Repossessions And Why The Government Won't Be Seen To 'go Soft'

[Jonnybegood]

Its a difficult balance to strike, there are many different situations where people find themselves being repossessed.

Some through illness and loss of a long term job.

The problem that the government are foreseeing and rightly so is that many hard working families may become repossessed through a downturn in the job market and rising food and energy costs.

These families may have paid a number of years off the mortgage and even with maybe 40% equity currently, the housing market is dead and 40% slashed at auction may not attract any buyers because mortgages are difficult to get hold of.

Another example FTB buys 3 years ago a £100k property puts down £30k deposit to leave a £70k loan @ £450pm.

Mortgage has now gone onto SVR at £500 and homeowner loses job, can still afford the £500 mortgage but with all the other bills, energy, food etc cannot afford the £500pm.

Now the FTB put down a good 30% deposit, bought a reasonable priced property and loses a job after 8 years.

Trys to sell the property but no interest even with 20% slashed from the price......

I personally think this example should receive help, did not overstretch was in a secure job, put down a healthy deposit, offers property at 20% less to prevent being repossessed but market so bad there is no interest.

Why should they be thrown on the street and in the process lose their 30% (£30k) deposit due to government and bank failure, which have now received bailout to save themselves, surely this in certain circumstances should be passed down to the homeowner.

[howarden]

Its a difficult balance to strike, there are many different situations where people find themselves being repossessed.

Some through illness and loss of a long term job.

The problem that the government are foreseeing and rightly so is that many hard working families may become repossessed through a downturn in the job market and rising food and energy costs.

These families may have paid a number of years off the mortgage and even with maybe 40% equity currently, the housing market is dead and 40% slashed at auction may not attract any buyers because mortgages are difficult to get hold of.

Another example FTB buys 3 years ago a £100k property puts down £30k deposit to leave a £70k loan @ £450pm.

Mortgage has now gone onto SVR at £500 and homeowner loses job, can still afford the £500 mortgage but with all the other bills, energy, food etc cannot afford the £500pm.

Now the FTB put down a good 30% deposit, bought a reasonable priced property and loses a job after 8 years.

Trys to sell the property but no interest even with 20% slashed from the price......

I personally think this example should receive help, did not overstretch was in a secure job, put down a healthy deposit, offers property at 20% less to prevent being repossessed but market so bad there is no interest.

Why should they be thrown on the street and in the process lose their 30% (£30k) deposit due to government and bank failure, which have now received bailout to save themselves, surely this in certain circumstances should be passed down to the homeowner.

The hypothetical FTB priced the risks incorrectly (risk of job loss, risk of rising rates, risk of house price falls, risk of price rises in other essentials, etc...), that is all that has happened.

The house just gets bought by someone else equally deserving who is either able to price risk better or just lucky.

At no point is anyone thrown on the street, society kicks in at some point and either offers a private lifeline (spare room at parents or friends) or a public one of LHA rental payments.

Someone has to take the kick in the balls, I say it should be the person who took the risk, you say it should be the equally deserving person who now has no opportunity to buy the house.

[IMHAL]

Its a difficult balance to strike, there are many different situations where people find themselves being repossessed.

Some through illness and loss of a long term job.

The problem that the government are foreseeing and rightly so is that many hard working families may become repossessed through a downturn in the job market and rising food and energy costs.

These families may have paid a number of years off the mortgage and even with maybe 40% equity currently, the housing market is dead and 40% slashed at auction may not attract any buyers because mortgages are difficult to get hold of.

Another example FTB buys 3 years ago a £100k property puts down £30k deposit to leave a £70k loan @ £450pm.

Mortgage has now gone onto SVR at £500 and homeowner loses job, can still afford the £500 mortgage but with all the other bills, energy, food etc cannot afford the £500pm.

Now the FTB put down a good 30% deposit, bought a reasonable priced property and loses a job after 8 years.

Trys to sell the property but no interest even with 20% slashed from the price......

I personally think this example should receive help, did not overstretch was in a secure job, put down a healthy deposit, offers property at 20% less to prevent being repossessed but market so bad there is no interest.

Why should they be thrown on the street and in the process lose their 30% (£30k) deposit due to government and bank failure, which have now received bailout to save themselves, surely this in certain circumstances should be passed down to the homeowner.

Sorry - this is tosh!

If the person who bought the house had been sensible he/she would have a buffer/insurance policy in the form of some money/saving behind them to help in times of distress. You cannot have a society that needs bailing out everytime it rains, a wind blows or a leaf falls. Living on the edge carries risk and if that risk materialises then you should be punished.

Put it another way, why should those that have been prudent have to bail out those that have not in what is essentially a dicresionary purchase i.e. a house.

If a house is not a discresionary purchase then why does the government not mandate that all citizens should be entitled to have a house of there own, then plan an spend accordingly (they have had 11 years in office remember).

Clearly the morallity of bailing out the larger group of have's is acting against the minority group of have nots - There would be a civil war over this kind of action if those groups where religous or ethnic factions. What next - those without a house should not have voting rights? (like they do in America).

HAL

[The Ayatollah Buggeri]

define 'trying hard'?

would the houses be checked for plasma TVs, Sky, PS3, history of MEW etc etc

Therein lies the problem: the government (unsurprisingly) doesn't want to get into the business of in effect means testing struggling mortgagees. The criteria would be divisive and applying them would be very time consuming and expensive. And its effect in mitigating moral hazard would be limited, as those denied assistance would still have the nuclear option of going bankrupt.

[MarkG]

That would destroy the rule of law, wouldn't it?

A gang of raving fascists like NuLab are hardly going to worry about a little thing like 'the rule of law', when they've been working incessantly to destroy it for the last decade.

[game over]

This is what will happen

1. New Labour will stop recessions at the taxpayers' expense. This was one of the objectives of state ownership - rigging the market for mortgages.
   
   1. 
      
   2. Millions will stop paying their mortgages - what's the point ZanuNewLabour pays
      

1. Taxpayers will suffer massive losses
   

1. The government's budget deficit grows
   

1. Hyperinflation and a crashing pound

   But Gordon will still do it because preventing repossessions and turning on the credit tap will be a vote winner in the short term.

Money gets printed Zimbabwe style
Edited October 20, 2008 by game over

[Girly girl]

they can't afford it in the two senses of the word.

Firstly, they can't afford the message/image that it's ok to default if you're experiencing hardship - if millions more homeowners begin to default what then? Will so many more mortagees currently 'skinting' themselves each month, just to keep a roof over their heads, begin to think it's ok to default if they think they govt will save them? This could cost banks billions in revenue that they will die a quicker death without. If the govt. fully intervene, by stopping repos. for a six month period, the loss to the banks will be even worse.

Secondly, they can't afford it in simple terms. The govt now own what; 52% of the mortgage market and approx. 60% of the repossession market?

IMHO they will talk up the level of help they'll offer, but in practice they'll do nothing, they've done their sums and the debt slaves have to pay. Next phase of the 'newspeak' will be how the selfish repossessed are costing us all money...

You are so so so wrong.

In order to be reposessed the bank/building society must prove you have made no attempt to keep up payments.

So in sending a cheque for say a pound every week, you have attempted to keep up payments and therefore will not be reposessed.

The people we see on the news, in the papers loosing their homes have buried their heads in the sand, ignored the letter, not turned up to court for at least 9 months, even years before it reaches the bailiffs stage.

The government will be paying up to £175k of peoples interest after 3 months of unemployment, they have told banks to back off and judges will hear about how the normal hard working family has been sailed up the river without a paddle and there simply will not be mass resposessions of family homes. Even the feckless going bankrupt do not usually loose their house. I suspect you'll be able to buy as many new build 2 bedroom flats as you like but the good stuff will be staying where it is now, with the OO's living in it.

If you don't believe me, make an appointment with the CAB and pretend you owe £50k on the CC and have a 100% mortgage and see what they say.

[gilf]

Sorry - this is tosh!

If the person who bought the house had been sensible he/she would have a buffer/insurance policy in the form of some money/saving behind them to help in times of distress. You cannot have a society that needs bailing out everytime it rains, a wind blows or a leaf falls. Living on the edge carries risk and if that risk materialises then you should be punished.

I agree, a friend who has spent about 6 of the last 10 years unemployed due to a series of redundancies has kept his house throughout, always kept the wolf from the door because, while he is terrible with money, was never stupid enough not to have some sort of mortgage insurance.

I don't have a massive problem with "hard working families" being given some leeway when the struggle so long as those who have done it for investment (BTL) are dealt with promptly.

[dredwerker]

One way would be to give them a 6/12 month repayment holiday, give them chance to build up some cash and avoid repo and it means non of the problems in the above posts would happen.

maybe? dunno?

As long as i get some help with my rent?

Why should the taxpayer help out these unfortunates, I wont see a bean if I get into arrears(as a renter). What am I, an untouchable? f**k em I say. BNP/Adolf here we come

[THE BALD MAN]

Sorry - this is tosh!

If the person who bought the house had been sensible he/she would have a buffer/insurance policy in the form of some money/saving behind them to help in times of distress. You cannot have a society that needs bailing out everytime it rains, a wind blows or a leaf falls. Living on the edge carries risk and if that risk materialises then you should be punished.

Put it another way, why should those that have been prudent have to bail out those that have not in what is essentially a dicresionary purchase i.e. a house.

If a house is not a discresionary purchase then why does the government not mandate that all citizens should be entitled to have a house of there own, then plan an spend accordingly (they have had 11 years in office remember).

Clearly the morallity of bailing out the larger group of have's is acting against the minority group of have nots - There would be a civil war over this kind of action if those groups where religous or ethnic factions. What next - those without a house should not have voting rights? (like they do in America).

HAL

From a financial perspesctive if banks can not repossess then the loan becomes riskier as they can not recover their loan. Therefore they should if following banking capital rules charge more margin on house loans relecting the increased risk. Own goal by government or will rule book be thrown away again.

[Converted Lurker]

In order to be reposessed the bank/building society must prove you have made no attempt to keep up payments.

So in sending a cheque for say a pound every week, you have attempted to keep up payments and therefore will not be reposessed.

Nope, sorry you're so wrong I can't even be bothered to reply.

[Guest theboltonfury]

Nope, sorry you're so wrong I can't even be bothered to reply.

yep, you are wrong. Maybe if they sell that debt on to a collections agency you could pull this excuse.

[jp1]

Simple fact is that if the government prevent banks repossessing, then what were previously secured loans, effectively become unsecured loans.

What will banks do to protect themselves?

1) Higher interest rates

2) Much, much stricted lending criteria

3) Much higher LTV: 60% max

4)Pprior to any legislation [if the govt want to force this it will require legislation] being implemented, we'll see a wave of repossesions being rushed through by the banks, in order to beat the new law, resulting in thousand more being repossed [ie those who are only just starting to run into trouble]

[jp1]

One way would be to give them a 6/12 month repayment holiday, give them chance to build up some cash and avoid repo and it means non of the problems in the above posts would happen.

maybe? dunno?

Alternatively, the 6 month holiday enables them to get even further into debt if they cant pay back the shortfall, and in the meantime, the property will have fallen even more in value meaning greater negative equity to pay off after repossession - so it could end up a double whammy

[Converted Lurker]

Simple fact is that if the government prevent banks repossessing, then what were previously secured loans, effectively become unsecured loans.

What will banks do to protect themselves?

1) Higher interest rates

2) Much, much stricted lending criteria

3) Much higher LTV: 60% max

4)Prior to any legislation [if the govt want to force this it will require legislation] being implemented, we'll see a wave of repossesions being rushed through by the banks, in order to beat the new law, resulting in thousand more being repossed [ie those who are only just starting to run into trouble]

point number 4, lenders are busily looking at their *book*; what customer paid for the property, when, how bad are the arrears, whether it's a suspended order already etc.. and if they feel another 15-20% fall in values will leave them at a further loss then they're rushing through the repo. They have to otherwise their writedowns will be greater and could ruin them. CML still thinks only 45K repos this year, next year it'll be 100,000. If most of these next year lose even 30K (and it's generally those with little equity who lose first) the numbers get inteteresting - £3,000,000,000.

[Jim B.]

People should remember that most of these people having 'their' homes repossessed don't probably own very much of it at all. It annoys me when these sob stories say 'they are taking away my home'. No, it belongs to the bank, it's not yours. You were stupid and borrowed too much, accept the fact and move on.

Question though - if you get repossessed, and still owe the bank say £40k or whatever, can you just declare yourself bankrupt? Surely this is the sensible option for anyone in negative equity?

[THE BALD MAN]

Simple fact is that if the government prevent banks repossessing, then what were previously secured loans, effectively become unsecured loans.

What will banks do to protect themselves?

1) Higher interest rates

2) Much, much stricted lending criteria

3) Much higher LTV: 60% max

4)Pprior to any legislation [if the govt want to force this it will require legislation] being implemented, we'll see a wave of repossesions being rushed through by the banks, in order to beat the new law, resulting in thousand more being repossed [ie those who are only just starting to run into trouble]

In my earlier post I said this this looks like a complete own goal and will make obtaining housing finance more difficult. Politicans just react without thinking. Total non starter.

[jp1]

Ronald Reagan had a very apt quote that pretty much sums up Browns approach to government

“If it moves, tax it. If it keeps moving, regulate it. And If it stops moving,. subsidize it.”