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frugalista

Possible Crash Scenario

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The basic idea of this is that many mortgages are fraudulent, and that fraudulent loans can be called in at any time.

1. Jobless / personal insolvencies / mortgage default total rises gradually.

2. Repossessions rise.

3. Lenders begin losing money due to repossessions.

4. It becomes worthwhile to predict which borrowers will default.

5. Lenders begin auditing self-cert mortgages and other mortgages likely to have attracted fraudulent applications.

6. Fraudulent loans called in.

7. Go to 2.

comments?

frugalista

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A tax on second homes? Removal of CGT relief on capital gains for a second property? That would open the BTL floodgates... :lol:

There is no CGT relief on capital gains on a second property, so it can't be removed (except for taper relief at the non-business-asset rate, which is hardly generous and is very unlikely indeed to be removed).

Edited by zorn

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The basic idea of this is that many mortgages are fraudulent, and that fraudulent loans can be called in at any time.

1. Jobless / personal insolvencies / mortgage default total rises gradually.

2. Repossessions rise.

3. Lenders begin losing money due to repossessions.

4. It becomes worthwhile to predict which borrowers will default.

5. Lenders begin auditing self-cert mortgages and other mortgages likely to have attracted fraudulent applications.

6. Fraudulent loans called in.

7. Go to 2.

comments?

frugalista

It has to be in their interests to call them. It is only in their interests where the default actually happens. It would also not make sensible bank policy to start broadly calling in loans where income is still being derived, whether they think it will cease or not. Even if they can drag another year of repayments before foreclosing, that is another 2K? 10K? 25K. Over a broad sample it adds up quickly. This doesn't really work to their agenda, since it would reduce the nominal value of their securities on the books which would cause the business to be less valuable and look less viable. Share prices? Oh, and another reason they might shy away... it might bring on a HPC!

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banks in recent years only calleed in loans when it was clear there was no prospect of payments being maintained.

in the last crash, they were very quick to pull the plug on mortgages and businesses.

i suspect that once they see falling prices they will be quiicker to call in loans where there is a risk of negative equity after repossession.

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The basic idea of this is that many mortgages are fraudulent, and that fraudulent loans can be called in at any time.

1. Jobless / personal insolvencies / mortgage default total rises gradually.

2. Repossessions rise.

3. Lenders begin losing money due to repossessions.

4. It becomes worthwhile to predict which borrowers will default.

5. Lenders begin auditing self-cert mortgages and other mortgages likely to have attracted fraudulent applications.

6. Fraudulent loans called in.

7. Go to 2.

comments?

frugalista

Interesting. Not least because I have two people close to me who have self cert IO mortgages. One claimed to earn 50K salary, (whereas 28k was the true figure), to obtain a 160k IO mortgage. I'm seriously worried about these two because they have 4 children between them and probably more on the way.

I agree with Elizabeth's comments. I doubt self cert IO mortgages will be a driver or catalyst for HPC for the reasons she states. Provided people are working they will carry on paying their rent to the banks.

Where I do see a problem is the long term, say 20-30 years from now. A whole generation of people either saddled with negative equity and with no hope of paying off the house before retirement, may well pose a demographic time bomb for the future.

Edited by Baz63

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A tax on second homes? Removal of CGT relief on capital gains for a second property? That would open the BTL floodgates... :lol:

coucil tax to be levied on the homeowner rather than the occupier,and removal of all council tax discount on multiple homes......would that be stealthy enough?

maybe a multi-home tax multiplier.

prop 1 =100%

prop 2 =105%

prop 3 =110% etc.

...all done through existing land registry data,and more paper shuffling for the civil servants.

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My next milestone is seeing an increase in forced sellers.

These people are those that made plenty of money, and knocked up plenty of debts,

and are prepared to downsize for the sake of debt-free life-style.

(and what a lot of properties for sale, I’m seeing????)

The ones over their heads in debt... (so can’t sell), are those that post here as bulls.

And my heart bleeds purple coloured p!ss every time I read their posts of desperation.

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banks in recent years only calleed in loans when it was clear there was no prospect of payments being maintained.

in the last crash, they were very quick to pull the plug on mortgages and businesses.

i suspect that once they see falling prices they will be quiicker to call in loans where there is a risk of negative equity after repossession.

From my experience of the last crash, most of the lenders were too slow to 'pull the plug'

from the 20 or so, repos I had personal knowledge, the majority of lenders took action far too late

There was pressure put on lenders like the Halifax NOT to throw families out on the streets, if at all possible

They will NOT make the same mistake this time

I already know of 2 repo's last year and they moved f**king fast compared to last time

I gave advice to a good friend with fianancial problems saying "Don't worry, it will take months, aslong as you pay your arrears or make a decent offer, they won't repo"

I was very wrong and had to apologise - lucky I did warn him it was 'unlikely' rather than absolute - I'll keep quiet in future - times have changed since the last bust!

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coucil tax to be levied on the homeowner rather than the occupier,and removal of all council tax discount on multiple homes......would that be stealthy enough?

maybe a multi-home tax multiplier.

prop 1 =100%

prop 2 =105%

prop 3 =110% etc.

...all done through existing land registry data,and more paper shuffling for the civil servants.

Oracle? Your a closet evil technocrat (like me :D ). Gordie needs ya mate ;)

I'm all for Council Tax on the owner of the property. What is the difference? They will just charge more rent, which is fine if you don't have to pay the CT. Far simpler too to implement, since the owner is a fixed entity with an asset to hedge against. And would also pass the impetus to the owner to keep the property utilised (the first 6 months unoccupied they waive the tax). Given the level of automation of land registry information it would be far more easy and systematic to implement.

Ultimately your reforms would be far less paper and labour intensive. Your right of course, simplicity is always the key to good systems design.

EDIT:

Although not convinced by the tiering system. That means renters pay more rent. Maybe 100% for empty properties (rather than minus 100% for the first 6 months and 50% for second homes I think it is). That would bite. Yes. That works. :D

Edited by Elizabeth

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I wonder what they learned last time that makes them want to sell and get out fast this time? ;)

I remember one repo via the halifax where a 1 bed was bought in 88' for 65K and peaked at 75K in '89

It was eventually repod and sold for 25K circa 1992

If the halifax had acted quicker around mid 1990 they probably would have got 45K

They won't make the same same mistake this time and back then Halifax, Abbey etc, were building societies and the plea of the Tories to take it easy held some sway

They are now banks (some international)

I doubt if brown and blair will have the same influence, this time round

With regard to the 'fraud' aspect - this makes no difference IMO and frankly is quite laughable

Fraud, generally takes place when a company is unknownly ripped off, hence a fraud takes place

In this case all the lenders know exactly what is happening (at the highest level) hence there is no fraud

Likewise, in all but the most extreme of cases,the police will not prosecute

If there is no sentence, in the real world - there is no crime (a bit like when chav's break into your car etc,)

Edited by 88Crash

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  • 302 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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