Friday, February 15, 2008

CAB warns that the growth of sale-and-rent-back schemes may have had an impact on repossessions

CAB renews call for tighter regulation

The Citizens Advice Bureau has renewed its call for tighter regulation of the mortgage market following the Council of Mortgage Lenders’ repossession figures.The CAB warns that the at 27,100, total repossessions in 2007 were up 21% on the previous year and were nearly twice as high as the figure seen two year’s ago in 2005. “We want to see all lenders being reasonable when dealing with customers who do get into trouble, and taking court action for possession only as a last resort.”

Posted by jack c @ 12:29 PM (620 views)
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4 thoughts on “CAB warns that the growth of sale-and-rent-back schemes may have had an impact on repossessions

  • ““Our evidence shows that lenders are not always doing everything they can to help borrowers in trouble, all too often piling on extra charges and being too quick to take court action rather than being prepared to negotiate affordable repayment arrangements.”

    Yer ! The rotters ! Can’t they negotiate say £75 a month over the next 500yrs. These banks are so unreasonable !

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  • Have you noticed how lots of media sources (usually the most property-oriented) and government snouts are stepping up to rename “repossession” as “possession”?

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  • I’m not sure a lender can repossess something it never actually owned in the first place. I know that some lenders ask ‘have you ever had a property ‘in possession’?’.

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  • new user 2007 says:

    I am confused as to why estate agents do not have to be FSA registered. They give “advice” on the biggest purchase we make. I realise that the FSA deals with the financial world and investments, but they do effectively talk prices up as if they are investments (for homeowners as well as for BTL).

    Also, I am confused on the income multiples they allow i.e. they say market forces should determine them. There is one EA who even other EAs hate. It has an “independent broker”…it offers multiples so high that it is clear it knows the buyer will barely be able to survive owing to interest payments…

    it will not be possible to ever pay any of the capital i.e. no extra income, and there is no cushion for changes in rates. What they do is provide a slightly lower interest rate with a huge fee that is nicely added to the mortgage each time…

    so on a 45k salary they will give 315k mortgage. The fee for that is close to 5k, which you can add to the mortgage. So you now owe 320k BUT you get a low rate you can afford (barely). The issue is not the rate, it is the amount given…

    Next time you can give them another 5k to now have 325k in debt. This cycle can continue a few times and relies on increasing house prices and access to cheap debt. What happens when your equity does not go up and cheap rates are higher?

    …there is one last chance. Get another 2 year fixed at an ok rate but pay these guys £8,000 in fees this time.
    Again added to the mortgage. That is how families are being caught out (and to add to that most of the people who do this are probably the type to use equity withdrawel).

    This process should be illegal i.e. allowing people to take on huge debts assuming only the best case scenario (rising prices and stable rates)…we will ignore possible recession and unemployment, as these would impact even the most prudent person. But it is being allowed all the time.

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