Self-cert and fast-track mortgages banned by the FSA, but income verification can however be outsourced to an intermediary with appropriate systems and controls in place.
The lender will be responsible for ensuring that verification of income happens in every case and will be held to account if it does not.
In every case lenders must obtain reliable evidence to confirm the income stated on the mortgage application form to ensure that affordability assessments are based on fact.
As well as ensuring that the affordability assessment is based on fact, the FSA expects this to have a significant impact in reducing mortgage fraud.
The biggest concern that the industry had on the FSA’s income proposals was the potential impact on the self-employed.
The consultation paper said: “We stress here that we have no intention of preventing or making it more difficult for employed consumers or those with fixed term contracts, who can afford it, from getting a mortgage.
“As we explain, lenders have for many years underwritten mortgages for self-employed consumers by making an informed assessment of their circumstances, including their income, and there is no reason why this should not continue.”