Jump to content
House Price Crash Forum

Recommended Posts

I had an interesting chat with a friend that works at a high street bank, he had recently been to an internal training course about bank lending policy.

One of the policies was that houses with children living in will not be repossessed, the reason simply being bad publicity. One celebrity customer has got themselves in trouble but has a few kids and is being allowed to stay in the house without making the payments.

I thought you lot would like to know as its one factor that is keeping supply off the market so the UK house prices are not dropping as fast as other countries in similar economic situations.

A side effect of this is that the bank is now averse to make business loans over £25K to those with children since any unpaid debt will not be recoverable. Over £25K, some non housing security is required e.g. life policies that can be charged against. One funny thing I found out was that a guarantor for a loan is not actually liable for it, the guarantee can be used to pressure someone to pay up in the event of a default but is not actually enforceble. That was news to me. (Anyone know why £25K is the magic figure for securing debt?)

Although their "don't repossess kids" policy is superficially admirable, I do wonder why my 2 kids are stuck in rented and I am taking on a second job to make up for the pathetic interest on my savings whilst someone else that has blown it gets a free ride. When I last bought a house, I didn't overpay and made sure I had enough for a rainy day (or rainy year in fact).

I also wonder if this "no bad publicity" policy will end when the banks need the money due to their SLS/CLG funding running out and yet another £400bn is rolling over in the MBS market. With the nasty party back in charge, I wonder when the banks will follow . I was told they know that the above funding gap is a really big issue but they are happy that the general public and most of the media are not aware. (Peston/Telegraph/Moneyweek have covered it but I the issue is so big, peoples minds go blank at the consequences).

I'll spare you the rest of the conversation but bank sales targetting policies are sometimes quiet mad, involving incentives to actually not make sales that would be profitable!

VMR

Share this post


Link to post
Share on other sites

Although their "don't repossess kids" policy is superficially admirable, I do wonder why my 2 kids are stuck in rented and I am taking on a second job to make up for the pathetic interest on my savings whilst someone else that has blown it gets a free ride. When I last bought a house, I didn't overpay and made sure I had enough for a rainy day (or rainy year in fact).

(a) it's not admirable - it's an admission that it's a stinky policy for everybody, just they will try not to enforce it where kids are involved

(B) You ahould have bought up top the hilt, and themn some more, to secure your kids future. What sort of perent are you?

Share this post


Link to post
Share on other sites

Could become a bad leak and moral hazard. We should now tell homeowners with young children, they don't have to pay the mortgage as they are immune to repossession!

Edited by Money Spinner

Share this post


Link to post
Share on other sites

I had an interesting chat with a friend that works at a high street bank, he had recently been to an internal training course about bank lending policy.

One of the policies was that houses with children living in will not be repossessed, the reason simply being bad publicity. One celebrity customer has got themselves in trouble but has a few kids and is being allowed to stay in the house without making the payments.

I thought you lot would like to know as its one factor that is keeping supply off the market so the UK house prices are not dropping as fast as other countries in similar economic situations.

A side effect of this is that the bank is now averse to make business loans over £25K to those with children since any unpaid debt will not be recoverable. Over £25K, some non housing security is required e.g. life policies that can be charged against. One funny thing I found out was that a guarantor for a loan is not actually liable for it, the guarantee can be used to pressure someone to pay up in the event of a default but is not actually enforceble. That was news to me. (Anyone know why £25K is the magic figure for securing debt?)

Although their "don't repossess kids" policy is superficially admirable, I do wonder why my 2 kids are stuck in rented and I am taking on a second job to make up for the pathetic interest on my savings whilst someone else that has blown it gets a free ride. When I last bought a house, I didn't overpay and made sure I had enough for a rainy day (or rainy year in fact).

I also wonder if this "no bad publicity" policy will end when the banks need the money due to their SLS/CLG funding running out and yet another £400bn is rolling over in the MBS market. With the nasty party back in charge, I wonder when the banks will follow . I was told they know that the above funding gap is a really big issue but they are happy that the general public and most of the media are not aware. (Peston/Telegraph/Moneyweek have covered it but I the issue is so big, peoples minds go blank at the consequences).

I'll spare you the rest of the conversation but bank sales targetting policies are sometimes quiet mad, involving incentives to actually not make sales that would be profitable!

VMR

Lending policy for staff at high street sales points will be very different to Bad debt recovery policy at HO level, the bankruptcy court and the law.

Your friend has been given the wink, a snippet, a clue, that if a client is a bit sticky on making a decision to sign, that the mention ( but you didnt hear it from me 1000% unofficial of course) of the kind, caring, parental role of the bank should the borrower get into "difficulties", his kids will be spared.

Now sign the mortgage Mr Parent.

Share this post


Link to post
Share on other sites

Just checked on this with my source in the repo trade.

They said

Plenty of places they have seen that have been taken have childrens items such as toys, wall paper, etc.

In some cases bank may give more time before starting proceedings.

Share this post


Link to post
Share on other sites

(Anyone know why £25K is the magic figure for securing debt?)

It sounds like a Consumer Credit Act issue

Removal of £25,000 limit. The Act will apply to lending (consumer credit and hire) up to any amount. However, this limit will still be retained for business lending
Edited by oldsport

Share this post


Link to post
Share on other sites

Just checked on this with my source in the repo trade.

They said

Plenty of places they have seen that have been taken have childrens items such as toys, wall paper, etc.

In some cases bank may give more time before starting proceedings.

The particular bank I heard about was one that received significant tax payer support and that was why they were very concerned about (further) bad publicity.

Share this post


Link to post
Share on other sites

I had an interesting chat with a friend that works at a high street bank, he had recently been to an internal training course about bank lending policy.

One of the policies was that houses with children living in will not be repossessed, the reason simply being bad publicity. One celebrity customer has got themselves in trouble but has a few kids and is being allowed to stay in the house without making the payments.

I thought you lot would like to know as its one factor that is keeping supply off the market so the UK house prices are not dropping as fast as other countries in similar economic situations.

A side effect of this is that the bank is now averse to make business loans over £25K to those with children since any unpaid debt will not be recoverable. Over £25K, some non housing security is required e.g. life policies that can be charged against. One funny thing I found out was that a guarantor for a loan is not actually liable for it, the guarantee can be used to pressure someone to pay up in the event of a default but is not actually enforceble. That was news to me. (Anyone know why £25K is the magic figure for securing debt?)

Although their "don't repossess kids" policy is superficially admirable, I do wonder why my 2 kids are stuck in rented and I am taking on a second job to make up for the pathetic interest on my savings whilst someone else that has blown it gets a free ride. When I last bought a house, I didn't overpay and made sure I had enough for a rainy day (or rainy year in fact).

I also wonder if this "no bad publicity" policy will end when the banks need the money due to their SLS/CLG funding running out and yet another £400bn is rolling over in the MBS market. With the nasty party back in charge, I wonder when the banks will follow . I was told they know that the above funding gap is a really big issue but they are happy that the general public and most of the media are not aware. (Peston/Telegraph/Moneyweek have covered it but I the issue is so big, peoples minds go blank at the consequences).

Interesting post. I presume it's NRK? They got kicked to pieces by the judges over repossession policies for about a year following their collapse, and had to become much more lax.

Banks do allow people to remain in without paying. Longest I've seen is 14 months, but no kids. I doubt the practice is widespread, but who knows? We certainly don't, even though they're state-owned institutions. The problem and its likely solution are unfathomable, in which case you're best off assuming that the ship will hit the rocks any minute.

Not sure I get your point on enforcing guarantees. People are commonly sued on them. Most popular defence is "I only signed up for a fixed amount" when the guarantee covers rolling credit. But that doesn't work. Maybe it's a consumer credit act thing.

Share this post


Link to post
Share on other sites

Me and my partner are happily waiting in wings to pick up a cheap repo, we're not heartless b'stards we have said that when we do we will help any family move (chuck) their possesion out of said house. :D

Share this post


Link to post
Share on other sites

Interesting post. I presume it's NRK?

No and there are no more guesses.

Banks do allow people to remain in without paying. Longest I've seen is 14 months, but no kids. I doubt the practice is widespread, but who knows? We certainly don't, even though they're state-owned institutions. The problem and its likely solution are unfathomable, in which case you're best off assuming that the ship will hit the rocks any minute.

Just passing on what I heard from someone that had done the banks internal training recently. Message was clear, "no repossesion when kids involved", including repos related to recovery of non mortgage debt. The person who told me is in a position to decide whether to start bankrupcy proceedings or not against companies or to keep honouring their cheques.

Not sure I get your point on enforcing guarantees. People are commonly sued on them. Most popular defence is "I only signed up for a fixed amount" when the guarantee covers rolling credit. But that doesn't work. Maybe it's a consumer credit act thing.

Maybe it's just one particular bank not enforcing them. They found they were not able to collect from the guarantor.

VMR.

Share this post


Link to post
Share on other sites

been happening in the US for some time.people managing a year or two without making a mortgage payment.darn sight cheaper than renting.

I know of someone, bought a house 2004, remortgaged with a different company for 100% of the value in 2006, waited until he was repo'ed, paid no council tax at the same time - he even had the chutzpah to stand as a Tory councillor whilst not paying council tax. The time between re-mortgage and repo was about 2 years - quite a saving on about £300K mortgage bailiffs for the council were far quicker.

He and the money are as of today, missing. When I approached the police, they couldn't care less, "It's the banks problem". The mortgage company couldn't care less, they sold the house to a dodgy EA who within days sold it cash to a buyer, and recouped nearly all of the outstanding. As far as I can tell, he made off with £200K of the banks money, and nobody gives a rat's rse.

How many others did this? No wonder we're in deep poopoo.

Share this post


Link to post
Share on other sites

I know of someone, bought a house 2004, remortgaged with a different company for 100% of the value in 2006, waited until he was repo'ed, paid no council tax at the same time - he even had the chutzpah to stand as a Tory councillor whilst not paying council tax. The time between re-mortgage and repo was about 2 years - quite a saving on about £300K mortgage bailiffs for the council were far quicker.

He and the money are as of today, missing. When I approached the police, they couldn't care less, "It's the banks problem". The mortgage company couldn't care less, they sold the house to a dodgy EA who within days sold it cash to a buyer, and recouped nearly all of the outstanding. As far as I can tell, he made off with £200K of the banks money, and nobody gives a rat's rse.

How many others did this? No wonder we're in deep poopoo.

A poster on here claimed to have done this, he went to Thailand with the dosh. Think his username was Peter Mandelson (at least that was his revolting avatar)

Share this post


Link to post
Share on other sites

(Anyone know why £25K is the magic figure for securing debt?)

It's not.

However, the provisions of the Consumer Credit Act apply to lending up to £25,000. Above that, they do not apply.

Lenders will typically expect security for larger sums, but it is their decision as to the sums involved etc.

On the flip side, a secured loan could be obtained for very small sums (£2k) if the lender(and borrower!) was willing.

Edited by cheeznbreed

Share this post


Link to post
Share on other sites

I know of someone, bought a house 2004, remortgaged with a different company for 100% of the value in 2006, waited until he was repo'ed, paid no council tax at the same time - he even had the chutzpah to stand as a Tory councillor whilst not paying council tax. The time between re-mortgage and repo was about 2 years - quite a saving on about £300K mortgage bailiffs for the council were far quicker.

He and the money are as of today, missing. When I approached the police, they couldn't care less, "It's the banks problem". The mortgage company couldn't care less, they sold the house to a dodgy EA who within days sold it cash to a buyer, and recouped nearly all of the outstanding. As far as I can tell, he made off with £200K of the banks money, and nobody gives a rat's rse.

How many others did this? No wonder we're in deep poopoo.

how did he make off with 200K?

Share this post


Link to post
Share on other sites

One of the policies was that houses with children living in will not be repossessed, the reason simply being bad publicity. One celebrity customer has got themselves in trouble but has a few kids and is being allowed to stay in the house without making the payments.

Wait till its a choice of his kids or their kids on the street. The injections of capital into the banks has given them the luxury of not making this decision for the time being.

When it becomes dog eat dog again they will be moved on fast enough.

Edited by Fromage Frais

Share this post


Link to post
Share on other sites

seems a bit of a lightweight , if he didnt get a knighthood with it

thats what I thought.

just wondering how you can make off with your own equity? surely its yours. Ok he hasnt paid a debt, but thats what hes made off with...the equity was his.

Share this post


Link to post
Share on other sites

I'm convinced it will turn out this is what the Quantitative Easing money has been used for.

Share this post


Link to post
Share on other sites

I know of someone, bought a house 2004, remortgaged with a different company for 100% of the value in 2006, waited until he was repo'ed, paid no council tax at the same time - he even had the chutzpah to stand as a Tory councillor whilst not paying council tax. The time between re-mortgage and repo was about 2 years - quite a saving on about £300K mortgage bailiffs for the council were far quicker.

He and the money are as of today, missing. When I approached the police, they couldn't care less, "It's the banks problem". The mortgage company couldn't care less, they sold the house to a dodgy EA who within days sold it cash to a buyer, and recouped nearly all of the outstanding. As far as I can tell, he made off with £200K of the banks money, and nobody gives a rat's rse.

How many others did this? No wonder we're in deep poopoo.

Im not sure what you are saying here. If he obtained a sum of money, and scarpered, he is only up on the deal if the amount of cash he got his hands on, plus the money he saved for two years by not paying, was greater than the value of his house. If the mortgage company got all of the money back by selling his house, he could have done just as well and not spoilt his credit rating, or done anything criminal, just by selling his house.

Mind you, if you can obtain loans that are far greater than the value of the property, you can make a lot of money.

Tis up to the banks to check the value of the home very carefully, and ask for a big deposit (30%+), do this, and this type of fraud is almost impossible to pull off.

Share this post


Link to post
Share on other sites

If banks cannot repossess people because they have kids, then I wouldnt advise that they forward any loans at all to people with kids, or are likely to have kids, as they are no longer an acceptable risk. The only way to rebalance this risk is to ensure that such a family seeking a mortgage, can only do so with a much larger deposit, and/or a much higher rate of interest.

Perversely then, the policy of not allowing families with kids to be repossessed, makes the business of mortgages more expensive for such families.

Such is the law of unintended consequences. It would be far better for everyone, to allow banks to repossess simply and quickly, when the debtor is delingquent. It would save us all a lot of money, and it would make borrowers much more careful in the first place if there were real consequences to be faced for reckless actions.

Share this post


Link to post
Share on other sites

At least for now those with children can qualify for the government's Mortgage Rescue Scheme. This can take many forms from some lazy councils just paying the mortgage to others putting up a legal fight and some trying to get a Housing Association to step in and buy the property and rent it to the former owners.

It might be this potential quagmire that is making the banks reticent of repossessing.

Share this post


Link to post
Share on other sites

At least for now those with children can qualify for the government's Mortgage Rescue Scheme. This can take many forms from some lazy councils just paying the mortgage to others putting up a legal fight and some trying to get a Housing Association to step in and buy the property and rent it to the former owners.

It might be this potential quagmire that is making the banks reticent of repossessing.

I dont think it is ever good when you can get the taxpayer to step in and pay for the house you cannot afford, whilst the same taxpayer now cant buy the house as his subsidy has pushed it out of his or her own reach.

Share this post


Link to post
Share on other sites

I dont think it is ever good when you can get the taxpayer to step in and pay for the house you cannot afford, whilst the same taxpayer now cant buy the house as his subsidy has pushed it out of his or her own reach.

My sentiments exactly. The Mortgage Rescue Scheme was one of many gambits by Brown to stay in power whatever the consequences.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 142 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.