If the lenders think the crash is on, isn't it best for them to take the hit early...
I was looking for Terms and Conditions for IO mortgages on-line, and I could only find this for The Mortgage Bank
, but presumably the relevant clause is fairly typical:
If you do not keep to the terms of the interest-only arrangement, or if we reasonably believe that the provisions you have made to repay the capital covered by the interest-only arrangement are inadequate, or if any of the things in condition 16 happen, we may write and tell you:
- that we have cancelled the interest only arrangement; and
- that you must increase the monthly payments so that you pay off the debt in full by the end of the repayment period.
Condition 16 looks boiler plate too and includes missed payments and having given false information, (perhaps to self-certify income...). You're also breaching the condition if the lenders
reasonably consider that those of you who remain in the property do not have adequate financial resources to continue paying the monthly payment on your own.
Is there going to come a point when lenders are going to start pressing the auto-destruct button on these IO's by reviewing files, looking for proof of income in the hope of forcing sales as an attempt to limit the lenders losses
? Has anyone seen any sign of it?
Wendell: It's a mess, ain't it, sheriff?
Ed Tom Bell: If it ain't, it'll do till the mess gets here.