billybong Posted October 9, 2012 Report Share Posted October 9, 2012 (edited) http:// www.telegraph.co.uk/finance/newsbysector/banksandfinance/9594899/Financial-regulation-new-frontline-for-growth.html There is only big caveat, though. Taking the hit would wipe out so much capital the banks would need to go back to shareholders, or the taxpayer, cap-in-hand to demand another bailout. Edited October 9, 2012 by billybong Quote Link to post Share on other sites
The Knimbies who say No Posted October 9, 2012 Report Share Posted October 9, 2012 whatever the figures say, the reality is what it is. Agreed. Quote Link to post Share on other sites
Patfig Posted October 9, 2012 Report Share Posted October 9, 2012 (edited) they could always foreclose on defaulters. cash buyers would move in on the scene....people would move around. or, they could pass a law...everyone stays where they are, whatever their financial situation..renters, roomers, mortgage holders...whoever. Ban evictions for non payment. we could ALL default then. I like the sound if that we could have party and give each other a jolly good slap on the back Edited October 9, 2012 by Patfig Quote Link to post Share on other sites
Gigantic Purple Slug Posted October 9, 2012 Report Share Posted October 9, 2012 surely the forgiveness is in the arrears....thats what they couldnt pay before. how is forgiving something they couldnt pay, going to mean money into the economy?...they still have no excess to spend. They would just run up the same arrears as they were allowed to before. Quote Link to post Share on other sites
porca misèria Posted October 9, 2012 Report Share Posted October 9, 2012 I hope this is simply conference season blustering by officials with not much else to do. Interesting stat on commercial real estate- hadn't realised the levels of forbearance are so high: Officials don't have 'conference season'. That's politicians. Quote Link to post Share on other sites
billybong Posted October 9, 2012 Report Share Posted October 9, 2012 (edited) Although the homeowner would still in theory have the same principal loan to repay, the cost of servicing it would be lower – thereby reducing the effective debt. It would be forgiveness in another guise. And the borderline default high risk borrower (sub-prime?) suddenly becomes prime and able to help "stimulate" the economy again Edited October 9, 2012 by billybong Quote Link to post Share on other sites
EmpiricalBear Posted October 9, 2012 Report Share Posted October 9, 2012 I turned bear in 2002. I was sure the property market had to crash, it was a bubble, clearly. In late 2003 I went for the STR option. Boy, have I learned a thing or two about property and the UK market since then. The main thing I have learned is, 'don't be the only one out of step in the army' The government and PTB will do any amount of dropping money from helicopters to help the majority of their voters, you can be sure of that. My strategy is now to borrow as much as possible at the lowest IR possible. Rates aren't going up for a few years. And there is always an off chance of a bailout further down the line... The Funding for Lending scheme injects up to 80BN into the mortgage market for the next 4 years. That spans the next election. I predict that if things get shaky, they can increase the size of this scheme, provided banks are seen to take it up. Quote Link to post Share on other sites
Bloo Loo Posted October 9, 2012 Report Share Posted October 9, 2012 snip The Funding for Lending scheme injects up to 80BN into the mortgage market for the next 4 years. That spans the next election. I predict that if things get shaky, they can increase the size of this scheme, provided banks are seen to take it up. you cant push on a string. In 2002, the banks hid the reality of the "wall of money" from everyone...regulators, the Bank of England, Everybody. People were and are still being sucked into an unburst Ponzi. Today, they are more open about the dealings...but what we dont know is going to be truly amazing when we do find out. Quote Link to post Share on other sites
bmf Posted October 9, 2012 Report Share Posted October 9, 2012 My strategy is now to borrow as much as possible at the lowest IR possible. Rates aren't going up for a few years. And there is always an off chance of a bailout further down the line... The Funding for Lending scheme injects up to 80BN into the mortgage market for the next 4 years. That spans the next election. I predict that if things get shaky, they can increase the size of this scheme, provided banks are seen to take it up. 20% of shit pie still tastes like shit. If you want a real piece of a real pie then emigrate. Quote Link to post Share on other sites
rantnrave Posted October 9, 2012 Report Share Posted October 9, 2012 The Funding for Lending scheme injects up to 80BN into the mortgage market for the next 4 years. That spans the next election. I predict that if things get shaky, they can increase the size of this scheme, provided banks are seen to take it up. This really is a massive issue that should be getting more discussion here than it is IMO. See today's RICS report - expectations are that FFL will have a growing impact, putting a floor under current prices. Since most of the money is going to the equity rich already when they remortgage, I expect the prices of family homes to increase. How long is this going to take to work through the system? We are talking years here. It has the potential to not just stall an HPC but put into reverse... Quote Link to post Share on other sites
RufflesTheGuineaPig Posted October 9, 2012 Report Share Posted October 9, 2012 Are people still believing this ridiculous idea that banks can write down mortgages? They'll need bailing out again if they do that. Default on debt means default on savings and pensions.... when are people going to understand this? Quote Link to post Share on other sites
TheBlueCat Posted October 9, 2012 Report Share Posted October 9, 2012 The Bank has estimated that as much as 8pc of UK mortgages are in forbearance, equivalent to about £100bn of debt. On commercial real estate loans, it reckons a third are in forbearance – or roughly £75bn. So there's only 225B of commercial real estate loans in total made by UK banks? That number sounds way too low. Quote Link to post Share on other sites
Bloo Loo Posted October 9, 2012 Report Share Posted October 9, 2012 Are people still believing this ridiculous idea that banks can write down mortgages? They'll need bailing out again if they do that. Default on debt means default on savings and pensions.... when are people going to understand this? so its OK to buy a shell company, with money they dont have, sell the possessed home to the shell and show the debt gone, and the money as an asset in the Shell? But not to write off the debt. I see. One way is Ok and looks good on the books, as the losses will be off balance sheet for some while, the other, honest way, shows a loss, but the reality is the same. Quote Link to post Share on other sites
sleepwello'nights Posted October 9, 2012 Report Share Posted October 9, 2012 cash buyers would move in on the scene....people would move around. Who would the cash buyers be? There are only a small minority of STR's. I would hazard a guess that there are only a small minority of those who held back from purchasing because they thought prices were unsustainable. Most who wanted to buy bit the bullet and took advantage of generous lending multiples from the banks, special schemes from builders and the bank of mum and dad. Mortgage lending will probably remain restricted because the lenders won't have the capital available after taking the losses HPC would cause. My speculation is the cash buyers will be property investors who will buy up what they can and rent them out. I doubt whether those wanting to buy will be able to complete with the speed of professional property investors. Quote Link to post Share on other sites
RufflesTheGuineaPig Posted October 9, 2012 Report Share Posted October 9, 2012 so its OK to buy a shell company, with money they dont have, sell the possessed home to the shell and show the debt gone, and the money as an asset in the Shell?But not to write off the debt. Your example is mathematically ridiculous. I expect better from you of all people. Quote Link to post Share on other sites
The Knimbies who say No Posted October 9, 2012 Report Share Posted October 9, 2012 Officials don't have 'conference season'. That's politicians. Sure, but they are not above making mischief when their political 'masters' are otherwise engaged. Quote Link to post Share on other sites
the end is a bit nigher Posted October 9, 2012 Report Share Posted October 9, 2012 Given their policy on making work pay does anyone really think the Tories would allow a massive handout to what would in the majority be Labour voters? Middle class person A struggles to make ends meet and pay the mortgage. Chav B defaults and the government allows him a free pass out while leaving A to struggle. Can't see it myself. Quote Link to post Share on other sites
PopGun Posted October 9, 2012 Report Share Posted October 9, 2012 Are people still believing this ridiculous idea that banks can write down mortgages? They'll need bailing out again if they do that. Default on debt means default on savings and pensions.... when are people going to understand this? Some of us do.... Those savings and pensions are probably toast anyway. Quote Link to post Share on other sites
Bloo Loo Posted October 9, 2012 Report Share Posted October 9, 2012 Your example is mathematically ridiculous. I expect better from you of all people. looks great on a balance sheet though. Mortgage ...£100K cant pay.....option write it off and sell the house in firesale option 2. Take 100K...invest in shell....now bank has asset of £100K shell buys house...repays mortgage.... bank now has no bad debt, its risk is gone, and the 100K asset. The shell has nothing. see? This is the magic of off balance sheet dealings. Quote Link to post Share on other sites
Jail Them All Posted October 9, 2012 Report Share Posted October 9, 2012 looks great on a balance sheet though. Mortgage ...£100K cant pay.....option write it off and sell the house in firesale option 2. Take 100K...invest in shell....now bank has asset of £100K shell buys house...repays mortgage.... bank now has no bad debt, its risk is gone, and the 100K asset. The shell has nothing. see? This is the magic of off balance sheet dealings. Looks too easy. I'm off for a think... Quote Link to post Share on other sites
Bloo Loo Posted October 9, 2012 Report Share Posted October 9, 2012 Looks too easy. I'm off for a think... It is easy...its technically a scam....ie, there is no arms length detachment from the deal to the mortgage holder...if they underpay, then there is every chance of the bank losing a court case as the house wasnt marketed to get the best possible price. Quote Link to post Share on other sites
Dorkins Posted October 9, 2012 Report Share Posted October 9, 2012 Given their policy on making work pay does anyone really think the Tories would allow a massive handout to what would in the majority be Labour voters? Middle class person A struggles to make ends meet and pay the mortgage. Chav B defaults and the government allows him a free pass out while leaving A to struggle. Can't see it myself. I don't buy your premise that the people who bought at the peak of the bubble are natural Labour voters. When the London bubble bursts there are going to be plenty of Tarquins and Tamaras up to their eyeballs in negative equity. Quote Link to post Share on other sites
South Lorne Posted October 9, 2012 Report Share Posted October 9, 2012 http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9594899/Financial-regulation-new-frontline-for-growth.html This is a complicated article which I don't fully understand - but towards the end it seems to be saying there's moves behind the scenes to forgive £100bn of mortgage debt in a last desperate attempt to get the economy moving - entailing another bailout - oops....... quote ..in the article it states: UK banks are holding vast hidden losses on their books. ...surely this is fraud according to the stock exchange rules ...and does it not point to the continuing incompetence of both the FSA and the Bank of England.....?..... Quote Link to post Share on other sites
porca misèria Posted October 9, 2012 Report Share Posted October 9, 2012 Are people still believing this ridiculous idea that banks can write down mortgages? They'll need bailing out again if they do that. Default on debt means default on savings and pensions.... when are people going to understand this? Default on pensions is already a problem for those who've tried to retire since 2009 and QE. Quote Link to post Share on other sites
porca misèria Posted October 9, 2012 Report Share Posted October 9, 2012 Who would the cash buyers be? There are only a small minority of STR's. I would hazard a guess that there are only a small minority of those who held back from purchasing because they thought prices were unsustainable. Most who wanted to buy bit the bullet and took advantage of generous lending multiples from the banks, special schemes from builders and the bank of mum and dad. Mortgage lending will probably remain restricted because the lenders won't have the capital available after taking the losses HPC would cause. My speculation is the cash buyers will be property investors who will buy up what they can and rent them out. I doubt whether those wanting to buy will be able to complete with the speed of professional property investors. Potential cash buyers include those of us who've saved a few quid since Not Buying in 2005. Quote Link to post Share on other sites
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