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Bbc: Sub-prime Borrowers Face Repossession

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Panorama: Sub Prime Suspect: BBC 1, 2030 UK time, Monday 8 October

So, now we DO have a SP problem in the UK. Funny what a difference a few weeks makes.

We move into mass resets in q1 08. That's when the pain really begins.

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http://news.bbc.co.uk/1/hi/business/7030723.stm

Sub-prime borrowers face repossession

By Matthew Chapman

BBC Panorama

house of cards

Sub-prime mortgages: a house of cards?

A BBC investigation has found sub-prime mortgage lenders who give loans to people with bad credit records account for more than 70% of all repossessions.

The market for high interest sub-prime mortgages has been booming and it now accounts for about 8% of the total UK mortgage market.

But a survey of more than 7,000 court hearings over the past three months - carried out jointly by BBC programmes Panorama and Five Live Report - has found that lenders who specialise in these mortgages or offer them as part of their business disproportionately make up over 70% of all repossession cases.

Reckless lending

Sub-prime loans are marketed at people with poor credit records. Unexpected numbers of repossessions among such borrowers in the United States triggered a global financial crisis over the summer.

In the US, sub-prime loans account for just 55% of foreclosures, which are the equivalent of repossession hearings.

Years of reckless lending caused the financial markets to lose trust in sub-prime loans. This triggered the credit squeeze that resulted in a run on Britain's Northern Rock bank.

The investigation into Britain's sub-prime market found cases of council tenants on benefits being encouraged to significantly exaggerate their incomes in order to buy their houses under the right-to-buy scheme - some of whom now face having their homes repossessed.

In other cases families were given mortgages which became unaffordable within months.

On benefits, with mortgage

David and Maureen Bradbury outside their home

The Bradburys are on benefits - but were given a mortgage

Despite being in their late 50s, on benefits and in poor health, David and Maureen Bradbury were given a 25-year mortgage worth £55,000 by London and Scottish Bank.

With their interest rate currently over 11%, the couple have struggled to make repayments. In June they faced a repossession hearing.

The couple say they bought their council house under the right-to-buy scheme so they could pass it on to their children.

"I'm at the mercy of the interest rate," said David Bradbury. "If it goes up again, I'll struggle, I'll try and meet it. But after that if it goes up again I can't. We'll just lose the house."

In a statement, London and Scottish said the mortgage was arranged through an intermediary company.

The bank says it follows industry rules regarding responsible lending and took into account the income of the daughter of the Bradburys when granting the mortgage - although she too is on benefits.

Mortgage bundles

Many banks and building societies involved in sub-prime lending in the UK bundle up hundreds of mortgages like that of the Bradbury's and sell them on to investors for cash up front.

This trade in debt has become a multi-billion pound industry in the City of London and many investors - including pension funds - have eagerly bought a piece of this market.

The risk comes when increasing numbers of these mortgages have been mis-sold to people who could never repay them.

Whoever is left holding the debt in this game of pass-the-parcel could suddenly find it to be worthless.

Nearly a year ago Southern Pacific Mortgages, which is owned by US investment bank Lehman Brothers, was forced to buy back £13m of mortgages it had sold on after discovering they had all been sold fraudulently.

The UK's City watchdog, the Financial Services Authority, is also under fire. Critics say its "light touch" regulation of companies selling mortgages has lead to more fraud.

The Council for Mortgage Lenders has welcomed the BBC's research, saying that little was currently known about the extent of repossessions among sub-prime borrowers.

"I think the research you're doing is very valuable because it highlights who is actually starting to take action," said Michael Coogan.

He admitted there was a "worsening picture" in the sub-prime sector but said lenders had to check whether their customers could repay their mortgages.

"Every lender is under a responsibility to check ability to pay and to make sure that the advisers that they're using are reputable ones," said Mr Coogan.

5live Report: Mortgage Mayhem: 1100 UK time, Sunday 7 October or via the Five Live podcast (see links on right hand side)

Panorama: Sub Prime Suspect: BBC 1, 2030 UK time, Monday 8 October

The BBC survey was done by obtaining the court lists of repossessions hearings at 28 county courts across England, Wales and Northern Ireland during the months of July, August and September. A repossession hearing does not necessarily mean that a house will be repossessed as both parties, the lender and the borrower, could reach a settlement. The survey included both lenders who specialise in sub-prime debt and lenders with both sub-prime and so called prime borrowers.

EDITED TO ADD PRG DETAILS (AS REQUESTED).

Edited by BTLlivingthedream

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Sub-prime, otherwise known as Buy-To-Let in the UK.

Although the profile of the customers is different, the financial mechanism of taking a highly leveraged position using borrowed money at the top of an economic cycle with little repayment option is the same...

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There was a short piece on this BBC News 24 this morning too, and I think it is part of the headline news at the moment.

I did not realise interest rates are 11% with this sort of loan - it is a real shame for the likes of the family shown having their house repossessed. Hits home far more than the Times story based on a couple earning good money.

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There was a short piece on this BBC News 24 this morning too, and I think it is part of the headline news at the moment.

I did not realise interest rates are 11% with this sort of loan - it is a real shame for the likes of the family shown having their house repossessed. Hits home far more than the Times story based on a couple earning good money.

This is a MAJOR disaster unfolding- when I lost my home and business in 1992, I felt everybody was looking at me as a failure- they werent, of course, but it affects you terribly. Lucky for me, my wife and family stuck by me.

but the shock for this generation is going to be worse, theyll, not be able to borrow anything for years, they will have not only the shame of the "failure", but they will have to live within their means as well.

DISASTER- Shame on you TONY/GORDON

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I suspect that in the last few years the percentage of sub-prime mortgages has increased far more than we are led to believe from 'official' sources. Obviously at this stage we can only guess...but I would not be surprised if the figure is as high as 50%.

Much of this dubious debt is sold on to other financial institutions...I have heard that some pension funds have bought this toxic debt. Yee Gods!!

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I suspect that in the last few years the percentage of sub-prime mortgages has increased far more than we are led to believe from 'official' sources. Obviously at this stage we can only guess...but I would not be surprised if the figure is as high as 50%.

Much of this dubious debt is sold on to other financial institutions...I have heard that some pension funds have bought this toxic debt. Yee Gods!!

Current outstanding mortgage debt in the USA is $10 trillion of which Sub prime account for 7/8%, In the UK we have about $2.2 trillion outstanding mortgage debt of which BTL accounts for 10%, if we assume most of the BTL current outstanding debt has been taken on by inexperienced investors over the last 5 years and as such can be considered as sub prime, it is clear from the figures that the UK market is much worse in percentage terms than the USA.

Edited by Jimmy2Times

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I suspect that in the last few years the percentage of sub-prime mortgages has increased far more than we are led to believe from 'official' sources. Obviously at this stage we can only guess...but I would not be surprised if the figure is as high as 50%.

Much of this dubious debt is sold on to other financial institutions...I have heard that some pension funds have bought this toxic debt. Yee Gods!!

I have no doubt about that. Back in 2003 something like 40% or a half of first time buyers polled in one survey were using a credit card for some/all of their desposit. Remember this was when 0% credit cards were widely available, in large numbers.

We know there has been widescale fraud, excess lending going on, Gordon knows, the FSA know and the BOE know. They are just as complicit in this financial scam of an economy as the financial racketeers at the coalface. It has been policy for years.

Edited by OnlyMe

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Glad to see the BBC propaganda machine swinging into action again. Note the subject of their case study - a middle-aged couple who were clearly and obviously missold (subtext: 'subprime' strugglers are innocent victims and therefore the Government should step in), not a lie-to-buyer or a recklessly overstretched BTL. We wouldn't want Auntie Beeb blaming NuLab sheeple for their own stupidity now, would we?

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I have no doubt about that. Back in 2003 something like 40% or a half of first time buyers polled in one survey were using a credit card for some/all of their desposit. Remember this was when 0% credit cards were widely available, in large numbers.

We know there has been widescale fraud, excess lending going on, Gordon knows, the FSA know and the BOE know. They are just as complicit in this fianncial scam of an economy as the financial racketeers at the coalface. It has been policy for years.

Of course they all know- Its the plan

Its much easier to control things with the interest rates tool if the debt level is high- If there was little borrowing, the interest rate tool would have little affect.

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Glad to see the BBC propaganda machine swinging into action again. Note the subject of their case study - a middle-aged couple who were clearly and obviously missold (subtext: 'subprime' strugglers are innocent victims and therefore the Government should step in), not a lie-to-buyer or a recklessly overstretched BTL. We wouldn't want Auntie Beeb blaming NuLab sheeple for their own stupidity now, would we?

Indeed and who was that that just effectively said exactly what I said in the previous post regardin light touch and and intentinal running free of the lending system to gloss the economy.

The workers of Cadbury et al (soon to be ex-workers) I am sure so very very pleased.

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Its much easier to control things with the interest rates tool if the debt level is high- If there was little borrowing, the interest rate tool would have little affect.

But they broke the lever clean off when they used it last time (to conjure the phalanx of choppers full to the limits with cheap money). The tool is bust. The money was misborrowed, by folk who added "cheap money" to "static demand" and came up with "increase production levels". And now it's gone. They're hurtling down the autobahn at a million miles an hour, and they pulled the gearstick so hard at the lights it came off in their hand. Lifting reserve rates, dropping reserve rates, hell even minting enough new fivers to go around where they're needed. None of this will impact the rates existing lenders need on existing capital deployed (for the value of its repayment is depreciating daily now). They can punch the brakes, they can hit the gas, and it just doesn't matter to capital already lent, capital already borrowed for production (nor consumption). The (risk adjusted) value of capital outstanding is melting a hole through to China, which means the (commercial) rates set against it will go to the moon (and beyond).

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This is a MAJOR disaster unfolding- when I lost my home and business in 1992, I felt everybody was looking at me as a failure- they werent, of course, but it affects you terribly. Lucky for me, my wife and family stuck by me.

but the shock for this generation is going to be worse, theyll, not be able to borrow anything for years, they will have not only the shame of the "failure", but they will have to live within their means as well.

DISASTER- Shame on you TONY/GORDON

That sounds similar to what happened to my dad at that time, he lost his business and our house with it ( i was only about 8 years old but I remember bits and pieces, mainly the "excitement" of being in a 7.5 tonne lorry, which had all our furniture in). We ended up in a council house - the first one was rough as ****** and was basically falling down. I remember my mum crying and my dad going to the council offices to sort something out. Some bloke took us to another house, one that wasn't falling down, and we stayed there for more than 10 years. My dad went through a couple of different jobs, ended up as a delivery driver. I don't think he would start his own business again, though as he looks back on it, he realises he was quite naive (sp?) over certain things. Being too honest costs you I think.

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But they broke the lever clean off when they used it last time (to conjure the phalanx of choppers full to the limits with cheap money). The tool is bust. The money was misborrowed, by folk who added "cheap money" to "static demand" and came up with "increase production levels". And now it's gone. They're hurtling down the autobahn at a million miles an hour, and they pulled the gearstick so hard at the lights it came off in their hand. Lifting reserve rates, dropping reserve rates, hell even minting enough new fivers to go around where they're needed. None of this will impact the rates existing lenders need on existing capital deployed (for the value of its repayment is depreciating daily now). They can punch the brakes, they can hit the gas, and it just doesn't matter to capital already lent, capital already borrowed for production (nor consumption). The (risk adjusted) value of capital outstanding is melting a hole through to China, which means the (commercial) rates set against it will go to the moon (and beyond).

as sure as eggs is eggs- spot on

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What's the matter with you people, don't you see we have a chrystal ball and the ball says feck off

http://www.knightfrank.com/news/directnews...quity_0428.aspx

100% borrowers 'not at risk of negative equity'

"Each year, there's less and less chance of a crash. There may be a dip, and there may be a stabilising of the prices so that they're not increasing as much as they have done over the past couple of years," commented Bestinvest mortgage manager Peter O'Donovan.

"In which case a person [with a 100 per cent plus mortgage] will probably have to stay in the house maybe a bit longer than they planned.

"But the fact is, eventually house prices will continue to increase. And hopefully as they pay off their mortgage, of course, they reduce that burden on the loan-to-value," Mr O'Donovan added.

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There was a short piece on this BBC News 24 this morning too, and I think it is part of the headline news at the moment.

There was a major 30m segment on it at 11:00 on R5. I don't have time to find a link but it was great bear food and if anyone has time to find one, it is well worth listening.

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I kid you not this is the absolute truth.

Friday I saw my beauty therapist who said how stressed she was, she's buying a flat.

I know she's a single parent living in a very nice council house as a few months ago she was trying to sort her finances enough to buy it.

Puzzled I asked what.

BT a one bed flat to rent out

Me Youre brave

BT (loudly) well yes i HAVE come up against a lot of negativity but if I listened to it all I'd never do anything at all, I've always been interested in property and decided to go for it.

Me, good luck!

BT Yes it's a great investment, it will free up some money and help me get back on my feet.....

Me how's that?

BT (Exaspertated) because my debts cost me £350 pm

Me ? and

BT And the rent will cover my debts too

Me as well as the mortgage?? are you sure??

BT well I have to put a bit to it but it will still be less than what i'm paying now.

Me will you be able to let it?

BT I phoned a letting agent and they said they would be able to rent a garden shed at the moment they cant get enough to meet demand

Me thats cos people are selling up

BT YEAH!

Me so youre using an agent?

BT no doing it myself

Me have you got someone to do repairs and that then?

BT No I have a lot of other things to do before I think about that sort of thing

Me Right, but you know if something goes wrong you'll have to fix it

BT (loudly) Well I could spend my life worrying about what may or may not go wrong or I could just get on with it while everyone else is watching, I got the idea from a client, she's got NINE properties and at one time not one was let but she managed and she's talked me through it.

Me OK, so youre in for the long term then..

BT yes but I cant go wrong, ive got a 100% mortgage but borrowed a bit more (!) to cover my debts, yes I had to pay a bit extra but i'll still be better off it's costing me less per month so how can it go wrong?

Besides my FINANCIAL AD VIS ER says its ok.

Me, Bye!

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http://news.bbc.co.uk/1/hi/business/7030723.stm

[snip]

Despite being in their late 50s, on benefits and in poor health, David and Maureen Bradbury were given a 25-year mortgage worth £55,000 by London and Scottish Bank.

With their interest rate currently over 11%, the couple have struggled to make repayments. In June they faced a repossession hearing.

The couple say they bought their council house under the right-to-buy scheme so they could pass it on to their children.

"I'm at the mercy of the interest rate," said David Bradbury. "If it goes up again, I'll struggle, I'll try and meet it. But after that if it goes up again I can't. We'll just lose the house."

In a statement, London and Scottish said the mortgage was arranged through an intermediary company.

The bank says it follows industry rules regarding responsible lending and took into account the income of the daughter of the Bradburys when granting the mortgage - although she too is on benefits.

I am mystified as to how someone on benefits can be given a mortgage. In effect, priced-out tax-payers end up buying a house for someone already in a privileged, secure housing position. But I suppose it's no different from those who can't afford a family being forced to fork out to raise a generation of benefit brats...

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BT yes but I cant go wrong, ive got a 100% mortgage but borrowed a bit more (!) to cover my debts, yes I had to pay a bit extra but i'll still be better off it's costing me less per month so how can it go wrong?

Besides my FINANCIAL AD VIS ER says its ok.

Me, Bye!

Did you ask who was the mortgage provider? I'd be very interested... I'd also be very interested to determine who underwrites them... Is the bank underwritten in the USA or Europe?

Edited by A.steve

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Did you ask who was the mortgage provider? I'd be very interested... I'd also be very interested to determine who underwrites them... Is the bank underwritten in the USA or Europe?

Me too.

I reckon the 9 is quite likely with one of lenders that pushed 10 to let in the not too distant past.

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OIC, she can cover current debts by repayingthem with a 110% IO loan over 25 years- Her adviser should go to Jail- Name him

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Did you ask who was the mortgage provider? I'd be very interested... I'd also be very interested to determine who underwrites them... Is the bank underwritten in the USA or Europe?

I have just sent her a text to ask her.

OIC, she can cover current debts by repayingthem with a 110% IO loan over 25 years- Her adviser should go to Jail- Name him

Trouble is I don't think that's illegal is it?

I think she sees it as a way out, she works very long hours, no help from kids dad, lived in a council house for years so doesn't know the ins and outs of private renting, we have STR'd less than a year ago (by accident, chain collapsed) and must have had at least £1000 worth of repairs done in that time, in a 14 yr old house.

She's struugling to pay debts every month (money she borrowed to set up on her own), drives a modest car and leads a modest existance and sees BTL as a way of making ends meet, the flat was 80k so I dont think she's in it to make a killing just not have to struggle so much, although her parting words I've just remembered were something like once it's all settled I'll start looking round for the next one!...

Houses round here are still being snapped up and still going up in price, in the 10 months we have been renting we have been priced out, I read all that's written about a crash credit crunch etc, but it's just not happening.

A comercial property came on right move on Friday and we phoned up about it (it's got a flat above too), the owners are booking hourly viewings and the first availiable slot we could get is Monday afternoon, in the 10 months we have been looking we have been to see 2 houses, one has been sold, the other - a 4 bed new build is still on at a cool £525, it was on for 550 and we offered 450, EA couldn't be bothered to talk to us....

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Did you ask who was the mortgage provider? I'd be very interested... I'd also be very interested to determine who underwrites them... Is the bank underwritten in the USA or Europe?

Abbey!

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Much of this dubious debt is sold on to other financial institutions...I have heard that some pension funds have bought this toxic debt. Yee Gods!!

Why are you all so surprised at this?

The so called 'nutters', who you marginalise, have been warning this is exactly what the Templars/Bilderb'stards have been planning for decades!

ie to ruin the middle classes (of the western world?) - bankrupt them, force them to a point of riot - which many express on this website and others now.

If you seek for knowledge in the Bible(as asked) and work a few things out - you can suss that this is what leads to the so-called Apostasia(greek - means Apostasy(eng)=outbreak of rebellion/revolt.

There are Two things that happen before 'the day of the lord'

1. Apostacy - rebellion/revolt

2. The Anti-christ(Evil minded person who appears before Christ returns) is 'Apocalypsed' into the world!

Remember dollar notes - the pyramid structure with the 'eye' symbol on top(the capstone)?

The eye symbol

"The capstone will be the revelation of the man of lawlessness"

The apostasia or rebellion is the world itself departing from its

normal hostility and opposition to God and will join the Satanic Rebellion itself.

1. The revolt by Humanity against God and joining forces with Satan

2. The uncovering of a cover up…or the Antichrist reveals himself to the World.

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