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BBC Panorma: 22nd Oct 20:30 - Trapped By My Mortgage

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Northern Rock: US firm 'misled' UK government on mortgages

A US private equity company has been accused of misleading the government about the biggest sale of state assets in UK history.

BBC Panorama has discovered Cerberus told the government it was planning to offer homeowners better mortgage deals before its £13bn purchase of former Northern Rock mortgages in 2016.

But the company hasn't provided any new mortgages and 65,000 homeowners are still trapped on high interest rates.

Cerberus denies the allegation.

Many of the homeowners are mortgage prisoners, who cannot shop around for a better deal because their loans are too large or their credit rating has been damaged.

Trap

Lisa and Mark Elkins have to pay £2,500 a month on their mortgage because their interest rate is nearly 5%. That's about three times the best market rate.

They have tried to keep up with the monthly payments by taking on extra jobs and working long hours. The couple has also borrowed £20,000 from family and friends.

But Lisa says they now have no choice but to sell their home of 15 years: "I love the neighbours and I love the house but it's become a rock around my neck. You feel like you're sinking and you can't get up and I can't have that any more."

The couple has been trapped on high interest rates since the government took over Northern Rock in 2007.

BBC Panorama has calculated that the high rates have cost the Elkins an additional £30,000 over the past decade.

Mark tells the programme the money could have transformed their lives: "We wouldn't have been forced into taking on loans from family and struggling. I could have a day or two days off, I could have had a weekend."

'New deals'

The Labour peer Lord McFall says that many homeowners are paying large amounts of extra interest: "In some of the case studies I've seen, people with a mortgage would be paying an extra £40-50,000 in the mortgage before it's completed. That is totally unacceptable."

At the time of the £13bn sale, the government bank, UKAR, told Lord McFall that homeowners should get better mortgage deals from Cerberus.

In a letter to the peer, UKAR said that "by returning ownership to the private sector the option to be offered new deals, extra lending and fixed rates should become available to them".

A UKAR spokesman told the programme that Cerberus had the ability to lend to the former Northern Rock customers and that UKAR believed they intended to do so.

"The reply to Lord McFall sent on behalf of the UKAR board of directors was based on information presented to UKAR and the board had no reason to disbelieve this at that time."

'Challenger bank'

Panorama understands that the information presented to UKAR was in the pitch documents Cerberus submitted when it applied to buy the mortgages.

They said they planned to "evolve into an online challenger bank" providing customers with "a wider range of products".

Before the sale was finalised, however, the Financial Conduct Authority told Cerberus it couldn't offer new mortgages until it put the right systems and people in place. Nearly three years later, Cerberus still hasn't done that.

The private equity firm said: "Cerberus and our affiliates take great pride in being good corporate citizens who are committed to compliance with the strongest ethical standards and all legislative and regulatory requirements. We reject any allegations by BBC Panorama to the contrary."

Mistakes and complaints

Some of the homeowners say that as well as paying high interest rates, they have also been poorly treated by Cerberus.

Rachel and Adrian Neale, from Hinckley, fell into arrears on their mortgage when Rachel became seriously ill with Crohn's Disease.

They have paid off most of the arrears and have kept up their monthly payments with Cerberus's mortgage company, Landmark Mortgages. But Landmark keeps making mistakes and issuing default notices.

The couple say they have already made about 70 complaints and that nearly all have been upheld.

"You're in their palm basically," said Adrian. "They can do what they want, that's how it makes you feel, they can pull the rug from underneath you at any time."

It can take hours on the phone to sort out the mistakes and the default notices have badly affected Adrian's building business.

"I can't take on big jobs because I can't gain credit to fund a big job. Building merchants, credit accounts, I can't get access to it and it's held me back massively really in my business."

Landmark says it is committed to high standards of fair customer treatment: "Our staff are trained to deliver fair, consistent and right customer outcomes. Landmark promotes high conduct standards, adopting a tailored approach to customers experiencing financial hardship to ensure we find a suitable and fair solution."

Watch BBC Panorama: Trapped by My Mortgage, Monday 22 October 20:30.

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Rather a pointless investigative piece when you live in a nation that has 'bank' holidays.

Quote

Lisa and Mark Elkins have to pay £2,500 a month on their mortgage because their interest rate is nearly 5%. That's about three times the best market rate.

WTF people... £2,500 a month @ 5%! (~£450,000 mortgage???) Surely they are just morons let themselves get here?

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More BBC house price ramping, they don't want distressed sales they want these people to receive a taxpayer bail-out. 

If the mortgage terms do not suit these borrowers then they can switch providers, it's a free market. If they cannot switch then there is a reason - like they are high risk. And no Panorama, they cannot have the 'best rates'. Why should the feckless, who by their own admission are struggling, get the best rates? Feck 'em all - these people in collusion with the likes of Northern Rock have turned us all into debt slaves. I hope the markets burn 'em - burn 'em good. 

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It's fair to note that all the props to the housing market, billions already and future obligations for decades at least, and all the distortions to the economy as a result, have been in the interests of these people who made a bad investment decision. It isn't like they haven't tried to inflate their debt away.

 

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Northern Rock was always famous for lending to anyone.  A friend of mine didn't bother registering on the electoral register so had problems borrowing, fortunately Northern Rock was happy to do so.

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1 hour ago, dougless said:

UK government 'misled' UK population on mortgages and house prices by promoting 'Help to Buy'.

ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ

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People trapped by hosues then cannot afford.

These people - and the bank that lent to them - should have gone under.

Just sellup and buy somewhere cheaper.

 

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High risk or high loan to value = payday style mortgage loan......lots of different rates out there except some do not have access to the better rates, some have to pay more than others.....😉

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But Lisa says they now have no choice but to sell their home of 15 years: "I love the neighbours and I love the house but it's become a rock around my neck. You feel like you're sinking and you can't get up and I can't have that any more."

People can't afford cost of owning house forced to sell - is this news?

I am waiting for Panaorama to do a feature on how I'm forced to go to work as those people at Tesco demand that I pay for food.

 

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30k over a decade is that all. 

government policy has pushed up houses at 250-300k in 2008-2009 to 700-800k near me. 

not even worth a story about. pocket change 

 

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45 minutes ago, longgone said:

30k over a decade is that all. 

government policy has pushed up houses at 250-300k in 2008-2009 to 700-800k near me. 

not even worth a story about. pocket change 

 

Wow where is that? That is even worse than South East London.

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The British have been incentivised to play the victim to such a degree, it's a pathetic sight to behold.

They all have plenty of options to make up for their bad decisions without inflicting any more harm on the rest of society.

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I only saw the puff piece on the BBC website, it didn't cover much, did they go into any more detail in the programme about how they got to this point at all?

Did they say what type of loan they took out or what amount, etc? I think I already know the answer really.

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6 hours ago, iamnumerate said:

Northern Rock was always famous for lending to anyone.  A friend of mine didn't bother registering on the electoral register so had problems borrowing, fortunately Northern Rock was happy to do so.

snitch on him. you know you want to

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7 hours ago, cashinmattress said:

Rather a pointless investigative piece when you live in a nation that has 'bank' holidays.

WTF people... £2,500 a month @ 5%! (~£450,000 mortgage???) Surely they are just morons let themselves get here?

Watching the first few minutes of this. A right pair of tw?ts on. Oh poor us we took out a mortgage we can't afford and now we have to move. I'm failing to see why this drivel is on TV.

Some nonsense about interest rates ripping them off. Frankly when they took the mortgage there was no reason to expect rates to drop so if they can't afford 5% now that's entirely their fault. 

Idiots in huge houses they can't afford now struggling to keep up. Yawn. 

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33 minutes ago, darkmarket said:

The British have been incentivised to play the victim to such a degree, it's a pathetic sight to behold.

They all have plenty of options to make up for their bad decisions without inflicting any more harm on the rest of society.

there is the problem that politicians of all colours seem to describe having a mortgage and especially 'getting on the housing ladder' as a 'right' and therefore you'll be looked after -this specifically includes TM.

 

in reality, the only 'put' that should exist is that you'll get bottom-rung social accommodation if it all goes pear-shaped - and not get your mortgage obligations paid/bailed out/ignored instead.

 

At some point, the Brown/Cameron/May 'put' will break down as the rest of the country sim[ply can't afford to keep these tw1ts in the manner which they expect. Not sure exactly when that will be...

Edited by Si1

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A 5% mortgage wasn’t unreasonable 15 years ago. 

One guy had taken out a 125% loan and blamed the government for allowing it. 

I stopped watching after that. 

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19 minutes ago, Si1 said:

At some point, the Brown/Cameron/May 'put' will break down as the rest of the country sim[ply can't afford to keep these tw1ts in the manner which they expect. Not sure exactly when that will be...

Most of these couples could have been through bankruptcy and be living quite comfortably again by now, they all have the same idea that it's 'their house' and they're entitled to keep it.

21 minutes ago, Si1 said:

in reality, the only 'put' that should exist is that you'll get bottom-rung social accommodation

Not until another sterling crisis it seems. The main message I took away was, we bailed out the banks, now let's bail out whoever owns their junk debt now. If the idiots who took out 125% mortgages get a free house, it's just collateral damage.

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9 hours ago, prozac said:

snitch on him. you know you want to

He didn't do anything wrong, he was just a bad credit risk in theory (actually he wasn't in reality). 

I don't normally snitch on friends - particularly if they have not broken any laws.

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23 minutes ago, iamnumerate said:

He didn't do anything wrong, he was just a bad credit risk in theory (actually he wasn't in reality). 

I don't normally snitch on friends - particularly if they have not broken any laws.

So he was good for the loan

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16 minutes ago, prozac said:

So he was good for the loan

He paid (I think, lost touch) but what I remember were his words

"I was silly, I never bothered to go the electoral register, so no one would lend to me, apart from Northern Rock".

Now although he was safe, you wonder how many unsafe people they got due to that attitude.

It is better for a bank to not lend to some safe people, if it means that they only lend to safe people.

Edited by iamnumerate
Grammar

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45 minutes ago, iamnumerate said:

He paid (I think, lost touch) but what I remember were his words

"I was silly, I never bothered to go the electoral register, so no one would lend to me, apart from Northern Rock".

Now although he was safe, you wonder how many unsafe people they got due to that attitude.

It is better for a bank to not lend to some safe people, if it means that they only lend to safe people.

As long as house prices went up they were ok

or they would need a fairy godmother like Gordon brown to bail them out 

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  • 245 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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