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iamdamosuzuki

Interest Only Mortgage Scandal

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Unfortunately I can't link to this, but the Scottish mail has a Page one splash today:

'HOMES PUT AT RISK IN CUT-PRICE MORTGAGE SCANDAL'

Almost 80,000 Scottish families face losing their homes after taking out interest only mortgages.

Now I'm no financial whizz, and interest only 'loans' are a symptom of far gone financialisation, etc etc etc (an absurdity for residential property).

But how does anyone 'lose' something they haven't paid a penny for? I rented for years before I took a repayment mortgage post crash, which was the only time I could actually afford it. These individuals gambled on ever rising house prices, helping to keep property out of reach for more prudent (or just not completely idiotic) people - and now that gamble has failed, they are looking for the sympathy vote and ultimately to be able to keep what they could never afford in the first place.

The rest of us, presumably, are expected to pay out on their failed speculation. Nice work!

I'm genuinely concerned that IO is going to be seen as nothing more than a misselling scandal, like endowments or PPI. It wasn't. If you are unable to comprehend that failure to pay the principal on a loan is simple default - tough. If the banks somehow misled you into thinking you were repaying the capital (something I never encountered when taking out a mortgage) then you may have a cause for complaint.

But the concern I have is that the greed and feckless behaviour of those who took out IO mortgages is going to be rewarded retrospectively by TPTB. Surely not????

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I have a solution to this problem.

Take the equity off the people who made money on an IO mortgage and use that to pay off the losses of those that lost.

Any other scheme to bail our the losers would be intrinsically unfair :lol:

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I have a solution to this problem.

Take the equity off the people who made money on an IO mortgage and use that to pay off the losses of those that lost.

Any other scheme to bail our the losers would be intrinsically unfair :lol:

Just cancel all mortgages. Some renters might complain a bit, but, frankly, they are renters.

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All I can do is agree with you, the prudent and those who try to be responsible end up footing some of the high risk gambling losses. But the highly indebted are not all without their own cash, there are those that have plenty of surplus funds, investments and equity it is just they prefer to make speculative gains from other money preferring not to use their own play safe with that......privatise gains, socialise losses.....still TPTB must have thought the risks were worth it. ;)

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Unfortunately I can't link to this, but the Scottish mail has a Page one splash today:

'HOMES PUT AT RISK IN CUT-PRICE MORTGAGE SCANDAL'

Link: http://www.pressdisp...r.aspx?cid=8948

FWIW, I think there'll be a lot of compensation payments and bail-outs for the feckless once again, no matter how many sensible people argue that "Interest Only does what it says on the tin" or "what did they not understand about the term 'interest only'?".

Edited by mikthe20

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How can anyone who bought 25 years ago not have saved enough to pay off the capital? ave price in 1990 50k ish which is what most people today need as a deposit.

Bought 25 years ago and repeatedly MEWed ending up with a 95% IO mortgage, a BMW 5-series, and lots of holiday photos..

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"THE financial irresponsibility of banks is damaging a further group of victims: some 78,000 Scottish families who face losing their homes through inability to repay the interest-only mortgages they were sold in the days of easy credit. Because banks cynically sold these instruments to people without ensuring they were capable of repaying their mortgage loans, the menace of homelessness now looms over thousands of Scots. "

:lol: The sheeple must not be held responsible for their own idiocy whatever happens! Going to be plenty of distressed sales hitting the market soon I think.

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Bought 25 years ago and repeatedly MEWed ending up with a 95% IO mortgage, a BMW 5-series, and lots of holiday photos..

Unless the property is now worth less than the outstanding mortgage, these people have played the game and come out as winners.

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"THE financial irresponsibility of banks is damaging a further group of victims: some 78,000 Scottish families who face losing their homes through inability to repay the interest-only mortgages they were sold in the days of easy credit. Because banks cynically sold these instruments to people without ensuring they were capable of repaying their mortgage loans, the menace of homelessness now looms over thousands of Scots. "

:lol: The sheeple must not be held responsible for their own idiocy whatever happens! Going to be plenty of distressed sales hitting the market soon I think.

I know.....don't bother working, don't bother saving, don't bother paying off debt, don't bother doing much at all....blame the world and his wife for the situation we find ourselves in and then get everything paid for us because it is our entitlement. :blink:

....give people jobs/work, see if they actually want to try and improve the positions they find themselves or is it too little too late.

Still, spending money be it earned or borrowed only helps circulate money in the economy, helps growth, and paid a few wages at the time of the spend. ;)

Edited by winkie

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Oh well. Cheaper houses for those who waited and didn't panic buy in 2008 then.

You would certainly hope so..... but I'm not at all convinced. I half think the current administration would rather support Anyone than risk lower house prices.

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KFI will mean any misselling idea's go nowhere. Well for any mortgages after they were introduced. (2003 iirc)

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You would certainly hope so..... but I'm not at all convinced. I half think the current administration would rather support Anyone than risk lower house prices.

We should ban all IO mortgages now. WE should ban 120% mortgages which have re-emerged too. Only max 90% LTV AND 2.25 X INCOME MULTIPLES & 0.5 x second income should be allowed through any lender, primary or secondary. Minimum interest rate should be 4.5%. After a year, the prices would tumble to fit the incomes in most places. The unearned equity of a the few would be wiped away. The squeezed bottom and recent buyers would have negative equity. They would wait for 10 yrs for the prices to reach current levels or if very unlucky would lose what they could not afford on any realistic measure. Lower rents woud follow: lower housing benefit, less wage and inflation pressure, better international competitiveness. We could spend all this money currently supporting house buying on manufacturing and restructuring and exporting for long term wealth. Simples

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The squeezed bottom and recent buyers would have negative equity. They would wait for 10 yrs for the prices to reach current levels or if very unlucky would lose what they could not afford on any realistic measure.

The squeezed bottom would be ought to pay down their debt with homegrown equity rather than relying on HPI. Ten years of NE maybe rotten but if if they are paying the principle (sp?) back and the lending rules you mentioned were applied to everyone including recent borrowers then much of the sting of NE would be taken away.

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Just cancel all mortgages. Some renters might complain a bit, but, frankly, they are renters.

When people suggest stuff like this, debt jubilees etc, I can never tell if they are joking, or simply don't understand that it would lead to the complete collapse of the banking system followed by the collapse of society.

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  • 243 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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