The Scariest Impending Failure Ive Ever Seen

[homeless]

I will switch some details to hide the identity as is only correct.

I know this woman, she split up with the husband, in the settlement she recieved 50k in cash from the sale of the house.

She has 2 kids, who stay with her, and has just purchased another house for 140k, putting down 40k of the 50k she got.

Now what the strange thing about all this is i know what her wage is, she works part time for my brother and earns 200 pounds a week.

Yup 200 pounds a week with a 100k mortgage, totaly flaberghasted how she can do this i asked her, and basically she is dependent on working family tax credits to pay her way.

This i couldnt believe and then it got worse, she then proceeded to fill this new house with all kinda nice new leather sofas ect, she got the lot on hp agreements.

Then i took her to a hardware shop to get some items for a couple jobs i was doing for her, and she flicked open a card wallet with at least 20 credit cards in it.

I have never in my life seen impending crash coming as i do see with this woman.

I cannot believe she got a 100k mortgage on a wage of 200 week, and this makes me think that banks are taking into account government social security payments ie working tax credit, basically top ups from the state on your wages.What the hell are banks playing at.

I feel sorry in a way for this woman but then i dont becuase its her own fault, no-one elses but hers.

and you can guarrantee shes one of the first for the chop, even though she stuck 40k down on the house.(she didint even negotiate the price just paid what the seller asked).

[Starcrossed]

Oh dear.

Out of interest, was the split caused by poor money-management?

[RJG18]

I cannot believe she got a 100k mortgage on a wage of 200 week, and this makes me think that banks are taking into account government social security payments ie working tax credit, basically top ups from the state on your wages.What the hell are banks playing at.

<{POST_SNAPBACK}>

I've seen similar myself. She effectively has a 10x income mortgage, and no bank would give you this if you walked in and tried to buy this over the counter. However, go to any Broker/IFA and tell them you have a 30% cash deposit (£40k) and they will arrange a self-certified mortgage, no questions asked. Even if it will certainly send you bankrupt.

Self-cert has been abused to the point where people now see it as a method where by if you have abig enough deposit, you can take out as big a mortgage as you like, regardless of whether you can actually afford to repay it.

I personally know of a case here last month, where a couple on £20k each a year were unable to get a £200k+ mortgage, and were turned down by every high street bank. Went to a broker, who waved a magic self-cert wand, and they now have over a 5x joint income mortgage.

[English Rose]

I've seen another scary situation similar to this, a big self-cert mortgage based mainly on maintenance payments from the ex, which for various reaons are not exactly a secure form of income in this lady's case. With a number of children to care for I can't see how my friend would be able to make anything near the payments if the maintenance payments stopped.

Another friend was advised by a 'financial adviser' recently to get out a big interest only mortgage for a home on the grounds that in a couple of years the value of the house and their income will have risen and they'll be able to start paying off the capital. Hmmm. Fortunately they didn't fall for it.

[libitina]

Will the lendors start taking people who have lied on their self cert mortgages (Not accusing your friend here Homeless) and then defaulted on the payments to court?

And I always did wonder why Interest only mortgages seem like a good idea to some people (maybe I'm being dense here....?). Where do they think the cash will come from to pay the difference?

Edited twice for spelling errors due to being at work until 6am and only having 5 hours sleep. :yawn:)

Edited August 6, 2005 by libitina

[Chris....]

I don't know as a fact but I imagine that large shareholders in banks must be looking for assurances that the banks have not been lending iresponsibly, I

therefore would say that the criteria is tightning all the time and accounts are being reviewed.

[Take me to the cleaners]

Quite common scenario. Seen it all before. As a housing lawyer I have worked throught the last great crash. I have only just started to close my last few cases of swtalling on paying negative equity after repossession. I remember my clients were appalled at the fact that they could still own money on their house after they were repossessed AND the lender could sue them for it....not many lenders did sue though. Repossession cases are starting to appear again in reasonable volumes...batten down the hatches is what I say.

[Portent]

I feel sorry for the kids in this matter. My parents were always short of money and I recall that despite being around 8 at the time, I was always nervous about their worry. They tried to hide it but kids are always more susceptible that people realise.

So these kids are going to go through an awful time if their mother does get into trouble.