Now You See Them, Now You Don’t, The Amazing Disappearing Loan Deals!
We have all become aware of the diminishing numbers of homeowner loans and secured loans which are currently available to consumers, following the current banking crisis and we have reported on the subject many times over the past few months.
But there is now a growing concern from homeowner loan brokers regarding the particularly short shelf life of some loan products on what are becoming known as phantom mortgage loans.
There have been a large number of cases where a borrower has applied for a new homeowner loan, only to find that the product they have applied for is withdrawn by the lender before they can get the loan accepted, thereby wasting both the brokers and customers time and possibly having an adverse affect on the borrowers credit rating due to the necessity of making multiple loan applications.
With the Government applying pressure on the banking sector as a whole to start offering cheap loans at higher loan to value ratios, a number of brokers have accused lenders of advertising loan products which do not actually exist in order to meet the Government’s criteria on increased lending levels, but when a potential borrower applies for the particular product they are rejected, or the product is withdrawn before the loan can be offered.
Another method of avoiding having to offer a loan, is by simply down valuing the property and therefore the required loan to value ratio.
One homeowner loan broker commented “It would appear that some lenders are in the 90 per cent loan to value market in name and product, perhaps to satisfy the Government’s request for banks to lend, but the reality is that they don’t want to lend at this level because they feel it is still too risky and reject borrowers who apply.”
