Under the leadership of Sir Andrew Large, the group plans to develop improved sectoral standards based on the various recommendations and best practices that already exist. These home-grown sectoral standards are to abide by the principle of “comply or explain”. These standards are to cover assessment, disclosure and risk management and thereby the exact same areas identified by the FSF.
These and other shifts in underwriting standards, coupled with slowing house price appreciation or even depreciation, are the most likely explanation for the pronounced rise we have seen in defaults occurring within a few months of origination – before most borrowers would have experienced significant changes in their payment obligations or in their financial situations.