2003: Self certified mortgages, those that allow borrowers to verify their own income  without proof, such as payslips, are ‘a timebomb waiting to explode if the economy takes a  turn for the worse’. This from business information company Datamonitor.

2004: In response to a BBC documentary, the Council of Mortgage Lenders plays down any  suggestion that lax lending by some of their members could have distorted the housing  market. This is an argument that will persist. Mortgage brokers also tell the BBC that it  is easy to get round the checks most lenders make on fast-tracks mortgages, a similar  product where lenders reserve the right to ask for proof of income if they choose. This is  the same year that the FSA takes on mortgage regulation.

2005: In a mystery shopping exercise on self-cert mortgages the FSA finds that some  mortgage brokers are not asking sufficient questions to allow them to obtain a full  understanding of their clients’ circumstances, particularly in relation to their level of  personal debt and other commitments.

2007 – 2010: Self certs account for almost half of all new mortgages. They form part of the  irresponsible lending boom and over-extended borrowing binge that fuelled the credit crunch  and drove up house prices to a bubble that is still really yet to collapse. The default  rate on self-cert mortgages is higher than on standard deals. At the same time mortgage  fraud soars.

13 July 2010: FSA outlines proposals to impose affordability tests for all mortgages and  make lenders ultimately responsible for assessing a consumer’s ability to pay. It also says  lenders will requir verification of borrowers’ income in every case to prevent over  inflation of income and to prevent mortgage fraud.

 

‘There is a clear link between financial  overstretch and mortgage arrears and repossessions, and we are determined to protect  vulnerable consumers by making sure that everyone who takes on a mortgage can afford to pay  it back,’ Lesley Titcomb, FSA director responsible for the mortgage market, says, nearly a  decade after the first warnings and after lenders have deserted the self-cert market to  seek profits elsewhere.