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Sub-prime Loans Blamed For 7,000 Lost Homes


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http://www.telegraph.co.uk/news/main.jhtml...subprime108.xml

Seven out of 10 homes repossessed in recent months were owned by people who bought them with the help of so-called "sub-prime" mortgages – designed for buyers with bad credit records.
Research shows that sub-prime mortgage lenders are responsible for more than 70 per cent of 7,000 homes repossessed in the last three months.

:ph34r:

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What is subprime?

Is it a higher rate for those with bad credit?

Is it IO?

Is it more than 4x salary?

Is it self Cert?

Is it 100% or hight LTV?

Is it a loan based on affordability of repayments (at a low fixed)

Is it BTL with no deposit?

According to figures 8% of loans are sub prime, if all or most of the above a calssed as such then I would put the figure at more like around 8x that, I do not know anyone with a 'normal' mortgage anymore and I think thereby lies a big problem, people do not A class their mortgages as sub prime, and B if indeed they're not then these other loans need to be considered as they MUST be just as risky to the owner.

Yes ok when prices were soaring and those in trouble could either sell quickly if they couldn't meet their commitments or re mortgage at a lower rate with the equity as a deposit, but really I don't think anyone knows exactly what the market is doing now do they?

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Sub Prime means Extra Risky- pure and simple.

A loan in iteself has never done anyone any harm.

Its the Frackers who concocted the idea that they could make easy money by selling to vulnerable, fearful people that caused all this- the regulators, the government and others who should have been doing their jobs PROTECTING people from these LOAN SHARKS have all failed.

Who can trust a banker anymore- Like Politicians, they will become even more loathed as leaches on society than EAs.

Where is Captain Mainwaring with his prudent lending policies. The Banks need him now more than ever.

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Research shows that sub-prime mortgage lenders are responsible for more than 70 per cent of 7,000 homes repossessed in the last three months.

This is hardly a revelation. This is why sub prime is priced higher due to the risk involved. Personally, I would have thought the percentage would have been higher

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Sub Prime means Extra Risky- pure and simple.

A loan in itself has never done anyone any harm.

Its the Frackers who concocted the idea that they could make easy money by selling to vulnerable, fearful people that caused all this- the regulators, the government and others who should have been doing their jobs PROTECTING people from these LOAN SHARKS have all failed.

Who can trust a banker anymore- Like Politicians, they will become even more loathed as leaches on society than EAs.

Where is Captain Mainwaring with his prudent lending policies. The Banks need him now more than ever.

That's my point though, if you look at my post re friend who's just taken out 100% plus on a BTL with abbey she's not vulnerable - well not in the sense that's being portrayed anyway, she's run her own business for years, is almost 10 years older than me, quite a strong woman, but when I texd her to ask who her provider was and if it was self Cert she called me, so excited, she said she wasnt sure if it was self cert as not up on the terminolagy (sp?) but could give me the name of her guy who's been 'fantastic', sorted it all out for her.

The loan is with Abbey who are a big name, she will be better off per month and sees she's making an astute investment decision, there is no way she would put herself in the class as that couple on benefits so how can she be alerted?

If she hasn't heard of self Cert she almost certainly will not have heard of sub prime.

All the SP loans have been fine, paid back, bank happy people happy but when it goes pear shaped they look at someone to blame, I agree whole hearted that it should be explained better but would they understand?

I like to think I'm quite clued up but a lot of topics on here go straight over my head, that does not make me a sheep or vulnerable just trying to live in the society I find myself in.

I run a business so all my Mortgages have been self Cert, and yes I paid more for it but what choice do I have?

This is hardly a revelation. This is why sub prime is priced higher due to the risk involved. Personally, I would have thought the percentage would have been higher

I agree, I think as Bloo Loo put it sub prime is extra risky thus a higher rate but I think that it can't be officially classed as that or the figure would be much higher, the first thing that needs to be doen is 'sub rime' properly classified so everyone knows what they're getting themselves into.

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I agree with you, its not the loan category thats risky, its the whole circumstances of the loan, and there is not always a risk premium applied in dodgy cases.

Your example of the business woman, who has a track record, but cant Prove her income, may not be sub prime, she may well be happy ever after with her decision

However, the same loan offered to a young couple. recently married, probably want to have kids, borrowed to the max, could be very risky. Again, though, there is no definition of Sub prime that fits in with the Medias desire to produce some stats.

My own view, having worked in some FA offices (as an outsider) that huge numbers of mortgagees go to this type of organisation because, they know they'll be turned down by a prudent lender, where the FA's "have contacts" and can " make "things happen"

These may be self certs, lyers loans,125% LTV IO, whatever, but we do not have a category for sub prime. Just cos they are not labelled as such doesnt mean that dodgy lending has not taken place in the UK.

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These may be self certs, lyers loans,125% LTV IO, whatever, but we do not have a category for sub prime. Just cos they are not labelled as such doesnt mean that dodgy lending has not taken place in the UK.

Sub prime originally referred to the credit status of the applicant(s).

Nothing more, nothing less.

Sub prime lenders have prime self cert products and prime BTL products as well as sub prime versions. Or at least they used to. :)

The term has been adopted as a kind of shorthand for all the other dodgy lending practices that have gone on: BTL, self cert, 100% LTV etc.

It doesn't annoy me or anything, as I am happy for the sheeple to associate everything in the dodgy loans category as sub prime, because it is a convenient label and also one they have become accustomed to with the US situation.

That means that it will help to drive sentiment, once they realise that it is happening over here as well and that the US has plummeted and so will we, so they might as well accept a drop if they want to sell.

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Exactly! That is my point, how can they say sub prime counts for X% of loans when there is no real definition of the term.

How can the same loan be sub prime for one person and not another?

In the last few posts alone there have been conflicting opinions, and I know you all know what you are talking about but how can such a massive loan be subject to opinion and such vague descriptions?

There needs to be a definition of the term and if it doesn't apply to all then they need to be defined too so that people can realise they are at risk.

eg; I bought a car on a loan some years back, I looked into it and the rate offered by the car salesman was say 6% (I can't remember) but the bank would offer me say 7%, so naturally I went for the car loan and never gave it another thought.

That year new legislation was bought in making loans clearer, the car loan was on a flat rate so the APR was about 14% but the bank loan 7% APR.

I had no idea, it never occured to me to even look into it, was I ripped off? Yes I think so, had the car saleman done anything wrong? who cared, I paid off the loan and that was that, had I defaulted early and being a new car it would have had neg equity meaning all sorts of legal problems would I have been to blame? would the car salesman?

I am really looking forward to that programme tonight, I just hope it looks at all the facts objectively and not just a poor ripped off tales of woe, thats the only way people will be protected in the future.

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