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JMcLane

Impact Of Mortgage Securitisation On Consumers

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I have been doing some random searches and I am not sure if I have come across something which I would like to see if it has any meaning. I read more than post and I hope this will be allowed to be posted if it has something to add. In fact the document has many things in it which makes me feel like people knew what was going on and going to happen no matter how much they deny it. Maybe I have become to sceptical of everything.

Taken from Government PDF here dated 2003 http://www.communities.gov.uk/documents/housing/pdf/140684.pdf

Overview

The mortgage backed securities

market in the UK: overview and

prospects

Although this research was commissioned by the Office, the findings and

recommendations are those of the authors and do not necessarily represent

the views of the Office of the Deputy Prime Minister.

Introduction

The London School of Economics, with the University of Cambridge, was

commissioned by the Office of the Deputy Prime Minister to examine the reasons

for the growth of the mortgage backed securities (MBS) market in the UK and to

assess the opportunities and constraints with respect to its future development.

Mortgage securitisation enables lenders to sell on their mortgages to investors

better able to bear that risk. Lenders then use the money received to replenish

their supply of funds available for mortgage lending.

Key Findings

• The MBS market in the UK has grown rapidly since 1997 and is the leading

European MBS market. However, it still accounts for less than 5% of total

mortgage balances in the UK.

• The growth in interest in the market arises mainly from the perceived benefits

of diversifying sources of funds within a more competitive environment.

• Considerable economies of scale are now being realised and new vehicles have

been developed which make it more worthwhile to ‘taste’ the market.

-------------------------------------

So without more wasting of time, I quote the following paragraph : Bold is my emphasis.

"Impact of securitisation on consumers

It is not required by law that consumers give

permission for their mortgages to be securitised

although it is a part of the agreed code of practice.

There is little evidence that mortgagors are concerned

except perhaps where foreign names appear on

documents. Most importantly, issuers are still the first

port of call and they see the capacity to sell other

products to their customers as a major benefit of

winning mortgage business – so they do not want this

relationship muddied."

So what does this mean exactly? If the moderators allow the post can anyone throw any light on it?

Thanks.

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Mortgage securitisation enables lenders to sell on their mortgages to investors better able to bear that risk. Lenders then use the money received to replenish their supply of funds available for mortgage lending.

Christ that just about sums it all up really, the banks couldn't cope with the risk of lending....

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"Impact of securitisation on consumers

It is not required by law that consumers give

permission for their mortgages to be securitised

So what does this mean exactly? If the moderators allow the post can anyone throw any light on it?

Thanks.

It means what it says i.e. that the permission of individual mortgagees is not required for their mortgages to form part of a securitisation process.

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It means what it says i.e. that the permission of individual mortgagees is not required for their mortgages to form part of a securitisation process.

Nor is there any material reason for this to be required afaics, since securitisation is transparent to the borrower.

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Does the purchaser (or anyone else) of the RMBS have any say over policy on collection of arrears. or does that stay exclusively with the original lender?

I'm just asking because, AFAIK, there's still nothing in UK law to stop a lender demanding full and immediate repayment of a mortage once it's two months in arrears. It is almost unheard of for lenders to follow this route, instead they use traditionaol possession proceedings, but others might not worry too much about doing it

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Does the purchaser (or anyone else) of the RMBS have any say over policy on collection of arrears. or does that stay exclusively with the original lender?

I'm just asking because, AFAIK, there's still nothing in UK law to stop a lender demanding full and immediate repayment of a mortage once it's two months in arrears. It is almost unheard of for lenders to follow this route, instead they use traditionaol possession proceedings, but others might not worry too much about doing it

The borrower's contract is with the original lender according to the agreed terms and governed by UK law; securitisation can't change that. I've never heard of this "full and immediate repayment" thing, but repossession will be the outcome either way, it's not as if the defaulting mortgagor will be able to repay the loan otherwise ... so what's the difference?

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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