Friday, May 19, 2006

Spectrum offering 90% mortgages to bankrupt clients

Firstrung: Spectrum launches mortgage range for those subject to bankruptcy orders

Cue jokes of Captain Scarlet and the Mysterons as surely lending practice has now reached fantasy land?

The products, which cover from light to heavy adverse, include a choice of two- and three-year fixed rates starting from 5.89 per cent. All pricing is based on Bank Base Rate and mortgages are available up to 90 per cent loan-to-value (LTV) on both a full status and self-cert basis.

Posted by Converted Lurker @ 11:44 AM (634 views)
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1. Sebastian said...

I love how the market is heavily geared towards the rich and those willing to gamble more than they can afford. But then I suppose there is no risk as houses never go down in value...

Friday, May 19, 2006 12:38PM Report Comment

2. Tyrellcorporation said...

This confirms my theory that all those that are financially responsible in society are now systematically being used to prop up those who spend-spend-spend and then go bust. The government hates someone who saves and doesn't keep retail brimming along. What better way to penalise them and indirectly get them to spend than force them to 'pay' for someone elses profligacy through schemes like these.

Lets face it, Crash Gordon likes nothing better than to hose-pipe other peoples money at his own pet projects. Take using our money to make him look good down in Africa for example or sitting alongside real Philanthropists like Bill Gates who has given most of his fortune away. I'd like to take a butter knife and wipe that smug grin off his chops!

Friday, May 19, 2006 12:45PM Report Comment

3. harold said...

There is much wisdom to be found in Shakespeare. Take The Merchant of Venice for example. In this play, Tony has taken a loan of 3,000 ducats from Spectrum Lending, the moneylender. The loan has been taken out on a small house boat laden with, well... cheap furniture from IKEA. Let us for our purposes imagine it to be lost at sea and Tony defaults on his loan. As collateral, Spectrum Lending has extracted a loan on exactly one pound of Tony's flesh...

Friday, May 19, 2006 03:00PM Report Comment

4. Tyrellcorporation said...

What Spectrum hasn't banked on though is the slippery nature of Tony's flesh and the fact that even with the poshest of Sabatier knives you can't get near the bugger!!! In the end, news about Tony 'default' has left the front pages and he's off the hook again and taxing and spending like fury!!!

Friday, May 19, 2006 04:00PM Report Comment

5. uncle tom said...

More reason to bankrupt yourself - it's getting to the point where anyone who has net debts that exceed their annual salary would be better off pulling the plug out -

- there's an awful lot of people in that camp...

Friday, May 19, 2006 04:11PM Report Comment

6. bidin'matime said...

People laugh when I tell them, but its true many years ago, when I was a much younger man, there was a quaint old rule - that you had to not only prove that you had enough income to pay your mortgage, but you had to have a sound credit record to even stand a chance of getting the mortgage in the first place. I know, sounds crazy these days, but its true. You see, in those days, lenders were worried that you might not be able to pay off your loan. No, Im serious, dont walk away you actually had to satisfy them that you were a suitable credit risk. Sorry, maybe I should explain this term it means someone who, well, might not repay the loan. Im sorry? you want me to explain why there is a need to be able to repay the loan? Now, where do I start? No, no, thats okay, I understand that you are a busy man and youve got to get back to your work.. where is it? Oh, I see, head of lending at Spectrum

Friday, May 19, 2006 05:43PM Report Comment

7. Katzpaw said...

The way I read this article is that potential bankrupts are given the opportunity to avert/annul bankruptcy by remortgaging to pay off the debts. I can't see any problem with this, so wonder why the previous bloggers are whingeing.

Of course, I can't see the take-up on remortgageing to avoid bankruptcy being very popular as most of those concerned perceive bankruptcy as an easy means of getting rid of the debt they have stupidly acquired.

Friday, May 19, 2006 06:22PM Report Comment

8. bidin'matime said...

Katzpaw, I agree with your interpretation of the article and dont disagree with the general principle you state. However, what I find hard to get my head round is the fact that a lender is actively looking at taking these cases on and at typical mortgage rates. There was a time when such a borrower would have to beg for such finance and then would have to pay a suitable premium for the risk that they clearly present.

Spectrum can only be assuming that, whatever the financial competence (or otherwise) of the borrowers, they will be able to recover their lending from the security, so what the hell?! Their strategy appears to be Lend, add the interest, recover some of the cash as we go, then hope for the best doesnt matter if they dont pay well get it all back eventually from the equity in the property. What these people need is serious debt counselling, not an easy short-term fix.

There was a time when lenders regarded the ability to service the loan as 90+% of the decision and security as, whilst essential, only a fall-back. As a bank manager once said to me Were in the business of earning interest on lending, not selling houses. It seems that all of that is old hat these days.

If already overstretched borrowers learn that they can push their finances to the brink of bankruptcy and there will still be a lender eager to take it all on, then where is the incentive to curtail their spending? They will simply pay off the credit cards then do it all again, only next time they will have built up even more debt and will (eventually) leave even more creditors out of pocket.

Friday, May 19, 2006 08:12PM Report Comment

9. Ticktock said...

Financially illiterate, and often very poor people, have been encouraged by governent and banks alike to borrow way beyond their ability to repay, and in many cases to secure debts against their family homes. They have been encouraged implicitly, and explicitly, to prop up our economy with consumption, and have willingly done exactly what the government/banks wanted them to do.

Many working class people have never been taught about economics or finance. Many have never even been taught math.

Most are completely unaware of how the capitalist world in which they live exploits their ignorance,exploits their labour, and skillfully manipulates their consumption habbits.

The banks ( due to CDO market growth) have been looking to increase volumes across all risk spectrums, and consumers are increasingly strapped for cash as wages stagnate and living costs soar.

What did everyone expect would happen?

Saturday, May 20, 2006 01:48PM Report Comment

10. Exbankrupt said...

I would like to respond to the idiotic comment made by Katzpaw.

Not all bankrupts have as you put stupidly run up debts, mine where aquired through, 2 redundancies, divorce and a further redundancy a week after my twins where born. I entered into an firstly made arrangements with my creditors, entered into an IVA then finally, after all my attempts to pay off the debts incurred through trying to live through a really sh**y patch failed I filed for my own bankruptcy.

I am now neither poor nor stupid and it's the views of crettinous people like yourself that do ex bankrupts no favours at all, I do agree that in some cases debts are bought on by peoples stupidity but now being on a salary of over 45k I am seeking a mortgage 4 months after being discharged and yes I'm being hammered by the interest rates on offer to me. Do you really believe that this is just or should the issue of whether a bank gives a mortgage to a client be based upon personal intuition + banking history and not computer generated figures?

Tuesday, May 30, 2006 05:01PM Report Comment

11. This comment has been removed as it was found to be in breach of our Blog Policies.


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