What if bank adds 60k to borrowers salary on loan application?

[usernameinuse]

A lender owes no duty of care to a borrower.

Then why does it claim, according to their own publicity, to look for"proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future." As said before they advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

And why did the bank seemingly fraudulently alter the loan report and valuation, upon which the loan agreement was based?

 

[RedOnion]

As said before they advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

Since you've repeated this several times.
I wouldn't take much comfort relying on a phrase EBS used in 2017. 10 years after your friend took out her mortgage.

 

[Sarenco]

Then why does it claim, according to their own publicity, to look for"proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future." As said before they advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

Again, for the umpteenth time, a bank will look for that documentation for its own benefit - not for the benefit of the borrower.

And why did the bank seemingly fraudulently alter the loan report and valuation, upon which the loan agreement was based?

You keep making that allegation but a bank obviously cannot defraud itself.

I'm starting to wonder if the real problem here is that your friend cannot demonstrate that she did not collude with the bank official to fraudulently obtain the loan and therefore would not be entitled to a PIA. Is that the real concern?

 

[Leo]

Then why does it claim, according to their own publicity, to look for"proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future." As said before they advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

As stated a number of times by a number of people...they seek proof of earnings to protect their interest, they want to know that they'll get their money back. They didn't care back then or now how many holidays you get to go on, or how nice a car you drive, they're just interested in getting their money back and earning interest in the process.

And why did the bank seemingly fraudulently alter the loan report and valuation, upon which the loan agreement was based?

To allow your friend get the mortgage she asked for.

If you wish to address Sarenco's question above, please do so. Otherwise I see little point in continuing this cycle of you asking the same questions over and over, getting the same answers only to go on and repeat them again as you don not seem to like the answers.

 

[LDFerguson]

Because oldish 3 bedroom houses in a nice area was what she was quite happy to settle for, buy, and live in. And oldish 3 bedroom houses were not costing a million in rural areas , even in 2007.

You've said that the first mortgage application she made offered her a far lower amount. Evidently this wasn't enough for her. So she went off to a different bank and applied again. Because she wanted to buy for over half a million in a rural area in Ireland.

Great, I hope you gave better advice that the banker who advised the nurse. However you did not answer the question. "Did you ever see any mortgages being sold at say 10 or 15 times the borrowers salary, and if so, did the banker who sold them ever expect them to be repaid, or did he know it would end in tears for the borrower? Decades of tears?"

I did answer the question. In my capacity as broker, I was the one doing the "selling". So no - I would not have come across salary multiples of 10 - 15 times the borrower's salary. As I said, not the sort of business that would be of interest to me.

 

[24601]

Then why does it claim, according to their own publicity, to look for"proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future." As said before they advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

Out of curiosity, what do you think should happen? Do you think the bank should forgive the debt in part or in its entirety even though your friend borrowed the money? If they were willing to take the house back voluntarily and forgive the capital, would this be "fair" in your eyes?

 

[usernameinuse]

You've said that the first mortgage application she made offered her a far lower amount. Evidently this wasn't enough for her. So she went off to a different bank and applied again. Because she wanted to buy for over half a million in a rural area in Ireland.

I did not say it was over half a million. I did say her own bank refused her the loan for the 3 bedroom house and would not lend her anything like the amount she would have needed to buy it.

You keep making that allegation but a bank obviously cannot defraud itself.

The banker defrauded those higher up in the bank,that is the difference. The borrower submitted the correct P60, payslips etc. Whoever read the loan report assumed she was on a salary over 60k more than she really was.

Part of my job was arranging mortgages and giving advice.

If you were arranging a mortgage and it was obvious to you that the borrower was borrowing 10 to 15 times their salary, would you have falsified the loan report by adding over 60k to the borrowers salary, so they could borrow the money? If you did that, would you consider that a criminal act?

I would not have come across salary multiples of 10 - 15 times the borrower's salary.

Well seeing as you worked in the mortgage industry, clearly the banker did something very abnormal in this loan so, to say the least.

As stated a number of times by a number of people...they seek proof of earnings to protect their interest, they want to know that they'll get their money back. They didn't care back then or now how many holidays you get to go on, or how nice a car you drive, they're just interested in getting their money back and earning interest in the process.

They sought proof of earnings but they falsified the loan report and were not interested in getting the money back, as few borrowers could ever repay a loan 10 or 15 times their salary. The house is worth less now than the loan amount. The bank did not "protect their interest" as you say, in approving the loan.

 

[LDFerguson]

I did not say it was over half a million. I did say her own bank refused her the loan for the 3 bedroom house and would not lend her anything like the amount she would have needed to buy it.

You're being very coy about the figures involved. You could state the amount borrowed to the nearest €10,000 or €20,000 without it being remotely possible for anyone to identify the individual. You have said that the repayments are "under €1,800 per month" and that she put up a substantial deposit. The figure of €1,800 per month on interest-only allows us to calculate the approximate size of the mortgage, assuming interest rates of 2007.

But regardless of whether or not you continue to be coy about what the actual amounts involved are, the fact remains that she went to her own bank and they wouldn't give her the loan that she wanted. So she got told by her own bank that she couldn't afford a larger loan. But she went off to another bank because she wanted to borrow more and buy more.

Well seeing as you worked in the mortgage industry, clearly the banker did something very abnormal in this loan so, to say the least.

I have no idea how normal or abnormal this practice was. Bankers who were falsifying internal documents wouldn't be likely to broadcast this fact too widely. As I have already said, I can only speak for myself and the firm that I have run for the past twenty years.

 

[usernameinuse]

Out of curiosity, what do you think should happen? Do you think the bank should forgive the debt in part or in its entirety even though your friend borrowed the money? If they were willing to take the house back voluntarily and forgive the capital, would this be "fair" in your eyes?

The borrower has gone through hell worrying about financial matters as a result of taking out the loan she should never have applied for or been approved for. She is a caring person, finance is not her area of expertise. She has lost a sizeable deposit, almost €200,000 she paid in generous variable interest rates, she has spent a 5 figure sum maintaining the house, she is willing to surrender the house and even pay more to the bank. I told her to get her file and to see a PIP, she has arranged a second meeting with him. I told her she should get expert opinion and double check it. When the banker and the bank tell the truth of what happened, a fair outcome may be obtained.

I am not sure what is "fair" in her eyes, I gather she has been advised to have the banker and valuer investigated by the Garda National Economic Crime Bureau (GNECB). She thinks people should be better warned, and bankers who do wrongdoing properly investigated and punished accordingly, so it does not happen again. She thinks that would be "fair".

Her life has been destroyed, she accepts she should not have taken out the loan. She expected when she submitted her p60 and payslips for the bank, as they requested, to assess if she "could afford the mortgage" as they said, they would do so honestly. She does not want the bank doing the same to others as they did to her. Especially when the bank still claims they will check the borrower will be comfortably able to afford their mortgage repayments, with enough money left over to live their lives in comfort! That is adding insult to injury.

You're being very coy about the figures involved. You could state the amount borrowed to the nearest €10,000 or €20,000 ...

I do not want to risk identifying the individual, I have already stated lots of details about her. However as you say yourself the figures I gave allow you to calculate the approximate size of the loan amount. Somewhere between say 400k and 550k, it does not really matter the exact amount.

I have no idea how normal or abnormal this practice was. Bankers who were falsifying internal documents wouldn't be likely to broadcast this fact too widely. As I have already said, I can only speak for myself and the firm that I have run for the past twenty years.

But in your considerable experience in the mortgage industry, you did not come across borrowers who were approved for loans 10 or 15 times their salary, so clearly something out of the ordinary happened in this case.

I asked you already, if someone falsified the loan report by adding over 60k to the borrowers salary, so they could borrow the money, would you consider that a criminal act?

A homeless person could go in to a Mercedes showroom and ask for a loan for a €100,000 Mercedes, but the relevant people should not give him a loan if he cannot pay it back. Especially if they advertise that they get his P60, payslips etc to assess his ability to repay the loan, and then they falsify documentation and give him the car anyway. Whose fault is that? Entirely the homeless person?

 

[Leo]

They sought proof of earnings but they falsified the loan report and were not interested in getting the money back,

So now the bank were a charity, giving out money to all who asked with no interest in getting a return..

A homeless person could go in to a Mercedes showroom and ask for a loan for a €100,000 Mercedes, but the relevant people should not give him a loan if he cannot pay it back. Especially if they advertise that they get his P60, payslips etc to assess his ability to repay the loan, and then they falsify documentation and give him the car anyway. Whose fault is that? Entirely the homeless person?

Again, this point has been covered multiple times. In this scenario, the homeless person is entirely to blame for taking out a loan and purchasing something the could not afford.

 

[usernameinuse]

So now the bank were a charity, giving out money to all who asked with no interest in getting a return..
.

In this case, due to the banker defrauding his superiors about the borrowers true salary, they gave out money which the borrower could never repay. Who could repay a loan 10 or 15 times their income? That does not make the bank a charity, it makes the bank a possible victim of fraud by whoever ignored the P60, payslips etc and who made out the false loan report and valuation.

In this scenario, the homeless person is entirely to blame for taking out a loan and purchasing something the could not afford.

So you think no blame, not even 1 or 2%, should be attributable to the banker who gave the homeless person the loan, after fraudulently deceiving his superiors in the bank in to thinking that the homeless person was really on 60k a year more than he was, and the car was a different specification? Bonus for that banker in fact?
And if the homeless person is entirely to blame for asking for and getting a loan in a €100,000 Mercedes and driving away in one, you think its ok if the next day the banker lends 100K to another homeless person, after fraudulently changing documentation in the bank? Do not forget the bank advertises the fact they look for proof that the borrower has the earnings and self-discipline to repay the loan not just for the first year but long into the future.

In this scenario, there is no law against homeless people asking a garage or a bank if they can borrow €100,000 for a Mercedes. If a business is asked to lend someone money who has not and almost certainly never will have the income to pay it back, then the employee of the business has a responsibility to that business and to the shareholders of that business not to lend the money.

 

[dub_nerd]

So you think no blame, not even 1 or 2%, should be attributable to the banker who gave the homeless person the loan.

It's like this: if you come to me looking for a loan, that loan is expected to be paid back in full. It doesn't matter where I got the money you borrowed, even if I stole it, and it doesn't matter how or if I planned to make a profit on the transaction. So your question might be of interest to the bank. It is of no relevance or concern to the borrower. As an adult legally able to enter into a contract their decision to borrow and the responsibility to be fully informed of what they were getting into was theirs alone. And no, anything they were told by the lender does not affect this unless it was written into a contract.

...the employee of the business has a responsibility to that business and to the shareholders of that business not to lend the money.

... which has precisely nothing to do with the borrower.

 

[LDFerguson]

I do not want to risk identifying the individual, I have already stated lots of details about her. However as you say yourself the figures I gave allow you to calculate the approximate size of the loan amount. Somewhere between say 400k and 550k, it does not really matter the exact amount.

So if you disclose on Askaboutmoney.com that she borrowed €490,000 eleven years ago, you think that someone somewhere will remember "ah yes - that's the customer Jane Bloggs who borrowed €490,000 in 2007?"

Anyway, I agree with you that the exact amount doesn't matter. She was told by her own bank that she wouldn't qualify for the size of loan she requested because she couldn't afford it. But instead of accepting that, she went off to another bank and applied again because her own bank wouldn't approve her for as much as she wanted. So she applied for €400,000 - €550,000 and was accepted on her second attempt.

But in your considerable experience in the mortgage industry, you did not come across borrowers who were approved for loans 10 or 15 times their salary, so clearly something out of the ordinary happened in this case.

You're missing the point. As a broker running my own business, the people I came across were my own clients. And I wouldn't have advised them to borrow such high multiples, or entertained altering documents in order that someone would qualify for more than what their bank had offered them. So the reason that I did not come across such clients was because that's not the sort of business I run. But in the scheme of things, my business is tiny in this country. So such practices might have been widespread. Or they might have been rare. What went on among my clients is not representative of the country as a whole.

 

[usernameinuse]

As a broker running my own business, the people I came across were my own clients. And I wouldn't have advised them to borrow such high multiples, or entertained altering documents in order that someone would qualify for more than what their bank had offered them.

And over the 20 years you worked in the mortgage industry, you must have met hundreds of other people who worked in the industry, and possibly thousands of clients, socially and through work. You never once heard "on the grapevine" or otherwise of someone getting a loan of say 10 or 15 times their salary, or a banker adding over €60,000 to a relatively normal workers level of salary, a huge increase. Which makes this case all the more unique and worthy of investigation, wouldn't you say?

I asked you twice already "if someone falsified the loan report by adding over 60k to the borrowers salary, so they could borrow the money, would you consider that a criminal act?" and you did not reply, so I am not going to ask you the same question again.

 

[usernameinuse]

... which has precisely nothing to do with the borrower.

It has everything to do with the lender though. In the scenario we discussed, the employee of the business has a responsibility to that business and to the shareholders of that business not to lend the money. If every homeless person who went in to a Mercedes dealership and asked could he buy a €100,000 car was lent the money to buy one after the lender fraudulently deceived his superiors in the bank in to thinking that the homeless person was really on 60k a year more than he was, and the car was a different specification, then the lender would not last long.

 

[Sarenco]

It has everything to do with the lender though.

Indeed but you originally asked whether a lender had a duty of care towards a borrower.

Again, for the umpteenth time, a lender has no duty of care towards a borrower.

If a lender has an issue with an ex-employee or valuer, that's a matter for the lender. Nothing to do with the borrower.

Incidentally, a mortgage of anywhere between €400,000 and €550,000, plus a "sizeable deposit", would have bought one hell of a three-bed house in rural Ireland in 2007. The average price paid for a house nationally at that time was only around €300,000.

 

[usernameinuse]

Indeed but you originally asked whether a lender had a duty of care towards a borrower.

Incorrect. Originally I asked Should the bank have had a duty of care to behave honestly to its customers? Big difference.

Would you care to answer the question ""if someone falsified the loan report by adding over 60k to the borrowers salary, so they could borrow the money, would you consider that a criminal act?"

Incidentally, a mortgage of anywhere between €400,000 and €550,000, plus a "sizeable deposit", would have bought one hell of a three-bed house in rural Ireland in 2007.
The average price paid for a house nationally at that time was only around €300,000.

You are correct about average price of second hand houses nationally in 2007 being about €308,000. However it is fair to say prices varied a lot depending on location. Location, location, location as they say. Houses could go for a lot more than €308,000 if they were in a nice, scenic location, as I said it was. Obviously some sites houses are built on are more valuable than others. However, more to the point, why did the bankers cousin, the valuer he appointed, say it was a 5 bedroom with double glazing, when it was a 3 bedroom with all but one window single glazed? Have you ever come across a valuer getting basic facts like that wrong before? Something very wrong, would you not agree?

 

[coolhandluke]

As a no. of posters have said, this doesn't add up at all............something very strange about the price paid for a run down 3 bed in rural Ireland.

I wonder is there a lot more to this we are not being told and now a serious case of buyers remorse.......

Blaming the people who facilitated the bad decision is a waste of time, and further evidence of a lack of acceptance.

The fact that the buyers own bank would not give the loan and then they went elsewhere, shows that they already had the figure they wanted and that the loan did not cause them to higher their expectation.

 

[usernameinuse]

If a lender has an issue with an ex-employee or valuer, that's a matter for the lender. Nothing to do with the borrower.

The borrower was asked to pay for a valuation by a particular valuer, and had no choice in the valuer. She was entitled to a copy of the valuation at the time of the mortgage, not many years later. The bank failed in its duty there (s125). When even basic facts are incorrect in the valuation, she is entitled to ask the bank for an explanation. She paid for a service and is due an explanation at the very least.

.something very strange about the price paid for a run down 3 bed in rural Ireland.

Not if it was in a nice scenic location, on a site with a lovely coastal view, for example. Such houses were always expensive.

 

[usernameinuse]

The fact that the buyers own bank would not give the loan and then they went elsewhere, shows that they already had the figure they wanted and that the loan did not cause them to higher their expectation.

If a homeless person walks in to a BMW garage and asks for a loan for a €100,000 car, and the garage rightly refuses him, that does not say a Mercedes garage should be excused from given the person a loan for a €100,000 car by falsifying his income by over €60,000 per year, and changing the spec and type of car on loan documentation. The employee of the business has a responsibility to that business and to the shareholders of that business not to lend the money.