Sunday, Oct 26, 2008
No new code just Liebour spin
Guardian: It's not perfect - but this new code could say homeowners
Some good news at last for struggling homeowners? It seemed so from the headlines last week. The government announced a new set of rules - a 'pre-action protocol' - designed to tackle the growing number of repossessions, which, if they work, will make it hard for lenders to take borrowers who are in difficulties straight to court, as many do now.
My prediction - won't make a jot of difference
Posted by matt_the_hat @ 07:21 AM (492 views) Add Comment
9 Comments
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1. enuii said...
Lenders will inevitable settle back to the old golden rule of 3x one and 1 x the other plus minimum 10% deposit.
Now there's prudence for you; traditional lending = traditional house prices and no miracle economy and no Gordon Brown.
The other downside is that there will be many people who could have paid up to 2x a properties real value who will literally be stuck in their existing homes unable to move because they will not be able to move and may well be unable to re-mortgage.
In the end many mat wish they were repossessed Earlier rather than Later because NewLiebors scheme of keeping them in their homes may well sink them deeper in debt as they fall even further into negative equity compounded mortgage debt.
2. Rex said...
why the hell should lenders be prevented from enforcing their security. They made a commercial bargain with the the borrower - a bargain that they would lend money and if the borrower could not repay, then the lender can take the house. They are not charitable institutions. Of course they shouldnt have sanctions imposed on them if they dont follow the protocol in full.
3. bystander said...
Just as an aside - I have just received some information on 2 bed flats in a Redhill development called Park 25 - last year two beds were on the market and selling for 230K, but are now being marketed by Wimpey (therefore new, not resale) at between 98K and 105K. Now thats a major drop in anyones books and would definitely leave anyone who bought at the peak with 60% depreciation. How long will it take to make that sort of drop back (talk of 2010/2011 seem extremely optomistic)? How long, also, before Park 25 is bought up by HMG as social housing and developments like this around the country are turned into the new council estates of the future? Those who bought last year may well wish they could be repossessed and quickly. There will be a lot of very concerned owner occupiers out their in their not so new - builds, very worried and angry, who will they blame??
4. bilko said...
I have sympathy where someone becomes ill or redundant and are faced with repossesion and these people should be helped. Where people have irresponsibly overstretched themselves then I can't see why we should feel sympathy. I remember when I took out my first mortgage being told to double the prospective payments and make sure I could still afford before going ahead. Last year some home owners were complaining because interest rates had risen by a 'huge' half percent and that little jump was likely to put them in financial trouble. If that's the case then tough and there shouldn't be any bailout, especially as ultimately it'll be paid for by the taxpayer.
5. dohousescrashinthewoods said...
Ineffectual government action may be a blessing in disguise.
I chewed through some of the mises.org article about the Japanese depression and the difference between Keynsians, Monetarists and the Austrian school of economic thought. A bit heavy on the academic economic language, but from what I could gather, the theory is that depressions are caused by loose money and a bust is then necessary in order to unwind the malinvestments of the boom.
A key tenet seemed to be that the way to do this is to let the market correct itself and that government meddling (e.g. spending on public works or propping up failed businesses - both cases in point) actually prolong the bust. The conclusion seemed to be that this is why Japan is still in recession, because the government has continued to attempt stimulus packages, and amassed 200% of GDP in debt in the process.
Sounds familiar. Japanese Uncle, do you have any input on this?
6. uncle tom said...
This reminds me of the cover-up the Japanese banks indulged a few years ago.
Rather than write off a bad debt, they called it a 'non-performing' asset.
But in reality, if a struggling home-owner with deep negative equity knows that they will not be turfed out if they stop paying the mortgage, why would they continue paying it?
7. planning4acrash said...
For goodness sake.
Industry does not require regulation. It requires de-regulation.
We need to regulate the central banks! For example, they must target the money supply, which is the true nature of inflation, not measures inflation, such as RPI, CPI or whatever, which are delayed fractions of the real rate of inflation, which is the growth in the money supply. So folks, rates must go up, increasing savings, recovering bank reserve ratio's, providing a base to rebuild the economy.
Next, those behind derivatives must be held accountable, and unpayable debts must be written off, the ENRON style fraudsters must be wiped out and be put in jail, including those who ran the system. Then, lets get away from casino economics and back to production economics. Put government back to its prior position where it protects us from communist imports and protects us from fraud, and that's it.
BTW, next Karmabanque Radio Show is out today, if you haven't already, I advise subscribing to the podcast on i-tines.
8. planning4acrash said...
Ron Paul on Alex Jones Tv - Calling for Bernanke's arrest. I agree with some of the comments that call for arrest of some of the shadow families like Rothschilds. Personally? I consider some of the behaviour Treasonous, and that we should have capital punishment for many of them "Economic Terrorism"1/2
Ron Paul on Alex Jones Tv"Economic Terrorism"2/2
9. dohousescrashinthewoods said...
P4AC, I don't always agree with you, but you are on the button there. Money supply, productive economy, derivatives, rethink of government's role.