Think you can trust lenders, mortgage advisors, surveyors and solicitors? Think Again!

publication date: Feb 15, 2010
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Think you can trust lenders, mortgage advisors, surveyors and solicitors? Think Again!

We constantly hear about horrendous things that estate agents and letting agents get up to, but the property bubble and resulting credit crunch has shown that the finance, legal and surveying professions I once took for granted I could trust, isn’t as squeaky clean as it should be.

Now, don’t get me wrong, I believe the majority of people and companies in the property and finance industry CAN be trusted. It’s just that we all need to do our due diligence as property is such as big expense and a big part of our daily lives, at the end of the day it’s our haven we come home to, the place we can be ourselves and relax.

So what’s happened since the credit crunch to these professions?
What about mortgage advisors, surveyors and legal companies that didn’t play by the rules, have any been punished? Are you in a difficult position and feel that you were misled or miss sold to?

Well the answer is there are a lot of companies and individuals that have been closed down, prosecuted and fined. It’s just that it doesn’t really make the headlines and when it doesn’t, no-one really learns how incredibly important it is to be careful who you trust when buying, selling or investing in property.

Since the credit crunch hit, according to the FSA there are alot of lenders and mortgage brokers that have been fined for poor practice. They state that “In the last three years we have banned 60 brokers and levied fines totalling more than £1 million in relation to mortgage fraud.  We will continue to tackle mortgage fraud and perpetrators will find themselves facing bans and higher fines.” 

And one of their biggest fines appear to be GMAC: “The Financial Services Authority (FSA) has today announced it has fined GMAC RFC Limited (GMAC-RFC) £2.8million for failing to treat customers fairly and secured redress of up to £7.7million (plus interest) for over 46,000 mortgage customers.”

To find out more about companies that have been fined/banned visit the Financial Services Authority website and search for lenders, mortgage brokers who have been fined or banned.

Examples of companies that The Financial Services Authority (FSA) has fined or banned :-

“Fined Andrew Jeffreys (trading as Chepstow Financial Services) £10,500 for failures in the sales process he used for self certification mortgages.”

“Fined Select Mortgage Services (Select) £10,500 for poor financial promotions, inadequate sales processes and inappropriate systems and controls to manage its business.”

“Banned a mortgage broker and fined her £129,000 after finding she had been involved in numerous fraudulent mortgage applications. This is the first time the FSA has both banned and fined a mortgage broker for mortgage fraud.”

“Banned and fined North East based mortgage broker Robin Knox after finding he had exposed about 500 of his firm’s customers to the risk of receiving unsuitable advice.”

“Banned Newcastle Home Loans (NHL), a mortgage broker based in Newcastle, from carrying out regulated mortgage activities."

BUT this article isn’t here to scare you off using lenders, mortgage brokers and advisors, quite the opposite, it’s about making sure if you are buying or investing in a property that you check out the companies carefully and are really careful about the ones that you choose. Read our tips on Choosing a Mortgage Company

Want to make sure you choose the right company to work with?

Legal Companies
This is probably the biggest surprise as I had genuinely thought that solicitors are people that we can turn to who look after our interests, not anyone elses. The big lesson is that they are as susceptible to doing wrong as any other industry, oddly though they don’t get published in any way as much detail than or with as much fanfare as the finance industry.

However, here’s the evidence that not all legal companies look after your interests perhaps as well as they should do.  City Wire reports that the “Legal regulator [Solicitors Regulation Authority (SRA)] investigates 60 solicitors as mortgage fraud inquiry widens”. Also read more about how legal companies have broken the rules:

Solicitor Struck Off for £350,000 help to help a crooked property developer

Solicitor Vanishes after £7mn mortgage scam

So what happens, how do the solicitors take part in mortgage fraud? Apparently there are a variety of ways, for example, working with a mortgage broker that charges excessive fees and shares them with the solicitor, through to applying falsely for funds. 

How do you find a good solicitor? If you are buying or selling (including investing or re-mortgaging) never use a solicitor recommended by a company that is selling to you unless you have checked their advice with an independent legal company that is NOT connected with the deal. So if you work with a property investment company, don’t just use their recommended legal company. If you are buying a new build, check out any legal advice you get from their solicitor if you use them – make sure the contract isn’t too weighted in their favour.

Need a legal company? Read our information on Choosing a Solicitor

Surveyors are also in trouble!
It isn’t a big surprise after the problems that came out of the fall of Inside Track where city centre flats were apparently overvalued by developers, lenders and surveyors that now they too are under attack.

Slightly more scarily, it’s not necessarily individuals that are taking them to court, but, according to The Times, it’s the lenders that are chasing them.

Lenders threaten to sue for negligence over home repossessions

This news however is no reason NOT to use a reputable surveyor, it just means that you need to make sure you choose the right one and if you are investing, don’t rely on the surveyors report if they have been paid for by a property investment company – make sure you get your own done.

Need a surveyor? Read our information on Choosing a Surveyor.

If you need independent advice on choosing professional companies to buy or sell your property, then email or tel 0845 838 1763 for help.

Need help with a property problem? Have a question? Why not call Designs on Property on 07585 897128 or Contact Us via email.
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