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Papitogrande

Edeus Offering Btlers Cash To F.o

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I received a letter this morning informing me that a BTL client of mine was to be offered £10,300 if he redeemed his mortgage within the next 2 months.

Outline:

Takes out a 90%LTV loan on a purchase of £115k, there is a 2 year tie-in (£5400) and the rate is BBR+ 0.49%.

He completed in october '07 and they are now offering to waive the £5.5k + legal fees fee and give him £10,300 as long as he takes his business elsewhere (bit tricky as Edeus had loose lending criteria compared to anyone else and the loan is probably in neg equity)

A slight whiff of desperation from the mortgage creators I think, I'm pretty sure this is unprecedented.

Edited by Papitogrande

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Edeus paying £10,300 to get a mortgage off their books because they figure the hit they'll take over the 2 year life of the mortgage will be greater must surely be unprecedented.

EDIT - error in original first paragraph

Edited by Pacific State

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Guest sillybear2
By the way what is "adverse self-certification"? Is it where they can't spell their name on the application form?

It's when you get your dog to do it for you.

This is basically a cut and run strategy by the lenders, they're simply interested in capital preservation with no risk exposure. They just want as much of the capital back and to wipe their hands, amazing.

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Edeus encourages borrowers to redeem mortgages

David Pawsey | Magazine: MortgageAdviser | Published Monday , July 07, 2008

Edeus is offering borrowers incentives to redeem their mortgage early.
The lending services provider, which was initially set up as a mortgage originator and securitiser, announced if the loan is redeemed within a predetermined period borrowers will receive a cash allowance and will not incur a mortgage exit administration fee or early repayment charge.
The selected borrowers will be encouraged to contact the mortgage intermediary that originally introduced the loan to Edeus to source a suitable deal with another lender.

The mortgage market is now going LOCO. :ph34r:

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Edeus paying £10,300 to get a mortgage off their books because they figure the hit they'll take over the 2 year life of the mortgage will be greater must surely be unprecedented.

Agreed. They must have done the sums and concluded that they'll potentially lose a lot more than that if they're stuck with his loan for any significant time, as the asset slides further into negative equity.

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Guest DissipatedYouthIsValuable

If I tap my heels together will I get back to Kansas?

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A slight whiff of desperation from the mortgage creators I think, I'm pretty sure this is unprecedented.

More than whiff! I'd say: blind panic. It sounds like they need cash now to stay in business - paying your customers to go away is rather unusual to say the least. Makes you wonder if the top brass haven't changed their strategy to, "grab all the cash we can; pay it out to us as a megabonus; go bust!"

Are these jokers quoted? I feel a short coming on... :lol:

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Let's not overegg the mortgage crisis

Mortgage Strategy - from edeus's website!

Alan's column

01 July 2008

The Government has shown little if any understanding of the problem and has been woefully slow to act. The special liquidity initiative launched by the Government is yet to deliver a single pound into the system and LIBOR prices remain punitive. Mortgage sales are down, albeit more like 30% than 60% and house prices are starting to feel the pinch.
I have absolutely no doubt that the dust will settle and we will start to see the facts emerge and the crisis subside.
The contagion did not emanate from the UK, house prices are falling but are not crashing, unemployment remains stable and well below historic averages. Interest rates are historically still at a low level and recent statements from the BofE suggest little appetite for an increase. The number of houses is too low to satisfy demand and starts on new builds are at a post war low. Customers are still managing to pay their mortgages although arrears levels will increase, but this will be in line with the normal credit cycle that the mortgage market experiences every 5-7 years.

I think the dust has settled, Alan, and the facts have emerged.

The crisis has most certainly not subsided though if you're bunging customer £10,000+ to get the hell of your books and waiving their redemption penalties.

I am surprised this thread hasn't had a lot more responses. This is massive news.

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Edeus paying £10,300 to get a mortgage off their books because they figure the hit they'll take over the 2 year life of the mortgage will be greater must surely be unprecedented.

EDIT - error in original first paragraph

There's no mistake, he didn't describe it to me, I have a letter from Edeus in front of me right now - it's addressed to me. I called the client up and he confirmed he'd been sent the offer, I then called Edeus up to see how it works and they said that £10,300 would be credited to the account on repayment.

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Let's not overegg the mortgage crisis

Mortgage Strategy - from edeus's website!

Alan's column

01 July 2008

The Government has shown little if any understanding of the problem and has been woefully slow to act. The special liquidity initiative launched by the Government is yet to deliver a single pound into the system and LIBOR prices remain punitive. Mortgage sales are down, albeit more like 30% than 60% and house prices are starting to feel the pinch.
I have absolutely no doubt that the dust will settle and we will start to see the facts emerge and the crisis subside.
The contagion did not emanate from the UK, house prices are falling but are not crashing, unemployment remains stable and well below historic averages. Interest rates are historically still at a low level and recent statements from the BofE suggest little appetite for an increase. The number of houses is too low to satisfy demand and starts on new builds are at a post war low. Customers are still managing to pay their mortgages although arrears levels will increase, but this will be in line with the normal credit cycle that the mortgage market experiences every 5-7 years.

I think the dust has settled, Alan, and the facts have emerged.

The crisis has most certainly not subsided though if you're bunging customer £10,000+ to get the hell of your books and waiving their redemption penalties.

I am surprised this thread hasn't had a lot more responses. This is massive news.

Agreed, the big problem here is that these BTLers won't have anywhere to go if more start doing this. I'm guessing B&B is not taking on new BTL business, and the rest are probably keeping it at arms length too.

I hate the way banks predict a 8% drop in prices (or whatever) but then ask for 25% deposits. They're clearly saying that 25% drops are likely, and higher interest rates suggest they feel it might fall further as swap rates and fixed rates have started to depart as well (swap rates were already ignoring BoE rates).

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10.3K might be just about enough to cover the fees for the new mortgage. :lol:

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Get the "we match your current mortgage" from HSBC - Pay the £9,999 arrangement fee - pocket the £31 - sorted!

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Edeus encourages borrowers to redeem mortgages

David Pawsey | Magazine: MortgageAdviser | Published Monday , July 07, 2008

Edeus is offering borrowers incentives to redeem their mortgage early.
From the same article:
''Not only are we offering our customers an attractive deal, we are giving the original brokers advanced notice too - a chance to
grab themselves a slice of the action.
''
Business is so good that they just don't feel comfortable keeping it all to themselves?.....er...nope.

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It seems they only deal with the financially illiterate, their savings product:

Guaranteed Minimum Return Account Returns 60% of any FTSE growth or 15% Gross/2.84% AER whichever is greater.

and the referring broker gets up to 2.75% of all savings account deposits. Surely their can't be many sheeple out there daft enough to get sold this? But, then again ... :(

Their who's who page looks to me like day one's work for the firing squad if the people responsible for what is about to descend were actually to be held accountable.

Edited by Radge

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I love how this has dropped down this forum so quickly!

This is huge news.

Imagine if your credit card company offered you £250 towards your bill just as long as you cut the card up once you'd cleared the balance?

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Subprime flop scraps loans to target debt (April 08)

A specialist lender at the forefront of the UK's subprime mortgage sector is to abandon lending in favour of what it sees as the new 'growth area' of the housing market – arrears and possibly even repossessions.

[snip]

Alan Cleary, managing director, of Edeus, said: 'We do not think there is a market in the UK for a company like us anymore. We think that the market is going to get worse.

http://www.thisismoney.co.uk/mortgages/art...mp;in_page_id=8

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how can they afford to do this?

if they have 100,000 mortgages giving out £10k per that’s £1 B lost.

perhaps they are cherry picking the most risky and asking them kindly to piss off.

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how can they afford to do this?

if they have 100,000 mortgages giving out £10k per that’s £1 B lost.

perhaps they are cherry picking the most risky and asking them kindly to piss off.

he's 90% ltv and they're taking another 10pct hit, so they are saying this market is already 20pct down..??

would be interested in what market this is, ie city centre flats and location?

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he's 90% ltv and they're taking another 10pct hit, so they are saying this market is already 20pct down..??

would be interested in what market this is, ie city centre flats and location?

If I was to make a guess:

Being just originators-servicers they don't have the capital to support these loans, lending isn't their business. Those loans are what they had in the pipeline when the whole originate-package-distribute model just stopped. The loans are probably financed with ultra short term notes (3-6 months?) that have to be repayed soon or they go bust.

They probably tried to sell them on to banks (who would then slice and dice, apply magic formula, take their cut and turn into AAA, as they used to) but the prices they were offered were less than 90p on the pound (if anything).

This whole business is about removing this pipeline from their balance sheet to avoid bankruptcy, at a cost of 10% of the loans, e.g. a better price than what banks are offering them.

It doesn't mean anything very dramatic IMO (by today's standards...) but there is an interesting piece of info here: as of today, recently originated UK mortgages can't find buyers at 90p on the pound and that I think is real news.

Edited by williamdb

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Guest sillybear2

It's amazing how such news is now routine and expected, it was barely a year ago when those two Bear Sterns funds blew up. I cannot imagine events one year from now, the theme is obvious but we cannot begin to count the severity.

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