Tuesday, October 9, 2007

comment on last night’s Panaroma

BBC's pantomime season comes early with sub prime tales of woe

The only phrase missing from last night's Panaroma programme was surely; "He's behind you". In fact that's probably as good a place as any to start with this comment on the programme - he's not the 'bogey man' he's a mortgage broker..OK here goes, two words in relation to last night's programme; "personal responsibility"...Let's get one thing straight at the outset, it's just plain wrong to offer (for example) the disabled married couple interviewed last night who were on a variety of benefits, a mortgage to replace their rent.

Posted by converted lurker @ 12:46 PM (2381 views)
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21 thoughts on “comment on last night’s Panaroma

  • Didn’t they feature an investment bankers with his Hampstead home taking out a 2 million GBP mortgage on a salary of 100k GBP and a bonus of 300k GBP. (sounds like a lot – but dont forget the cars, nannies, champagne and strippers … it all adds up you know)?

    No? You do surprise me.

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  • It reminded me very much of the endowment mis-selling scandal. All the same ingredients. Probably much worse outcome however.

    I take it you were not one of the people who ever got an endowment then CL?

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  • converted lurker says:

    I had an edowment however first property fell in such value in the 80`s it was irrlevant. Sold out went into rental for a bit then bought again a bit later on. I’m a bit fed up with these so called exposes TBH, they always leave me deeply frustrated. The blame will be ultimately directed towards brokers and ‘Penny from Philedelphia’ who brought the housing market down..I mean who the fukc was she thinking she could afford a house on a cleaner’s wage? Lenders knew exactly what the brokers have been up to over the past five years, the inducements to lend to: anyone, at any rate, have been directly from lenders. No excuse given the level of sophistication underwriting could adopt ‘these days’.

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  • David Smith's Sub Prime. . . says:

    I don’t know about plain wrong, dishonesty springs to mind….

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  • Unfortunately, it looks like I was right with my concerns for this programme yesterday:

    http://www.housepricecrash.co.uk/newsblog/2007/10/blog-no-suprises-here-7289.php

    14. doomwatch said…
    Uncle Chris, this is precisely my point. My concern is that the Panorama “investigation” will portray that UK “sub-prime” is restricted to a load
    of council house and poor credit people. In essence telling to rest of the country, “don’t worry, it only happens
    to these wasters, who were mis-sold mortgages by just a hand full of bad people.” Go back to sleep Britain, keep binge drinking
    and watching X Farse.

    Monday, October 8, 2007 01:36PM

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  • take heart CL

    I looked on the programme as much less of a finger pointing expose, and much more of a very well described assessment of the situation. I liked the analogy to the house of cards, and I enjoyed it even more when they pointed out that the bottom of the house of cards is kept up by people who have been given huge mortgages despite being unemployed.

    The program was a huge positive for me because it is educating all those people who think prices can only ever go up. It will do a lot to change sentiment, and when sentiment changes the game is up. Roll on HPC.

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  • I have viewed this site for over a year and this is the first thing I have written.

    sub prime mis-selling, what about prime mis-selling?

    I wanted a long fixed rate mortgage, so I went to the bank with the best rate. They told me that according to their database my house was worth 225k and tried to convince me to increase my current mortgage to 90% of that.

    A) I didnt need 90%
    B) An estate agent had valued it at 185K just 3 weeks earlier.

    For the prupose of my mortgage application, the bank insisted they use their figure. I know that a 90% mortgage would mean immediate negative equaty for me, so I didnt take their offer. But the point is that they would lend it to me. Also, I was not an existing customer. They have never asked for proof of income. No bank staements, no wage slips, nothing (all on my say so).

    When did this happen?……. just just 3 weeks ago!!!!

    If this happens after the media start questioning lending criterior, god knows what they were like before? In my opinion, what I will call “bending the rules” lending is common. It started with credit cards in the late 90s and has moved onto peoples homes. There is alot of questionable lending out their (not just sub prime). We will find out how much when the house of cards starts to fall.

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  • Panorama should do another one on the property investment / BTL courses, that promise ordinary folk multi-million pound property portfolios.

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  • There is a similar expose on Friday’s Money Program

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  • I thought it was quite a good programme – I thought the main point was that mortgage companies have been lending vast sums without bothering to check any details, and the FSA and CML were looking a bit complacent to say the least. The poor old council tenants were just there to give it a bit of human interest.
    Not nececessarily news to a dedicated HPC blogger but I bet it made a few people stop and think.

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  • Quite an intelligent article.

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  • What I don’t understand is why the couple who had lived in he council house for 20 years were in trouble. They would presumably have got a massive discount on whatever the ‘value’ was when they bought off the council two years ago. Their mortgage shouldn’t have been anything like as much as their previous rent. I think there must be more to their case than we were told.

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  • Sukhjit Singh says:

    It is beyond belief that the FSA had no idea what was going on – both with respect to the cases in the programme and more offically in their statement about Northern Rock.

    It seems like this is a case of the blind leading the blind or more accurately the greedy leading the greedy.

    We have seen a supposed huge growth in wealth mostly due to house price increase over the last decade. I myslef have not ‘benefited’ from it, but I have many friends and family that have. Question: are people happier – not from what I can see – they are more worried and paranoid then ever.

    The HPC is almost inevitable now – and if it does wipe the smiles off the smug (I bought a house for 50p and sold it for £2m in 3 weeks – but that is just acceptable capitalism) crowd then bring it on!

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  • Still-waiting says:

    Possibly cornishman. But the Right to Buy discounts aren’t what they used to be, and maybe house prices went down in their area, as interest rates rose.

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  • Interesting programme, but only the tip of the iceburg. There is so much fraud and bent practice out there happening on a daily basis. Can the FSA and lenders really be so blind to it?

    Give you a couple of examples :- Did a valuation last week – sale price quoted as £195K, mortgage required £175,500 – thought it strange as house had been on the market 3 weeks before at £170K. Asked vendor how much he had sold it for (I always check) he said he couldn’t remember and shuffled through some notes in his pocket. On finding the right bit of paper he said sheepishly er— £195K I think. I said ‘wow, that’s a lot isn’t it’. He said yeah, but I don’t get that much ‘as it’s something to do with his mortgage’. The joke is, the broker submitted a complaint after my ‘downvaluation’ (to which I will enjoy responding).

    Did a ‘we-buy-houses-dirt-cheap.com’ valuation 3 weeks ago. House had been on market for 2 years at silly price of £285K. Company was buying it cash for £200K (it was worth about £225K). Surveyor friend rang me up last week looking for comparable sales evidence as he was suspicious when doing a ‘remortgage’ on the same house for the buyers (vendor had left by this time). The estimated value was now £285K and loan required £213,750. You can see how the deal works if the surveyor is hoodwinked (particularly as the deal is done with such speed that the sale details haven’t hit the land registry site). The company gets the house (cheap adnittedly) but with no deposit and a dollop of extra cash to go into the pot towards funding the next ‘cash’ purchase.

    The examples of all those empty flats (potential repossessions) is repeated in many parts of the country. Not all buyers are stupid . Many are just greedy speculators buying off-plan in the hope of making a quick buck by ‘flipping’. I know of estate agents and financial advisers who have done this (and are now getting their fingers burned) In this crazy distorted market, it is difficult to assess the ‘true’ value of property. God knows how those CDOs can be valued.

    So, my sympathies are not always with those poor souls who have got themselves into debt. Many know exactly what they are doing and are complicit in it.

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  • @ whiteknight – Investment Banker on “100k GBP and a bonus of 300k GBP”. P’fft. Equities in Dallas possibly…

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  • converted lurker says:

    p.doff your anecdotes are excellent, far more enlightening than last night’s entertainment. Any chance of me writing them up into an article? Mail me if you’re interested, thanks: [email protected]

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  • The BBC is completely compromised these days,. I enjoyed the program, thought is was funny and new they were trying to pull the wool over the viewers eyes, as they always do. The trouble is that according to psychological test done in Holland some 18 years back, the British came out with an average mental age of 11.5.

    I think it has now dropped to 5.0 today. But then, most five year olds I talk and listen to seem more inteligent than their parents.

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  • I think what the programme highlighted was the fact that the UK is now a banana republic but without the benefit of having any bananas. Even Terry Wogan commented on the radio this morning about all the flats being built next to flyovers which all seem to be empty and who would want to live in them anyway.

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  • David Smith's Sub Prime. . . says:

    I is intellijent,

    There is no sub prime………thats wat I say………

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  • sub prime 125% mortgage, extended terms , interest only, potentially all subprime and further to that 90% of mortgages inthe uk are on adjustable rates

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