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Mortgage Joker

I have a self employed client who asked me to provide to the prospective lender via a mortgage broker a certificate of profit shown in her unaudited accounts for the last three years - pretty normal stuff! I am now informed that the Spanish-owned high street name lender objects to the fact that my firm believes the information is correct but takes no responsibility in law. In other words it objects to the disclaimer and expects me to take responsibility for someone else's mortgage.

I wondered if anyone else has come across this? Is it ignorance by some junior in white socks or paranoia in the current climate of panic?. Either way, obviously I am not budging, but the client is blaming me in part for the hold up in her funds. As far as I am concerned the broker is being paid to sort out this nonsense, not me.
Old Horace

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By Anonymous
20th Oct 2008 10:28

The latest
is that the mortgage company will accept copies of SA302s (Revenue tax calculation prints). These of course would be issued in response to the Tax Returns containing the figures derived from the accounts. Of course they do not have any form of certificate from my firm so in my view are less valuable than a certificate from me with the standard disclaimer.

The bad news is that I only submitted the last six years returns last month when the client asked me to act and we know how long it takes HMRC to process paper returns these days, so we will have to wait.

Re the mortgage company it is impossible to get over a point to someone who knows nothing of the practicalities and has a set of rules (however stupid) she feels obliged to follow, and with her senior manager apparently lacking or unable to act on initiative.

Although I have explained the point very carefully to my client and suggested that she should get her mortgage broker to earn her money, it is clear that she blames me anyway. And I have wasted so much time......

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By Anonymous
16th Oct 2008 14:01

Certifying a guarantors accounts
I was recently asked to certify a clients accounts as she was acting as a guarantor for her nephew's flat rental whilst he was at university. Like the original poster the letting agency didn't like my disclaimer and wouldn't accept it. In other words they wanted me to be guarantor for the guarantor!

The client realised how unreasonable this was and went away to shout at the lettings agency. She realised I couldn't guarantee that her earnings were going to be the same this year as last. I never found out if the student got his digs.

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By Anonymous
16th Oct 2008 11:00

There may be trouble ahead
During the last great property crash, lenders found that solicitors were an easy touch to claim compensation from following reposession.

I cannot remember the exact reason why solicitors were found liable, but in a conveyancing transaction, they commonly act on behalf of the lender as well as the client, and so have a duty of care to the lender.

Solicitors have high PI cover that lenders found easy to claim against.

I can envisage lenders coming after accountants due to poor wording of references given.

Time to review some files and order extra supplies of Andrex?

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16th Oct 2008 09:21

Earnings certificates

I was instructed as an expert witness in a case recently heard in Crown Court.

Essentially Mr Accountant (a member of a CCAB body) had signed a certificate along the lines of "I have acted for Mr Client for the past 3 years. He is self employed trading as The Giggling Funeral Director and his profits for the past 3 years have been £x, £y and £z". Mr Accountant's firm billed Mr Client £250 plus VAT.

Mr Client obtained a mortgage based on Mr Accountant's certificate.

It turned out that Mr Client was a drug dealer, the business of The Giggling Funeral Director did not exist and Mr Accountant had never acted for, or even met, Mr Client.

Subsequently Mr Accountant was charged with conspiracy to obtain the mortgage by deception.

At Court Mr Accountant explained that his staff prepared correspondence and other documents for him to sign and he had signed this certificate without reading it. He had therefore been negligent but not dishonest (and mere negligence is not criminal in such cases).

The jury found Mr Accountant not guilty. (He may still be subject to a negligence claim by the lender - when Mr Client was imprisoned for drug dealing the property was repossessed and sold at a loss - and / or disciplinary action by his professional body.)

An interesting case!

David

(P.S. Obviously all names have been changed!)

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By bobhurn
16th Oct 2008 07:34

Disclaimer Wording
I have received a letter from a mortgage lender asking the usual information, plus a few additional comments. But they appear to be asking for a guarantee of future profit levels (how many clients would I have if I could ensure that)?

Can anyone recommend a suitable disclaimer, I will make it clear that we are commenting on historic results and cannot guarantee future performance, but it would be nice to have a decent disclaimer.

Thank you in anticipation for any assistance.

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By Anonymous
09th Oct 2008 17:29

Dumbed down!
Well, at least I am not going mad then. I think the broker is probably a bit green. She said the lender would accept copies of signed accounts which I have sent with the client's permission, but my neck is definitely not going on the line.

Thanks for all the comments.

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By Anonymous
09th Oct 2008 17:11

Mortgage Fraud
Methinks that it is possible that a mortgage lender would try to come after Mr Accountant. Stretching income in any report makes Mr Accountant a party to mortgage fraud - and because it's all in writing it makes a case that much easier for the Crown to prosecute.

I try to ensure that I get a request direct from the lender and respond to them.

Try asking Mr Mortgage Broker to put what he wants in writing.

Or, when he (or she) calls, say 'this call is being recorded for training and monitoring purposes'

That type of broker begins to get the message

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By Anonymous
09th Oct 2008 14:11

liars...
I've had brokers say 'But he neeeeeds more income than that on the form'. Well, hard luck if that is all the money he has!

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By Anonymous
09th Oct 2008 11:20

.
Suggest to your client that he/she try another lender.

Nationwide don't mind disclaimers............so much so that they pre-print them on the form!

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08th Oct 2008 16:57

wow....NJ...
..was that phone call you describe recent?

Don't tell me the banks, having been forced to stop liar loans (aka self-certification) some time ago, are now trying to get third parties (let's ignore the brokers, shall we !) to lie as well?

(under any circumstances. But under current conditions? You could not make it up)

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08th Oct 2008 16:50

agree totally....
..that (i) whoever at the bank is being incompetent and unfortunately someone needs to break that problem (ii) you do not change your disclaimer - it's annoying that a bank has brought up this old chestnut again, after it seemed clear that they all accepted the situation after earlier attempts at bullying had been put to bed.

But .... if you think the broker will sort it out, think again.
The broker is more likely part of the problem, not part of the solution.
The broker often sides with the bank (and tells the client the accountant is just being awkward).

So if you want a happy client, you need to take up the case with both the bank and the broker, and being absolutely firm and clear. And make sure the client knows what lengths you are going to sort out the idiot bank and idiot broker to help them get a mortgage despite such idiots. Works every time (as it should) and you get a happy client again.

(I would bet that at present the client is probably blaming you, not the bank or the broker)

edit - whoops - I see you have already stated client is blaming you. Sorry, but that is inevitable. You will have to take action if you want a happy client. Both bank and broker will happily assure the client it is all your fault.

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By Anonymous
08th Oct 2008 16:29

joking aside
I always put a disclaimer and haven't had any problems the other end...maybe because never been sure whether they carry any legal weight in the first place...there is a view that you can stick whatever you want in a report however if a third party can prove loss as a direct result of your negligence you're in trouble....

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By Anonymous
08th Oct 2008 16:01

STICK TO YOUR GUNS
This is a classic case of lenders not really knowing what it is they want (or who they want to blame!) so they adopt the "no-one ever got sacked for buying an IBM" type mode.
Any information they can "put on file" and which obviates them from actually forming their own professional view and making their own decision will be welcomed.
Yes, evidence is useful, but I never CERTIFY anything, never fill in standard questionnaires and always use careful language AND A CAVEAT WITH A DISCLAIMER.
After all, most accounts are prepared from information supplied, applying common sense and a high level of integrity, but there's no such thing as an absolute profit - it depends on judgements/assumptions/consistent treatment etc etc which others don't appreciate.
Provision of final accounts and returns, or confirmation of extracts, should always suffice (and be as far as we can go!)
Any dropping of your guard may just come back to haunt you in years to come.

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By Anonymous
08th Oct 2008 14:31

Client expectations
I would have a chat with the client and explain the position an open reference places on you. Ask her how she would feel if you were asking her to do such a reference.

Most clients, once they understand where you are coming from, fully appreciate the situation, even if they don't like it.

A way forward may be to send copies of the tax returns for the three years and confirm that these have been submitted to HMRC.

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