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Home Owners Receive Compensation After Sold Mortgages They Couldn't Afford

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http://uk.finance.yahoo.com/news/Home-owners-receive-tele-1651684415.html?x=0

Home owners receive compensation after sold mortgages they couldn't afford
Myra Butterworth, 11:42, Tuesday 22 February 2011
Home owners who were sold mortgages during the property boom that they couldn’t afford are to be given compensation following a ruling by the City Watchdog.
Borrowers who took out a home loan with specialist lender Deutsche Bank (Xetra: 514000 - news) before the property market took a dramatic turn and the full force of the credit crisis took hold have been told to expect a payout.
It is the first time that the Financial Services Authority has taken action against a lender for lending irresponsibly.
More lenders are expected to named by the FSA and told to compensate borrowers
.

:angry:

They will stop at NOTHING to make sure the greedy sheeple keep their homes even if it means we bail them out. Once the moral hazard is compeletley removed from the market we may as well fly a flag with a bunch of bananas on it. At least they have dropped "Great" Britain as our national moniker.

Edited by Realistbear

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I'm as repulsed as you are, but I can't help but think this is good for HPC. Lenders will be even less inclined to lend now, in all but the most conservative of scenarios.

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I'm as repulsed as you are, but I can't help but think this is good for HPC. Lenders will be even less inclined to lend now, in all but the most conservative of scenarios.

Yes it's physically revolting.

People took this debt either not capable of understanding they were doing something stupid (and should never be leant more than an envelope again) or they were fraudulently taking the money.

But the banks need to learn from it.

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More lenders are expected to named by the FSA and told to compensate borrowers.

This could prove to be much bigger than the government or the banksters expect. Once a precedent is set to compensate silly borrowers the floodgates will open. Another way to prevent the PONZI from collapsing and the government are likely to embrace it.

Edited by Realistbear

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They will stop at NOTHING to make sure the greedy sheeple keep their homes even if it means we bail them out. Once the moral hazard is compeletley removed from the market we may as well fly a flag with a bunch of bananas on it. At least they have dropped "Great" Britain as our national moniker.

disagree totally - moral hazard has simply been transferred to the banks, correctly imho

HPC still on as the same amount of money has been removed from the market

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disagree totally - moral hazard has simply been transferred to the banks, correctly imho

HPC still on as the same amount of money has been removed from the market

Agreed.

The FSA have further signalled they're serious on mortgage market reforms.

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Yes it's physically revolting.

People took this debt either not capable of understanding they were doing something stupid (and should never be leant more than an envelope again) or they were fraudulently taking the money.

I wish I had been dropped on my head at birth so I too could be in receipt of this largesse.

Edited by Tiger Woods?

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Agreed.

The FSA have further signalled they're serious on mortgage market reforms.

If the FSA want to show they are serious about this, they really need to go back and compensate/unwind all financial transactions to the Medicis at least, otherwise they are just window dressing for me

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I'm as repulsed as you are, but I can't help but think this is good for HPC. Lenders will be even less inclined to lend now, in all but the most conservative of scenarios.

at an average of 300 pounds per customer, some of which is the refund of "illegal" administration charges, I can't see this being significant

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Not sure how I feel about this - it's not very clear whether they get to keep the properties or not, apart from anything else. Also, reading the link, this would appear to be targeting a particularly blatant bit of bank shenanigans... I dunno. I remain slightly stunned nevertheless that anyone could take on that much debt without some understanding of what they are doing and what's involved.

That said, I asked my sister the other day (who I'm fairly sure paid peak-price for a property in Hastings in 2008) whether she was on repayment or IO. "Not sure," was the less than edifying answer.

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The only way I read this is that the banks will now tighten up the criteria for lending, hopefully meaning no silly wage mulitples and no liar loans, without those there is no way that house prices can be maintained, surely? :huh:

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I can see both sides to the argument here. No, people who couldn't afford it shouldn't have borrowed it but neither should it have been available for them to borrow in the first place. The lenders took a calculated business to decision to lend to people they either knew couldn't afford it or with minimal investigation as to whether they could afford it or were complicit in the knowledge that people were lying. If you decide to run your business like that then you cannot complain if you come unstuck.

A poster had made a very relevant point in pointing out that lots of people were simply ignorant to the fact that they shouldn't be taking on so much debt. A bank regulated by statute and a mortgage adviser who is properly licensed under the relevant law isn't going to allow you to do something like hat - are they? I mean, everyone knows hat banks don't do business with people who are going to cost them money.

The general populous doesn't have a great deal of grasp of how finances and the economy work in detail - I certainly don't although I'm a tad more clued up now. People are never actually taught these things so how could they be expected to know?

The other problem is that you have to look at it from the point of view of Mr and Mrs average who want to get their own house. All they have seen for years is prices going stratospheric and them being rapidly priced out of the market. What are people expected to do in that situation? It's all very well harping on to them that the bottom is going to fall out of the market at some point but if it keeps not happening then why should they believe you? It still hasn't happened despite people being on here for years prophesising it and us having one of the biggest financial upheavals in decades. There's a pretty good chance it may never do as well.

Months ago I posted on here a bit of a jokey draft Act of Parliament which basically said that if someone can't afford to reasonably service a particular loan they it should be a criminal offence to provide them with it. That's all it would have taken and we wouldn't have the problems we currently do. It wouldn't even have needed to whole populous to be educated finacially because the banks just tell the applicant they they have applied to statutory criteria in the Act and aren't allowed to lend to them.

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at an average of 300 pounds per customer, some of which is the refund of "illegal" administration charges, I can't see this being significant

Perhaps not, but the £840k fine and bad press might make DB think differently.

When the FSA fines and punishes someone they're likely to be extra cautious about that area of business for a couple of years.

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Perhaps not, but the £840k fine and bad press might make DB think differently.

When the FSA fines and punishes someone they're likely to be extra cautious about that area of business for a couple of years.

These fines are chicken-feed though, surely? Put in the context of mortgage lending - £840K is probably less than they'd lend on a pretty pokey london flat and they probably approve a few of them a week. They won't even miss it.

In referenceto the ficticious Act of Parliament I wrote up a few months back; I think I included a bit about the penalty for irresponsible lending being forefeit of the right to enforce the loan along with a fine at least equal to it. That will go a long way to making lenders think twoce before lending to people who are unable to service the loan.

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I cant afford bread anymore...has Tesco mis-sold it to me ?

If you can afford an internet connection, you can afford bread.

Case closed.

Actually, my line of work brings me into contact with companies who are setting up new service products to cover the mis-selling of mortgage products. These companies started on equitable life then onto bank charges claims, and moved onto unenforcable loan agreement (UCA) claims and payment protection insurance claims for consumers, taking a % of the amount awarded. As the market for the latter services is depleted I guess we can expect to hear more from mortgage compensation claims over the next couple of years.

With the high £sums involved and the widespread nature of mortgage fraud (imo) it will be interesting to see how any test cases pan out.

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... Deutsche Bank ...

Could this be some international politics in play here? To spread the blame a little?

The Continentals have being blaming the "Anglos" for this crisis (correctly IMPO). Could this be just a little pay back from our monetary authorities?

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Could this be some international politics in play here? To spread the blame a little?

The Continentals have being blaming the "Anglos" for this crisis (correctly IMPO). Could this be just a little pay back from our monetary authorities?

My initial thoughts exactly.

How has Deutsche Bank's mortgage lending differed from HBOS/RBOS/Lloyds? Northern Crock* etc?

*Maybe they were lending 135% loans instead of 125%?

Edited by Reck B

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I spent too much on my credit card...now I can't afford to repay...I deserve compensation for the stress entailed. :huh:

....maybe people should pass some sort of financial awareness test before they are allowed to complete a mortgage application. ;)

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I spent too much on my credit card...now I can't afford to repay...I deserve compensation for the stress entailed. :huh:

....maybe people should pass some sort of financial awareness test before they are allowed to complete a mortgage application. ;)

That's actually not too unreasonable, when you think about it. However, given that they don't then can a lender really complain if it lends to someone like that and who then turns out not to be bright enough to pay it back? Would we consider AVIS to be blamless if they rented a car to someone who ha never driven one before and they then ended up killing lost of people?

Also, thinking about your first sentence - is that also so unreasonable? If someone has a fairly low appreciation of how finance works and someone chucks vast amounts of money at them with virtually no checks then might they have a case if their life goes to shit? If a doctor chucks you a bag of herion and tells you it's fine and no harm will come to you if you stuff loads of it into your arm (assuming you have no knowledge of the nature of Heroin t0 begin with) and you then end up a helpless junkie is the doctor really blameless? I don't think so. Okay, it's not exactly the same as lending too much money to people as they really should have the common sense to do a few simple sums and realise they can't afford it. However, ad into the mix the fact that people are essentially being told that they can afford it by the lender (why would heavily regulated proferssionals lend me stuff unless they thought it was the right think do do?) and they see everyone else doign the same and you get a bit closer to the Heroin analogy. It's very hard to resist when everyone else is telling you you are wrong and they are right, especially when your decision is harming your standard of living compared to theirs.

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I spent too much on my credit card...now I can't afford to repay...I deserve compensation for the stress entailed. :huh:

....maybe people should pass some sort of financial awareness test before they are allowed to complete a mortgage application. ;)

Don't miss d point peops. What 'we'd now seem to be calling dodgy mortgage brokers were for 10 years called "good" mortgage brokers. They can get me a mortgage = they are good.

I'm gonna start a thread on this when I get time but I want to talk about the accountability of SURVEYORS... during HPI, HPC (ahem) and in market correction going forward.

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If the FSA want to show they are serious about this, they really need to go back and compensate/unwind all financial transactions to the Medicis at least, otherwise they are just window dressing for me

What compensation...?

is it the loss in value of the house?

is it the underpayments they made?

what exactly are they compensating?

cant be the loss in value of the house...if its overpayment, then are the bank due to compensate the borrower for what exactly?...giving them what they asked for...of course, if it was a LIAR LOAN, the tables might get reversed.

need to read and understand more.

"It is understood that 4,000 customers are affected, which equates to an average payout of £375 per borrower. DB Mortgages said payouts would be issued on case by case basis.

At the height of the property market, borrowers were able to obtain mortgages that were more than the value of their home as well as interest-only loans without proving how they intended to repay them."

im sorry, but just who was taking out loans more than they could afford...it wasnt the bank doing the asking. LIAR LOAN CENTRAL

Edited by Bloo Loo

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Also, thinking about your first sentence - is that also so unreasonable? If someone has a fairly low appreciation of how finance works and someone chucks vast amounts of money at them with virtually no checks then might they have a case if their life goes to shit?

All very well and good but what I am very uneasy with is this new and forever expanding blame culture we have today...that started in America and is now restricting our lives in so many ways, too many lawyers and blame claim companies have got onto the bandwagon and are happy to make a few bob in the name of blame and fault....if things go pear shaped all we do is think who can we blame instead of blaming ourselves for being so stupid..so if people like lenders in a position of responsibility only lent to those that to the best of their ability could afford it from the information given by the lender, made the small print big print and spelled out the terms and conditions and the consequences of late or non payment and the recipient signed in agreement to that agreement.....there would only one person to blame the one who borrowed the money whether they lied or not, cue eric. ;)

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  • 284 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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