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A Banking Conspiracy To Stop "below Market Value" Sales?

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This deserves a thread of it's own.

The accusation

I heard a completely unsubstantiated rumour on another forum that banks "will not lend a penny against BMV properties"

The innocent explanation

The suggestion is that banks are wary about lending to buy properties at a price substantially below that for which comparable properties have sold in the recent past for fear that there might be something wrong with them (expensive repairs needed, leasehold with not long left to run, etc. etc.).

The other possibility

Basically the price agreed is 20% off peak price and would set the floor in the area as nothing else has sold of late. The banks balance sheets for all the current mortgages would then look very shakey indeed. A BMV conspiracy indeed.

"Market value" is simply a result of what other houses in the area have sold for so allowing only sales that are similar to previous levels has the potential to halt a HPC in it's tracks. It's easy to do as part of a mortgage approval process, we can all access previous sales data with a few mouse clicks. The loss of business the lender will suffer is nothing compared to the losses from a HPC. Less loans being given out overall can simply be blamed on unavailability of credit and tightening rules. It is up to the banks who they lend to, they cannot be pressured to lend in specific cases. The motive is there, the opportunity is there, it's risk free and with a guaranteed pay out for the lenders who are not very motivated to lend anyway.

If this is true then the HPC is called off. Game over.

What to do?

Edited by athom

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they wont lend to a BMV scammer.

the plot...obtain a property "worth" 100K, but only pay 80K.

the idea is that the BMVer gets a 100K mortgage on the property bought for 80K, and keeps the difference.

trouble is, the BMVer stupidly thinks he's gained 20K, but in reality, he's lent it to himself...a detail he cares not to mention to other BMVers, who also beleive they have got 20K for free.

course, the BMVer also fails to realise that the BMV has set market value, so the bank can only honestly lend on the BMV valuation...which is of course, MV.

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To start with, learn the difference between loss and lose.

Is that it? You read through posts and you find a spelling mistake. What would we do without you :rolleyes:

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Don't believe unsubstantiated rumours.

Prices are going down depending on the area you live in.

I personally know someone who recently got a mortgage on a house that was selling well below prices of other properties nearby. It just depends on your job, your deposit and your credit history.

This was the original example

My wifes just been declined for a mortgage.

Higher rate tax payer asking for 2.5x basic earnings and a 25% cash deposit. No other debts. The underwriters won't underwrite. Not sure who they are lending to but if things are this difficult I am now more bearish than ever before.

in her job 4 years, has credit history, nothing else except that the house was 20% BMV

Prices might be going down but why by so much less than other countries? I never could understand it but this makes sense now.

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they wont lend to a BMV scammer.

the plot...obtain a property "worth" 100K, but only pay 80K.

the idea is that the BMVer gets a 100K mortgage on the property bought for 80K, and keeps the difference.

trouble is, the BMVer stupidly thinks he's gained 20K, but in reality, he's lent it to himself...a detail he cares not to mention to other BMVers, who also beleive they have got 20K for free.

course, the BMVer also fails to realise that the BMV has set market value, so the bank can only honestly lend on the BMV valuation...which is of course, MV.

Are you saying that "BMV" refers only to a specific scam and you know there is no problem of lenders manipulating the value of their housing stock? Or just talking about something off-topic?

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Stop forming theories based on unsubstantiated rumours would be a start.

It would naturally start with an unsubstantiated rumour before it was substantiated. There's plenty of logic to it, plenty of motive and opportunity.

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There is no such thing as "below market value". :rolleyes:

Exchange defines value.

"Below Market Price" then? Sales that would exchange below previous sale levels are prevented from exchanging and redefining the normal price level in the area = no HPC. Well very much slowed HPC.

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:lol::lol:

Just to clarify, I have no idea exactly what the original poster meant by BMV sales or if they were simply talking BS. It was framed as "my mates, mates, friend's dad works at a bank and he reckons.....! "

I was just testing a pretty flimsy theory.. but as a previous poster mentioned it can be put to bed very quickly.

Does anyone know anyone who has been given a mortgage on a very BMV property?

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Well its no secret they want to protect their balance sheets by keeping HPs up...but given they all have different balance sheets in vastly different shapes i think it would be very difficult for them to achieve this in a controlled manner.

That said, most the repos ive seen, even if lower than 2007 prices, seldom are advertised for less than 2004 prices, even if that means they sit on RM for months on end. Although i would think thats more a bi-product of low rates than a conspiracy.

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I was just testing a pretty flimsy theory..

Come on now, don't be coy.

but as a previous poster mentioned it can be put to bed very quickly.

Does anyone know anyone who has been given a mortgage on a very BMV property?

Nah, we already have 1 perfect customer turned down at 20% BMV, if that doesn't prove anything nor will a few that have slipped through the net :ph34r:

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Are you saying that "BMV" refers only to a specific scam and you know there is no problem of lenders manipulating the value of their housing stock? Or just talking about something off-topic?

the scam was that the scammer would pay 80 and get a mortgage for 100.

they needed a tame valuer...course in the run up to 2008...mortgage cos were keen to lend based on any valuation that compared to recent sales. a forced sale wasnt made known to them...indeed, for the scam to work, the BMV HAD to remain unknown.

As for manipulating the market, the same would apply for higher pricing...

I cant see anyone other than a scammer calling something BMV. A person on the clapham omnibus would call it a bargain.

The bigger conspiracy is the buying up of defaulting possessions by a bank financed shell company.

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This was the original example

in her job 4 years, has credit history, nothing else except that the house was 20% BMV

Prices might be going down but why by so much less than other countries? I never could understand it but this makes sense now.

Go to a mortgage broker and pay a bit more if she can't find her own loan.

Collusion among mortgage lenders would have to be so wide that it would leak out or so narrow that it would be ineffective. Cartels only work for any period of time when they can either operate in the open or when there is a tiny group of providers dominating a niche in a market. Neither applies, even now, for mortgage lending.

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Come on now, don't be coy.

Nah, we already have 1 perfect customer turned down at 20% BMV, if that doesn't prove anything nor will a few that have slipped through the net :ph34r:

maybe the house was 20% or more damaged, and the cost to repair they felt was beyond the means of the borrower who was borrowing to the limit of her spending capacity?

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So who does control the market then ? buyers, sellers or the people providing the money ? Athom has raised an interesting point.

I reckon its the buyers and sellers, oiled by the lenders. Fracked up by the Government.

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So who does control the market then ? buyers, sellers or the people providing the money ? Athom has raised an interesting point.

its me, i cornered the uk housing market last week after getting bored of Frozen concentrated Orange juice

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  • 146 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%



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