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Warning on new-build - 12 February 2008
Mortgage lenders have called for tighter rules to stop possible mortgage fraud involving the sale of newly built city-centre flats.
The Council of Mortgage Lenders (CML) said that a slowing market could tempt some developers into offering greater "incentives" to potential buyers. Deals such as cash-back offers, the lenders insisted, might inflate the headline value of a property. And that could see them being duped into granting excessive mortgages.
The warning of potential problems came in the CML's fortnightly publication News and Views.
Bernard Clarke, speaking for the CML, commented: "In recent years, discounts and incentives have had the effect of making the real value of new homes less than transparent. This is bad news for genuine buyers and for lenders. Buyers may find themselves with a mortgage worth more than the property's value, while lenders may find themselves exposed to fraud and the risk of loss”.
Mr Clarke added: “We want developers to sign up for the codes of practice that currently apply to solicitors and valuers. We want them to uphold similar sorts of standards.
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