Radical Legislation On Mortgage Possessions

[okaycuckoo]

The Secured Lending Reform Bill - private bill on second reading in commons:

http://www.publications.parliament.uk/pa/cm201011/cmbills/023/11023.i-i.html

It cuts out receivers' power of sale and abolishes lender's right of peaceable re-entry, so everything would have to go through court. And it allows judges to reset repayment terms until personal circumstances improve (similar to what happens in court with consumer credit) - at the moment, if the borrower can't meet the monthly instalment he's sunk, but this seems to allow an indefinite period of payments below instalment level.

It's just a short bill, a few pages, and if it passes it will depend on tedious amounts of regulations being spewed out by some minister. But looks like a big shift toward support of defaulting borrowers.

The sponsor is a Cameronite, so it may be more than kite flying:

http://www.conservatives.com/People/Members_of_Parliament/Eustice_George.aspx

[TheCountOfNowhere]

The Secured Lending Reform Bill - private bill on second reading in commons:

http://www.publications.parliament.uk/pa/cm201011/cmbills/023/11023.i-i.html

It cuts out receivers' power of sale and abolishes lender's right of peaceable re-entry, so everything would have to go through court. And it allows judges to reset repayment terms until personal circumstances improve (similar to what happens in court with consumer credit) - at the moment, if the borrower can't meet the monthly instalment he's sunk, but this seems to allow an indefinite period of payments below instalment level.

It's just a short bill, a few pages, and if it passes it will depend on tedious amounts of regulations being spewed out by some minister. But looks like a big shift toward support of defaulting borrowers.

The sponsor is a Cameronite, so it may be more than kite flying:

http://www.conservatives.com/People/Members_of_Parliament/Eustice_George.aspx

It might make lenders much less happy to lend to them that can't repay the money

[bomberbrown]

Yay!* Does this mean we no longer have to have “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it” at the bottom of all the mortgage adverts any more?

* The real Yay is I reached my 5000th post!!!!

[TheCountOfNowhere]

Yay!* Does this mean we no longer have to have “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it” at the bottom of all the mortgage adverts any more?

* The real Yay is I reached my 5000th post!!!!

Well done !!!

Only about 800 to go then I'll be there too, then I can finally retire from HPC :-)

Any plans to stand down/buy a house ?

[Si1]

It might make lenders much less happy to lend to them that can't repay the money

yep

introduces US jinglemail?

forces more responsibility onto mortgage lenders, increases liquidity, lowers long term house prices

question - does this retrospectively affect existing mortgages, or will they be subject to existing rules on this instead?

[bomberbrown]

<br />Well done !!!<br /><br />Only about 800 to go then I'll be there too, then I can finally retire from HPC :-)<br /><br />Any plans to stand down/buy a house ?<br />

<br /><br /><br />

Thanks for the congrats The CountOfNowhere and the interest in my house buying stance. My situation still remains solidly as per my post from 2009:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=133642

Anyway, this is way off topic and I don't want to railroad Okaycuckoo's thread.

[leicestersq]

The Secured Lending Reform Bill - private bill on second reading in commons:

http://www.publications.parliament.uk/pa/cm201011/cmbills/023/11023.i-i.html

It cuts out receivers' power of sale and abolishes lender's right of peaceable re-entry, so everything would have to go through court. And it allows judges to reset repayment terms until personal circumstances improve (similar to what happens in court with consumer credit) - at the moment, if the borrower can't meet the monthly instalment he's sunk, but this seems to allow an indefinite period of payments below instalment level.

It's just a short bill, a few pages, and if it passes it will depend on tedious amounts of regulations being spewed out by some minister. But looks like a big shift toward support of defaulting borrowers.

The sponsor is a Cameronite, so it may be more than kite flying:

http://www.conservatives.com/People/Members_of_Parliament/Eustice_George.aspx

Strewth,

How on earth can anyone suggest something so dumb. If this goes through, why pay your mortgage? Why risk lending to anyone?

Are our politicians so dumb?

The law should be easy. If you have missed a payment, the lender can go to court, show the missed payment, show they have the mortgage, and the judge would grant the repossession. kiss.

Instead they appear to be trying to introduce no consequences borrowing. Lord have Mercy. This is world class dumb.

[The Knimbies who say No]

Strewth,

How on earth can anyone suggest something so dumb. If this goes through, why pay your mortgage? Why risk lending to anyone?

Are our politicians so dumb?

The law should be easy. If you have missed a payment, the lender can go to court, show the missed payment, show they have the mortgage, and the judge would grant the repossession. kiss.

Instead they appear to be trying to introduce no consequences borrowing. Lord have Mercy. This is world class dumb.

Like Si1, I see this as a pretty bearish move, assuming the extra risk is brought through to the offers system. If it's not initially, I'm sure it will be when a few defaulters hit the books.

Edited August 31, 2011 by cheeznbreed

[Democorruptcy]

It might make lenders much less happy to lend to them that can't repay the money

As if bankers taking bonuses now based on fictitious profits from dodgy lending, care about what might happen years in the future.

It needs more legislation to work like that. Bankers classed as criminals and the proceeds of their crimes confiscated. At the moment there is no downside to lending anything to anyone. It's government policy to stop the FSA even thinking about a return to sensible mortgage lending. Grantley Shapps wouldn't have been able to buy his house if the FSA were to finally start regulating lending, so he told them to **** off.

[RufflesTheGuineaPig]

If this law passes, HPC hits 88mph.

Flames. Tyre Tracks. And the market is gone.

Getting a mortgage will be, quite literally, impossible. Banks simply wont be able to offer a mortgage, as the actual CONCEPT of a mortgage will no longer be valid.

And it's likely banks will start to fold in weeks as their share prices vapourise when people realise they have no way to recover the debts without massive legal costs.

[swissy_fit]

Instead they appear to be trying to introduce confirm no consequences borrowing. Lord have Mercy. This is world class dumb.

Fixed that for you.

The banks have already had years of no-consequence lending, so it's only fair....

[Si1]

Instead they appear to be trying to introduce no consequences borrowing. Lord have Mercy. This is world class dumb.

tyhis is not introducing no consequences borrowing - it is simply transferring the consequences away from private people TO banks

[Georgia O'Keeffe]

The Secured Lending Reform Bill - private bill on second reading in commons:

http://www.publications.parliament.uk/pa/cm201011/cmbills/023/11023.i-i.html

It cuts out receivers' power of sale and abolishes lender's right of peaceable re-entry, so everything would have to go through court. And it allows judges to reset repayment terms until personal circumstances improve (similar to what happens in court with consumer credit) - at the moment, if the borrower can't meet the monthly instalment he's sunk, but this seems to allow an indefinite period of payments below instalment level.

It's just a short bill, a few pages, and if it passes it will depend on tedious amounts of regulations being spewed out by some minister. But looks like a big shift toward support of defaulting borrowers.

The sponsor is a Cameronite, so it may be more than kite flying:

http://www.conservatives.com/People/Members_of_Parliament/Eustice_George.aspx

This is massively radical, instead of giving a backhander to a lawyer politician it seems that judges (rightly so) would like a piece of the pie

Double backhanders are notoriously radically complex to execute efficiently and costly, last time i saw this clarence beaks was cornering the frozen concentrated orange juice market, its THAT radical

[okaycuckoo]

If this law passes, HPC hits 88mph.

Flames. Tyre Tracks. And the market is gone.

Getting a mortgage will be, quite literally, impossible. Banks simply wont be able to offer a mortgage, as the actual CONCEPT of a mortgage will no longer be valid.

And it's likely banks will start to fold in weeks as their share prices vapourise when people realise they have no way to recover the debts without massive legal costs.

In a way it's just seeking judicial confirmation of widespread practice in the mortgage industry - the MCOB requirement is to hold off litigation until 2 months of instalments have been un(der)paid, but lenders often allow 6 to 12 months, even 18 in some cases, before they kick off.

In other words, the banks are a sham already, and the market has probably priced this in.

As for mortgage availability - buy with cash! But there won't be many places to choose from so prices will still be astronomical. Hehe.

[okaycuckoo]

tyhis is not introducing no consequences borrowing - it is simply transferring the consequences away from private people TO banks ...

... who transfer it to taxpayers.

[cybernoid]

At first glance it looks like a problem for the responsible, the irresponsible that already have mortgages basically don't have to pay them. No forced sales. If you're already in a house you can't afford, hey why not have it for free. That is disgusting.

However, in future it will mean that lenders have little chance of getting their money back, so why lend. That looks to be an unintended consequence. Politicians are brilliant at those.

I don't really see this accelerating the crash, i see this as stopping the market. Underwater borrowers will never sell, their houses will simply not be available for ftbs as banks will not lend the asking price. Like today, except with no prospect of a forced sale in future. The music would have stopped, those in houses win them.

It will take a Long time to feed through, but ultimately will lead to lower prices i guess. You cant spend what you can't borrow. But in the meantime feckless get free houses. I make that one generation buggered, unless they were reckless. Nice one.

[Terribad]

Is this a private members bill? If so, forget about it.

[okaycuckoo]

Is this a private members bill? If so, forget about it.

Yes, but it's sponsored by one of Cameron's guys. Could be part of a battle with Osborne.

[Terribad]

Yes, but it's sponsored by one of Cameron's guys. Could be part of a battle with Osborne.

A private bill can be blocked by a single MP. Not a majority of MPs .... just one. Even if its a ballot bill, it will most liekly get timed out and get buried before the parliament is over.

Don't get excited folks.

Edited August 31, 2011 by Terribad

[Democorruptcy]

At first glance it looks like a problem for the responsible, the irresponsible that already have mortgages basically don't have to pay them. No forced sales. If you're already in a house you can't afford, hey why not have it for free. That is disgusting.

However, in future it will mean that lenders have little chance of getting their money back, so why lend.

Because it isn't their money they are lending it is ours.

They get bonuses based on what they lend. They will have swanned off into the sunset like Sir Fred before it goes tits up. Crime pays in the UK.

[Mr. Piddle]

Right that's it, I'm off to go and buy the biggest lavish house that I can't afford and if I can't meet the mortgage repayments I will offer to pay £1 per week until my circumstances improve!! :

[The Ayatollah Buggeri]

If this law passes, HPC hits 88mph.

Flames. Tyre Tracks. And the market is gone.

Getting a mortgage will be, quite literally, impossible. Banks simply wont be able to offer a mortgage, as the actual CONCEPT of a mortgage will no longer be valid.

Not sure I agree that it'll be that extreme, but lending behaviour would certainly change. Borrowers with big deposits, relatively secure sources of income and other assets they can secure the loan on (e.g. a nice car) will get more attractive deals, and those without much less. Some, towards the bottom of the pile but not totally shut out now, will be shut out if this goes through.

And it's likely banks will start to fold in weeks as their share prices vapourise when people realise they have no way to recover the debts without massive legal costs.

Actually it could have the opposite effect, as it'll mean that banks will still get some money from mortgagees in trouble, as distinct from none (which would be the case in a repo and/or bankruptcy scenario). The bank could then ride it out until - so the theory goes - the value of the property increases, and in the very long term will either see the mortgage repaid, or get a share of the property after the mortgagee's death.

[FreeTrader]

I think you'll find at least some of this proposed legislation seeks to address an anomaly in current property law which although recognised back in the 1980's became glaringly apparent in Ropaigealach v Barclays Bank at the end of the 1990's. The ruling in the latter case was confirmed in Horsham Properties Group Ltd v Clark in 2008 and there was an extensive discussion of it on HPC at the time.

Basically as it stands at the moment a mortgagee (i.e. the lender) can bypass the provisions of section 36 of the Administration of Justice Act 1970 by not seeking a court order to repossess a property – the mortgagee simply sells the property and there's nothing that the mortgagor can do about it (unless the mortgagee has explicitly waived this right in the mortgage contract). The mortgagor can then be declared as a trespasser by the new owners and evicted from the property.

[Si1]

... who transfer it to taxpayers.

the public are already backstopped by taxpayers anyway

[okaycuckoo]

I think you'll find at least some of this proposed legislation seeks to address an anomaly in current property law which although recognised back in the 1980's became glaringly apparent in Ropaigealach v Barclays Bank at the end of the 1990's. The ruling in the latter case was confirmed in Horsham Properties Group Ltd v Clark in 2008 and there was an extensive discussion of it on HPC at the time.

Basically as it stands at the moment a mortgagee (i.e. the lender) can bypass the provisions of section 36 of the Administration of Justice Act 1970 by not seeking a court order to repossess a property – the mortgagee simply sells the property and there's nothing that the mortgagor can do about it (unless the mortgagee has explicitly waived this right in the mortgage contract). The mortgagor can then be declared as a trespasser by the new owners and evicted from the property.

Spot on, although I wouldn't call it an anomaly - just the unfettered right of a charge holder to get his money back without faffing around in the courts. The legislation is the anomaly.

It's the repayment provision that has HPCers screaming into their pillows.