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H S B C And Other Banks Try To Unload Their Bad Loans


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http://www.realestatejournal.com/buysell/m...0216-simon.html

Wall Street Journal

Mortgage Hot Potatoes: Banks
Try to Unload High-Risk Loans
By Carrick Mollenkamp and James R. Hagerty and Ruth Simon
From The Wall Street Journal Online
Efforts by major banks and Wall Street firms to unload bad U.S. housing loans are speeding up a shakeout in the subprime mortgage industry.
As more Americans fall behind on mortgage payments, Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same high-risk, high-return loans that the big banks eagerly bought in 2005 and 2006.
Merrill demanded in December that ResMae Mortgage Corp. -- which in 2006 sold it $3.5 billion in subprime mortgage loans, or loans to borrowers with poor credit records -- buy back $308 million of loans whose borrowers had defaulted. In a filing this week for bankruptcy law protection, ResMae said those demands "crippled" its operations. The Brea, Calif., company said that repurchase requests were "severe and unexpected."
..../
-- February 16, 2007

Hysterically funny! What a load of bankers these people are. Serves them right. I look forward to the shys trying to unload all the trash loans that are backfiring here now with the 67% rise in mortgage defaults--and rising.

Edited by Realistbear
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I got a call from HSBC (well, a lady in India anyway) the other day because my business bank account was... £8 overdrawn. Asking when the next credit would be made.

I wonder how many calls someone £10,000 down on one of their credit cards gets? Not one I imagine, as long as they keep 'a spendin'. ;)

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I got a call from HSBC (well, a lady in India anyway) the other day because my business bank account was... £8 overdrawn. Asking when the next credit would be made.

I wonder how many calls someone £10,000 down on one of their credit cards gets? Not one I imagine, as long as they keep 'a spendin'. ;)

To be fair, if you go overdrawn on an HSBC business account they will bend you over and brutalise you, so it's only fair that they notify you. To the tune of £30 a day I believe it was a few years ago, unless you've paid the £100 protection money for an 'authorised overdraft'. Yes, I'm speaking from experience. :P How much do they whack you for nowadays?

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To be fair, if you go overdrawn on an HSBC business account they will bend you over and brutalise you, so it's only fair that they notify you. To the tune of £30 a day I believe it was a few years ago, unless you've paid the £100 protection money for an 'authorised overdraft'. Yes, I'm speaking from experience. :P How much do they whack you for nowadays?

something i've noticed recently is that some banks seem to be charging more than one overdraft fee per annum and it is usually in the order of £150 - £170 a pop :o

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To be fair, if you go overdrawn on an HSBC business account they will bend you over and brutalise you, so it's only fair that they notify you. To the tune of £30 a day I believe it was a few years ago, unless you've paid the £100 protection money for an 'authorised overdraft'. Yes, I'm speaking from experience. :P How much do they whack you for nowadays?

I've got an arranged overdraft facility of £1500. There is a charge for the account, but it's only a few quid a month. Thinking about it, I only have a business account to make calculating tax easier.

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You'll get back most of your money up to about £35,000 if it's invested with a UK bank or building society (it's protected by a government scheme which I think is now called the Financial Services Compensation Scheme).

I think Ing and Icesave (and presumably other institutions with their primary regulator abroad) are more complicated -- the level of protection is the same, but you have to claim on the Dutch or Icelandic protection scheme for the first 20,00 euros (no idea how making a claim would work in practice) and then claim in the UK for any shortfall.

BE

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The blame game always follows soon after miracle prices start to collapse. No doubt our Lenders will be looking around soon to see who they can shove the losses onto. Perhaps Hedge funds may be left holding the parcel when it blows up?

What amazes me is how our bankers thought people could repay 5 X loans and not want to default on IO when they could see no way out of their trap after the mortgage comes to an end. Its going to be interesting to watch as they start increasing their debt provisions as Moodys and Standard and Poors begin lowering their bond ratings.

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http://www.housingwire.com/2007/02/16/stud...tential-losses/

Study: Mortgage Risk Exposes CDOs to Significant Potential Losses

Risk in the U.S. mortgage market may have been severely understated for years, according to market analysts in a paper presented late Thursday at Hudson Institute, a public policy research organization.

.....

“This study of risk in the subprime mortgage market is very timely,” said John C. Weicher, director of Hudson Institute’s Center for Housing and Financial Markets. “The subject has been much in the news just in the last few days, but there is a need for further research.”

Some would say it is massively late.

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http://www.housingwire.com/2007/02/16/stud...tential-losses/

Study: Mortgage Risk Exposes CDOs to Significant Potential Losses

Risk in the U.S. mortgage market may have been severely understated for years, according to market analysts in a paper presented late Thursday at Hudson Institute, a public policy research organization.

.....

“This study of risk in the subprime mortgage market is very timely,” said John C. Weicher, director of Hudson Institute’s Center for Housing and Financial Markets. “The subject has been much in the news just in the last few days, but there is a need for further research.”

Some would say it is massively late.

Is the crash coming? :o

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General Motors may lose up to a billion dollars on subprime mortgages:

http://www.marketwatch.com/news/story/gms-...o&dist=yhoo

You know, I remember the days when car companies made and sold cars, not mortgages...

Why do one thing well when you can do two badly?

Meanwhile...........

http://business.scotsman.com/banking.cfm?id=238092007

14TScrawb.jpg

B&B offers 9% divi rise after solid profits

NICK BEVENS

A HEFTY provision to cover compensation for mis-selling in its IFA business, which was closed in 2004, has failed to dampen a solid performance at Bradford & Bingley, and shareholders can still expect a 9 per cent rise in dividend this year.

.......

He said December's deal with fellow lender GMAC to buy up to £12bn in mortgages from the firm over three years would add flexibility and control over the product mix and credit profile of its mortgage book.

:o

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Kebab, Coming?

http://thehousingbubbleblog.com/?p=2356

The decline means an investor this week would have paid more than $950,000 a year to protect $10 million of bonds against default. ‘We’ve yet to see the floor on where these things can go,’ said Paul Colonna, a fixed-income manager for GE Asset Management, which oversees $199 billion. ‘And it’s not based on housing data or performance data’ on mortgages in the bonds.”

“Last week, Realtors reported that existing- home sales in North Texas declined for the eighth consecutive month. The Metroplex has a glut of new homes sitting vacant, one of the highest mortgage delinquency rates in the country and a long run of rising foreclosures.”

“It’s correction time in the housing market, so hold on to your hat. ‘It’s going to affect the economy, period,’ says Jim Gaines, regional economist at Texas A&M. When he spoke to a group of (builders) recently, he heard a mix of resignation and gallows humor. ‘Builders were saying if you hadn’t gone under a few times, you just haven’t been around here long enough,’ Gaines says.”

....................

http://thehousingbubbleblog.com/?p=2354

From Bloomberg. “In another sign of growing concern about mortgages made to high-risk borrowers, Standard & Poor’s said it would no longer wait for homes to be foreclosed on and sold at a loss before alerting investors in mortgage-backed bonds that it expects to lower ratings on the bonds.”

....

“‘It is a watershed event’ because it means S&P is now actively considering downgrading bonds within their first year, said Daniel Nigro, a portfolio manager at Dynamic Credit Partners, a manager of about $6 billion in hedge funds and collateralized debt obligations. ‘We welcome them being more open’ about their methods.”

.....

“One of the bonds S&P warned about this week was backed by Alt-A mortgages. It was the company’s first warning about any of those securities sold in 2006. Alt-A loans often are made with less proof of borrowers’ pay, or are interest-only loans or ‘option’ adjustable-rate mortgages.”

Hmm, Alt-A, that will be the equivalent of pretty much the whole of the UK FTB sector then? What there is left of it.

Edited by OnlyMe
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I have seen first hand the underwriting operations of several UK sub-prime lenders. It strikes me that there is unlikely to be the level of income inflation and downright lying that seems to be occuring in the US. The major sub-prime boys have all been round the block i.e. 20+ years of grizzled experience at the coal face, so they've seen the bad times too.

Just an observation. :unsure:

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If international banks get hit hard by bad debts in America, they're sure to try to recoup that money elsewhere. Also, if the people buying 'mortgage backed securities' come to believe they're 'financial toxic waste' (as someone described them a while back), then the UK banks aren't going to be able to sell debt on or insure it as easily.

I can't see how a major credit crunch and bad debt apocalypse in America could _not_ have serious repercussions in the UK when the global financial system is so intertwined.

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I can't see how a major credit crunch and bad debt apocalypse in America could _not_ have serious repercussions in the UK when the global financial system is so intertwined.

It will have a very serious impact in the UK. However this impact is not the same as UK banks facing bankruptcy when all the debtors in the UK default. What may happen is UK banks (for whom US sub prime is a modest portion of their debtor portfolios) take a far more sensible view of lending - rather than they actually go bankrupt because of US losses. Remember when half teh thrid world defaulted on its debts years ago - all that happenned was the banks got leery of lending more and squeezed UK borrowers to keep profits up.

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I am a little confused about all this. Is there a chance that the US situation might spill over to the UK? ie banks stung in the US leading to credit tightening etc here

The government (Gordon) are getting scared that they have a disaster brewing and may already be trying to shift blame:

http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770

Banks told to outlaw irresponsible lending
By SEAN POULTER - More by this author » Last updated at 17:32pm on 16th February 2007
The Office of Fair Trading is demanding dramatic changes from banks
Banks have been told to outlaw irresponsible lending and hidden charges by the Office of Fair Trading, which is demanding dramatic changes in the policing of the industry.

Gordon has been riding the HPI-MEW bandwagon for years to create his so called "miracle economy" and NOW he wants them to stop? Just to make it look like his policies have not been to blame. :lol::lol::lol:

Our housing market is built on irresponsible lending that is why insolvency rates are rocketing and CAB are inundated with homeowners who can no longer pay their crippling mortgages. No wonder they can't--who on earth could? Madness.

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I doubt they'll go bankrupt either, because the government would bail them out first. But simply cutting back on mortgage lending to sensible levels would be enough to cause a housing crash.

Yes indeed. Tighten credit and Gordon's HPI-MEW economy strangles itself to death. Gordon must keep the floodgates of credit flowing and flowing and flowing.............. :lol::lol::lol:

Watch the spread of collapsing banks as more and more punters can't pay their "crippling mortgage payments(Daily Express)."

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Banks have been told to outlaw irresponsible lending and hidden charges by the Office of Fair Trading, which is demanding dramatic changes in the policing of the industry.

That's a joke. The only people who can outlaw irresponsible lending is government through legislation.

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That's a joke. The only people who can outlaw irresponsible lending is government through legislation.

Not such a joke any more:

http://www.iii.co.uk/markets/index.epl?typ...LLTYPE=insider2

Should companies be allowed to offer high-interest loans?
Results
No - the public should have protection 60.2% 60.2%
Yes - it's up to the individual to check 39.8% 39.8%
Court dismisses £384,000 loan debt
A judge has ruled that a Merseyside couple do not need to pay off a high-interest loan, calling the terms of the agreement "extortionate". The loan grew from £5,750 to a staggering £384,000 over 15 years.
Tony and Michelle Meadows faced reposession of their £200,000 home after North London Securities took them to court for failing to keep up with repayments on their 34.9% APR loan.
The amount owed grew to such a huge amount because the couple fell behind on their repayments. The loan terms stated that, if payments fell into arrears, interest at 34.9% would be charged not just on the basic repayments, but on the arrears as well.
"Where the rate concerned is as high as 34.9%, it seems to me that the combination of factors is so potentially exorbitant that it is grossly so and does grossly contravene the ordinary principles of fair dealing," said Judge Nigel Howarth.
Even If Mr Meadows had made the payments on time, he would still have paid £20,699.21 interest on the original loan.

There has been quite a strong move for an independent judiciary since NuLabour have come to power and abused civil rights. If that wet Tory Cameron stood up for a constitution guaranteeing civil rights against the tyranny of a TB-GB style government they might get my vote.

Edited by Realistbear
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  • 440 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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