Saturday, Nov 14, 2009
Both sides of the story
BBC: High-risk mortgage lending rapped
Both the FSAs and CMLs sides of the story on Self Cert mortgages.
The CML must think a 60% arrears rate is acceptable.
Posted by tenyearstogetmymoneyback @ 08:35 AM (483 views) Add Comment
2 Comments
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1. alan said...
"Jon Pain said lenders should check borrowers' ability to repay loans". "Jon Pain of the Financial Services Authority (FSA) was speaking to the annual conference of the Council of Mortgage Lenders (CML) in London". .....Clearly ground breaking stuff from the FSA.......
Pardon my sarcasm, shouldn't they know this already? Lots of other good information that lenders should know already.
Finally...."Mr Pain rejected the suggestion that the FSA's new approach would force lenders to check the fine details of how people spent their own money". Why not, if they want to borrow a load of cash?
2. drewster said...
At the risk of greatly upsetting everyone on here, I don't think non-bank lenders should be restricted. If GE Capital (one of the largest non-banks) has a lot of defaults and subsequently collapses, then the bondholders lose their money. That's the risk bondholders take - they are supposed to be professional investors who can tolerate higher volatility than ordinary savers. Bonds aren't risk-free, and professional investors should know that.
Obviously it would be madness for retail banks to provide wholesale funding for non-banks. Why did German banks ever think it acceptable to buy US subprime mortgage bonds? That practice should be banned forthwith.