The UK Financial Services Authority has issued a stark warning to homebuyers looking to get a self-certified mortgage that if they untruthfully overstate their income they could end up with a criminal conviction.
The caution comes following a review by the FSA into the self-certification market in the UK which revealed that some industry individuals were actually encouraging mortgage seekers to over-declare their income in order to get a bigger mortgage.
The regulatory body said that in a recent investigation it had found that three organizations out of 80 reviewed were advising customers about over inflating income declarations. The revelation follows a BBC investigation in 2003 that found that a minority of staff at Birmingham Midshires and a select number of estate agents were found to be encouraging over-statement.
The FSA said that the fraudulent practice was not widespread, however it was sufficiently moved to issue its general warning that deliberate overstating was fraud, which leaves the perpetrators open to criminal charges.
The regulatory body also pointed out that a self-certified mortgage issued on the basis of unrealistically high income estimates could leave the holder with unaffordable repayments.