of concerns about being sued, according to mortgage industry trade bodies.
The Council of Mortgage Lenders and the Intermediary Mortgage Lenders Association (IMLA) are warning that proposals in the FSA's Mortgage Market Review could pave the way for lenders to be sued if mortgage repayments methods are not suitable.
John Heron, chairman of IMLA, says that lenders are expected to check the appropriateness of a particular mortgage repayment vehicle and it raises questions about where the responsibility lies if it fails.
“If it is going to be judged in retrospect, will lenders have been expected to assess the robustness of the repayment vehicle according to information at the time or future considerations?
“You can understand why lenders are likely to address this by constraining their criteria.â€
February 27, 2012
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