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Vanessa read this article earlier today on Property118.com and asked me to post it here for you all to enjoy and debate:-
Buy to let mortgage lenders are barring legal advisors who have not signed up to the new Conveyancing Quality Scheme (CQS) from acting for them. More than 700 legal firms have joined the CQS scheme – and mortgage lenders are making membership a condition of acting for them for every buy to let purchase.Property investors who want to opt for another lawyer outside the scheme will face their purchase blocked by lenders. Cash buyers are not affected by the ban.From May 2011, the Law Society is starting an advertising avalanche urging landlords and homebuyers to check if their conveyancer is a CQS member – and if not, to choose another firm.CQS is the result of the Law Society tightening controls on conveyancers after police inquiries highlighted that many mortgage frauds involved legal professionals to falsify documents to lenders and the Land Registry,Dozens of lawyers have faced a reprimand or have been struck off for their involvement in mortgage frauds over the past two years, confirms the Law Society.Law Society president Linda Lee said: "In our ongoing talks on the wider issue of membership of mortgage lender panels with the CML and major lenders, it is clear that there is support for the CQS. Not only will it help deter fraud, it also drives up practice management standards and provides a beacon of quality for home buyers."The Council of Mortgage Lenders (CML) has also confirmed banks and building societies will not instruct conveyancers outside the scheme.Michael Coogan, director general of CML, said: "The CML has worked closely with the Law Society as it developed CQS to ensure conveyancing standards are improved for consumers and lenders alike.“Any conveyancing firm which wants to continue to act on behalf of lenders should expect the CQS to become an important new criterion for panel management, and expect to be asked by their clients whether their firm has been accredited.”Lawyers registering with CQS undergo staff identity and financial checks, while the Law Society will carry out random visits to assess standards are maintained.
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Definitely on the cards following BMs major cull of solicitors recently.
Playing devils advocate here but given there is already The Law Society and the SRA in place what makes the lenders/CML etc think that belonging to this body will stop a determined solicitor from continuing to do such deals? In some ways it could make matters worse by giving a green flag to those doing this if they become members.
The FSA/CML etc certainly hasn't stopped some brokers continuing to do it.
Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com
The fact that the Solicitor is confirming absolutely they are acting in the best interests of both the purchaser AND the lender whilst acknowledging the lender as a client is the big change that they are hoping will fix the problem. My understanding is that previously, two solicitors in the same practice would act, one on behalf of the purchaser and the other would sign off his work on behalf of the lender. That's why sole trader practices were a major problem at one time. Where two solicitors acted they could then claim they were unaware of all aspects of the transaction.
No doubt some smart arse already thinks they've got a way around this!
Time will tell.
Certainly something has to be done I agree but not sure this will be it.
I get contacted about 3 times a week by people asking for my advice on NMD deals they are doing so I can't even imagine how many are still being done.
Judging by the spam emails that come into my junk box every day I suspect it's still loads. I signed up to all the BMV/NMD sourcers web-sites I could find so that I could report them all to lenders. Having done exactly that it really confuses me as to how they manage to continue to trade. Are the lenders really interested in stamping out this practice or are they simply making noise as it PC to do so? Surely they wouldn't need to throw much resource at the problem to close all of these companies down once and for all but what do I know?
The lenders don't think its a big issue! I kid you not; I asked the MDs/heads of lending of 6 of the main B2L lenders at a conference and they all said it wasn't a problem. I was approached by loads of brokers afterwards asking me what was going on as they were unaware of any such NMD schemes!
Perhaps we just see more of it as we are immersed in the PRS more than others.
If a picture says a thousand words!
Mark Alexander said:
Hi Lisa If a picture says a thousand words!
Yep confusing isn't it!!
Seeing the checks and audits as a broker I know for a fact they see it as an issue; perhaps those at the top are indeed oblivious or it was the wrong place to agree with me that there is a problem!
JOANNA CAROLINE said:
Given the title of the discussion, I am confused : they are tightening up / they don't see it as a problem ...?
You're not the only one!