No proof of income on up to 80% of HBOS mortgages
by Gill Montia
Story link: No proof of income on up to 80% of HBOS mortgages
A former employee of HBOS has claimed that prior to the credit crisis up to 80% of the group’s mortgage applications were accepted without full proof of income.
Michael Bolton was once managing director of BM Solutions, a specialist lending unit of Birmingham Midshires that deals with intermediaries.
Speaking to Money Marketing magazine recently Mr Bolton explained that HBOS had five brands, all offering products without proof of income.
The range included self-cert and buy-to-let mortgages and fast track mortgages, where income was “non-verified”.
According to the former MD, who left BM Solutions to join Oakwood Group in 2005, the lender introduced a new automated system in 2001 that allowed the majority of mortgages to be underwritten at the point of sale.
The more traditional system of full evaluation by an underwriter was therefore largely abandoned.
HBOS was taken over by Lloyds Banking Group in a shotgun marriage during last October’s banking crisis.
Since then, serious allegations about its attitude to risk have come to light with a former head of risk alleging that he was fired for warning that the bank’s pace of growth was dangerous.
In 2008, HBOS posted a loss of £10.8 billion and last month Lloyds Banking Group warned that writedowns on HBOS’s lending portfolio are expected to be 50% higher in 2009 than in 2008.
