More Rigid Borrowing Standards Sought
Stringent rules designed to prevent mortgage fraud are necessary in the sale of newly constructed flats in the city’s center, according to the Council of Mortgage Lenders (CML).The property market is in a down trend, and the council fears that developers may try to offer incentive packages, including cash-back offers. Such a move will inflate property prices.
Buyers and lenders are hurt when developers offer discounts and incentives. It is difficult to determine a fair value for properties, according to a recently published CML report. These practices may encourage buyers to borrow more than their property is worth, while masking the true value of the property for lenders.
The CML also questions such practices as holiday give-aways, buying linens, and paying legal fees.
The Council of Mortgage Lenders is the trade association for the mortgage industry.