It is surely beyond belief that according to the FSA,at the height of Britain's booming mortgage market, nearly half of the total amount lent was done so without any checks being made that borrowers had the income they claimed to repay their loans.
The soon to be abolished Financial regulator has published plans to prevent a return of the risky mortgage lending seen in boom times.
Their Mortgage Market Review aims to prevent a recurrence of the "irresponsible lending"which resulted in some borrowers taking on mortgages which only seemed affordable on the assumption that house prices would always rise
The result being that many of those borrowers ended up struggling to repay their mortgage and in danger of losing their home.
The review recommends that loans should only be approved where there is an expectation that it can be repaid without having to rely on "uncertain" house price rises in the future.
According to the FSA,around 15 per cent of borrowers who took out mortgages between 2005 and 2010 could be in negative equity,
Lord Turner, chairman of the FSA, said of the proposals:
“We believe that these are common sense proposals which serve the interests of both lenders and borrowers. While the excesses of the pre-crisis period have largely disappeared from the current market, it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return.