Sunday, Aug 13, 2006

Interest only mortgages could turn nasty

MSN Money: The most dangerous mortgage in the world?

Are you sitting on a mortgage time bomb?
Just like a packet of cigarettes, mortgages now come with a health warning: your home may be repossessed if you cannot meet the repayments. However, some mortgages are more dangerous than others and the interest-only mortgage has the potential to be particularly nasty.

Posted by bigwavedave @ 11:35 AM (516 views)
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1. Adren said...

Disclaimer: IANAL and IANAA.

The arse covering has started. Here's how I see it.

Someone very high up at the Britannia has realised that by selling these things without advising punters to do a LOT of due diligence first, they have left themselves wide open to charges of mis-selling. Again.

Clearly the board has recently taken advice on this and the advice was to inform all IO punters to do that due diligence and to do it NOW. The move gives the directors cover in that they have been seen to act as soon as they realised there was a potential problem. They can point to this in the event of an investigation to show what good, responsible captinas of industry they are.

The interesting thing is that by and large financial institutions have directors so elderly and wealthy that when the writs start flying they are usually well out of the frame and in any case so financially tooled up as to stall any proceedings until they are pushing up the daisies. The fact they are taking action now to deflect culpability is in itself instructive. It implies to me at least that they expect trouble, big trouble, from high places and that they are expecting it really soon. I wonder what their spies have told them.

Monday, August 14, 2006 12:49PM Report Comment

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