By Julian Worricker
You and Yours, BBC Radio 4
Reckless lending in the American sub-prime mortgage market has been blamed for causing today's financial meltdown.
But one former mortgage broker turned whistleblower has revealed to the BBC how lenders on this side of the Atlantic were equally reckless.
At this stage we cannot reveal his full name or the UK firm of mortgage brokers he worked for, but between 2002 and 2004 Steve worked in a call centre alongside more than two hundred people targeting home-owners who traditional lenders would shy away from: those in arrears, with county court judgements to their names, even those reliant on state hand outs.
"If they had enough benefits to support the size of the mortgage they wanted, we'd do it," he admits.
"I did remortgages where the customer was solely on benefits - carer's allowance, income support, or housing benefit."
'Loving it'
Steve says people were coming back again and again.
"We'd have customers ringing us up, who we'd remortgaged 4 months ago, asking 'can we do it again', and we'd remortgage 2 months later and they'd get another 10k."
"The company was loving this, absolutely loving this. But it was wrong. They shouldn't have done it."
By remortgaging, struggling home-owners could capitalise on the rising value of their houses to release enough cash to pay off their existing debts.
Back then, the residential mortgage industry was self-regulating, and it was not until the FSA took over in October 2004 that practices like cold-calling were outlawed.
Mediterranean cruise
Steve guessed that many of his customers would struggle to meet the repayments of their new sub-prime mortgages once the fixed rate deals came to an end, but with cash bonuses and luxury holidays on offer for hitting targets, he persisted with what he now admits were immoral - but not illegal - tactics.
"Today I can see people losing their houses and I was part of that "
"I won an 11 day cruise in the Med - now I'm thinking perhaps I shouldn't have done," he says.
"Other people won trips to Barbados, New York, Vegas, the Bahamas. Some days the boss would come in and he'd wave five grand cash in the air and say 'book two hundred deals today and someone could be going home with this'."
Today, mortgage brokers require a Consumer Credit Licence, FSA authorisation and must demonstrate that the firm is fit and proper, with sufficiently trained staff.
Mis-selling
But of the estimated £363bn tied up in UK mortgages in 2007, the Council of Mortgage Lenders considers anything between 5 and 8% is sub-prime - that's worth at least £18bn.
"The regulators need to revisit sub-prime mis-selling," warns Carol Riley, founder of the National Association of Mortgage Victims.
"Many of the people who were selling these loans have had umpteen warnings and nothing's become of it."
Carol claims tens of thousands of people are still suffering from the effects of cold-calling, some of it dating back a decade.
She relies on whistle blowers within mortgage broker firms to supply her with customer lists.
"We've rescued at least 3,000 people who were facing repossession in the last 12 years. We have a database of nearly 50,000 people who aren't aware that they could be rescued".
Steve now looks back on his career as a mortgage broker with some guilt. "Today I can see people losing their houses and I was part of that," he says.
You and Yours is broadcast on BBC Radio 4 every weekday at midday
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