Wednesday, December 12, 2007

No surprises here!

Lenders 'at fault' on home loans

Citizens Advice has accused UK sub-prime lenders of knowingly giving mortgages to many poor borrowers who cannot afford them.

Posted by dave the box @ 08:36 AM (1577 views)
Please complete the required fields.



12 thoughts on “No surprises here!

  • I particularly like:

    ‘However, the Council of Mortgage Lenders (CML) said the report was “skewed” and “disproportionate”.
    It said the charity’s attack on the sub-prime mortgage industry was “simplistic” and “sensationalist”. ‘

    No Vested Interest by the CML there then!!!

    Reply
    Please complete the required fields.



  • and like people earning a £1000 per month don’t know they cant afford £2000 per month!! But i bet labour bails them out leaving the responsible people to to sh*t

    Reply
    Please complete the required fields.



  • Interesting that UK Sub-prime lending is making more and more of the headlines – when the “credit crunch” blew up some months ago we were informed Sub-prime problems were definitely confined to the US market and that the market here in the UK is “different”.

    Reply
    Please complete the required fields.



  • Sounds like the government propoganda machine setting the ground to pin the blame on someone other than the government.

    Reply
    Please complete the required fields.



  • Having heard the inane comments of the CML representative on TV this morning, I’m not surprised they have no clue abourt the size of the problem – head so far in the sand only the toes are sticking out.

    Partly lenders don’t know because the level of risk has been obfuscated by the brokers/mortgage sellers, who seem detached from the lmain part of the enders, who seem detached from the parcelled off debts that have been sold on as CDOs – no wonder there is uncertainty….

    …added to that having overheard 3 mortgage ‘salespeople’ from Northern Rock bragging about how high a multiple they could offer (11 times salary), two days after the Rock hit the fan, I’m not expecting a low final number for the UK subprime…

    Reply
    Please complete the required fields.



  • And of course the unintended consequence of holding the lenders accountable is that that they will restrict their lending even further to people of modest means. Responsible people with modest aspirations will be denied access to the housing market because of the past actions of some greedy idiots. You cannot escape the logic that people have to suffer the consequence of their own actions, however nasty it is for them.

    Reply
    Please complete the required fields.



  • I think these folk are victims of mortgage salesmen with targets to meet and big bonuses to collect.

    The whole economy is sharply heading for a recession or even a depression.

    Reply
    Please complete the required fields.



  • japanese uncle says:

    The radical and necessary solution is, to change the mortgage system to “non-recourse” loans where lenders cannot claim any more than the collateralized property, which will certainly work to normalize the lending practice and stablize the property market because lenders will after all have to take the loss when a property speculation goes wrong.

    Reply
    Please complete the required fields.



  • There has been plenty of sub-prime lending in the UK, much of it by American institutions. They thought it a profitable wheeze in the US and extended it overseas.

    In my experience, sub-prime work is a pain in the @rse. You often feel that the borrowers are non-copers and that their property is a repo waiting to happen. One frequently attends the same houses over and over again as the borrowers remortgage repeatedly to pay off the next round of credit card debt. Instructions generally come via brokers who routinely challenge any downvaluations in an attempt to get the deal to go through, so they can get their commission. I’ve lost count of how many times the broker has told me he’s trying to ‘help’ the client and asked whether I can cooperate. If the broker doesn’t get the valuation required, the instructions are ofter touted round other valuers in the hope that some over-worked corporate sucker, who hasn’t got the time to argue the toss, will eventually rubber stamp it.

    Extreme pressure is applied to ‘get the valuation’ . There is the threat of work being withdrawn and diverted elsewhere. This may come from the lenders local representative or the broker. I am aware that some corporate surveying firms have a policy of not downvaluing, in order to get the business. A surveyor friend recently told me that their companies computer software actually prevented downvaluations of less than 10%. He thought this rather inflationary. For example, if the remortgage came through with an estimated value of £200K and the comparable evidence supported a value of only £180K, the software would only allow the surveyor to submit a valuation of £200K.

    IMHO the US freeze on interest rates, and Camerons recent talk of lender leniency, is a red herring.

    Reply
    Please complete the required fields.



  • A good piece of work by Citizens Advice. They are right. A lot of pain will be caused by the easy lending criteria that has been in place over the last 4 or more years. When that is combined with greed and profit hunting there can only be one outcome. I don’t see anything wrong with making profits in principle but these companies must have known that these people would have problems in the future – but they figured that didn’t matter because they still have the house as an asset to sell on when the payer defaults. We have to look coldly at the greed culture if we are going to be able sustain the economy (British people) long term without it going down in flames. May be too late for the next 5 years but maybe lessons will be learnt – and then probably forgotten again. Shrug!?! 🙂

    Reply
    Please complete the required fields.



  • We all know that at least some people in trouble with mortgage payments are going to get some kind of “new assistance”. The question is how much and for how long,not if. We as yet don’t know how much public money was lost at NR. Of course the full amount will probably never be revealed. Any estimates on how much Cameron’s scheme will cost ?

    Reply
    Please complete the required fields.



  • Did you see the interesting News Blog item posted yesterday from the San Francisco Chronicle? Utterly fascinating –

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL&ref=patrick.net

    “The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth.

    The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

    And, to be sure, fraud is everywhere. It’s in the loan application documents, and it’s in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies – all the way up to senior management – knew about it.

    I can hear the hum of shredders working overtime, and maybe that is the new “hot” industry to invest in. There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer “he can’t refuse.””

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>