12m Britons regularly buy a newspaper – but around 15m regularly pay a mortgage. Mortgage payments also cost a little more than a paper, even with all the Sunday trimmings.
Just like the press, the mortgage industry is facing its own regulators on the rampage. The Western world is experiencing a depression on a par with the 1930s and the chief trigger was inappropriate mortgage lending. There’s still plenty of blame to go round.
Valuations are still at the heart of the storm. Accurate and impartial information is what keeps the wheels of the mortgage machine turning. Without clear information buyers and sellers can never trust each other and the whole system stalls.
We need a new imaginative approach to tackling the evolving threat from fraud. The approach must take previous successes into account then build on them. Sharing information works well, and it’s been the mainstay of progress against fraudulent applications since the early 1990s. It can do the same job against rogue valuers.
We’re only just starting to apply this approach to valuation fraud. But it won’t need regulation to drive it through because the potential savings are so great for lenders. Where regulation is needed, it must be a long-term solution – harsh where necessary, but only in a way that genuinely heals the mistakes of the past.
The mortgage industry has to operate in a Goldilocks zone – where relationships with regulators are comfortable, but not too comfortable.
The Mortgage Market Review was a good example of the regulator and the industry working together in harmony. Despite acknowledging challenges, the FSA set out what the mortgage landscape should look like decades from now. When most mortgages last a quarter of a century, this makes a lot of sense.
We need to avoid the spectre of a massive regulatory over reaction. A prime example was the suggestion, made over the summer, for mandatory second valuations. This particular spanner in the works would almost double the cost associated with the mortgage valuation.
While banks aren’t lending enough to fill demand, the danger of valuation fraud only makes this blockage worse. It puts off recovery even further.
Brokers, lenders and surveyors have shown incredible agility in negotiating an economic precipice. Now, just as Leveson could crush press freedom with over enthusiasm, the new FCA has no room for complacency either way.
Mark Blackwell is managing director of xit2
