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Paul Thomas takes a look at the pre-credit crunch product guides of sub-prime lenders
Sub-prime lender product guides reveal the relaxed lending criteria and high commission levels available before the credit crunch.
Before the crisis there were a large number of specialist lenders in the market offering borrowers with impaired credit the opportunity for mortgage finance.
These lenders, which were largely non-deposit-taking organisations funded through the wholesale markets, were typically known for relaxed underwriting criteria compared with high-street lenders.
Typically, these institutions paid far higher commission to intermediaries for referring mortgage cases. Sub-prime lenders frequently offered intermediaries commission of over 1 per cent while high-street lenders offered less than 0.4 per cent.
Chadney Bulgin mortgage partner Jonathan Clark says this resulted in some borrowers being pushed into unsuitable products.
He says: "Some people who were borderline and who could have gone to a high-street lender got pushed into an adverse-credit situation. That definitely happened.
"If you had an adverse-credit mortgage, the procuration fee was certainly in excess of 1 per cent. If you were a broker who had a few bills to pay, you might have been tempted to do adverse-credit products, instead of going to a...