Saturday, June 21, 2008

Banks Generosity Hits Home

First Northern Rock borrower to be thrown out of her home by the Government

We took out a loan for around £300,000 with Northern Rock in 2006. In an astonishing twist, they were handed an extra £60,000 by Northern Rock on September 20 last year, days after customers queued outside branches in the first run on a British bank for 100 years.

Posted by yoyo1 @ 09:18 AM (1801 views)
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40 thoughts on “Banks Generosity Hits Home

  • Mostly I feel really sorry for people who find themselves in the awful situation of repossession, but this is just madness.
    We do have to take responsibility for our actions and by the way, where did the 60 grand go?
    That would have paid the entire mortgage for more than two years.
    More partial reporting from a partial paper!

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  • planning4acrash says:

    They spend hundreds of billions of OUR money to chuck us out WITH OUR money!!

    Down with the B(w)ank of the Un-United Kingdom. Down with the Corporatist New Liebour.

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  • How much will the house go for at auction ? Much less than the secured debts for sure. Who picks up the tab, the taxpayer or the debt victim? Both. Misery, irritation and useless management of the economy.

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  • The article says that NR is repo’ing six properties a day – that’s a little over 2000 a year. Given the size of their mortgage book, its composition, and the total number of UK repo’s, one would expect the figure to be at least double that number, if not three times.

    Looks like the govt have told NR to be repo-lite – more taxpayers money wasted…

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  • 1. wdbeast said…
    … where did the 60 grand go?

    My thoughts exactly. If there was a good excuse it would be quoted. They probably bought a big 4×4. Sympathy evaporates…

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  • speculatorone says:

    Its just amazing the woman can be complaining, who takes out a mortgage that size when you know from the start you can’t pay it back?

    I can’t see how the govt can be repo-lite given the size of the problem, the best outcome for the present govt would be to crash the market now and get it out of the way for the next election.

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  • mark wadsworth says:

    The comments from the NR guy at the end are brilliant.

    What Speculatorone says.

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  • “they jumped by £800 to a £2,300 a month after her two-year fixed rate loan came to an end this month.”

    OMG! An increase of 53% when the two year teaser rate ran out! I don’t have much sympathy for reckless borrowers/house gamblers either but what was the bank thinking of when they gave a loan like that?

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  • Lending money in this fashion will suck people into borrowing it because we all have to compete for the limited stock available.

    The house doesn’t look way over the top, just the price.

    Once again the family have split, was the husband brow beaten into this against his will ?

    Being a Director of a business brings with it a certain responsibility, as does being a politician, fund/investment managers should also carry a certain level of responsibility.

    This level of lending should be tracked back through lending houses, companies who invented the mortgage backed security products, politicians who oversaw all of this.
    If there are so many people involved that we need to build a new prison in which to house them all then so be it.

    A group of people have essentially brought down the economy of the Western World.

    This should be an imprisonable offence.

    And yes Mr Brown. You held the highest level of office that should have been responsible for keeping a check on this mess.

    You Mr. Brown should be at the front of the queue for a spell at her Majesties Pleasure to contemplate what you’ve done to this country.

    You claimed all the credit for the last 10 years, I think a spell of similar length in a dark room on your own is the minimum you should go through.

    You Mr. Brown were warned about this coming crash and did nothing.

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  • “Mother of Three” why not “A Family of Five” or just “A Family”.. better join the council house list, and on your way drop by argos for that family tent. Recommend “Pro Action Scout 20 Person Tent.” Cat No. 340/0827 £249.99 bargain at half price. Dad can sleep in his taxi!!!

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  • Fingerbob69 says:

    Is there such a crime as ‘reckless apathy’? If so Chairman Brown should go down.

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  • japanese uncle says:

    Still Applegarh is playing cricket on 60K+ pension.

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  • Str [email protected] I totally agree with everything you say apart from the ten years solitary imprisonment.

    It should be 25 years and it should be with both the Biars!

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  • japanese uncle says:

    Incidentally, this sorry story reminds me of the following:
    ——————————————————————————

    To: Mr. Gordon Brown
    Prime Minister
    and
    Mr. Mervyn King
    Governor of the Bank of England

    Dear Sirs:

    To make the long story short, I bought half a dozen of tulip bulbs in my local a couple of years ago at 100,000 pounds each. A guy called David pushed them to me, saying they were of an extremely rare kind and would soon fetch at least half a million each. He also said to me that the quality of those bulbs was guaranteed by a botanic laboratory called Bustard & Poo. Regulars in the pub, I mean Tom, Dick and Harry told me that they also had bought a few bulbs and looked forward to becoming millionaires very soon, telling me that only a fool would not grab such a chance of a lifetime. I instantly decided to invest, but of course I did not have such a big money, so I went to the local bank. Surprisingly they offered me 700,000 pounds, not even having a look at the bulbs nor asking about my income, saying I could buy Mercedes or go on a cruise trip to the Bahamas or whatever, using the extra 100,000. Of course I spent to the last penny, why not?

    Last year, as we all know, bulbs prices dropped like a stone and my bulbs are worth 30 p each now. (Between you and me, I forgot to keep them in a fridge, so they went bad and started to stink now). Yesterday, I heard a rumor that the government and the Bank of England are extending a warm hand to vulnerable souls like me and buying the tulips at the original prices. How generous!   Daniel s come to Downing 10 and the Threadneedle Street, yea Daniels indeed!  I have never been so grateful as now for the fact that I was born in this land of hope and glory. Thank you so very much for such prudent and thoughtful handling of this matter. God bless you all!!

    Yours sincerely,

    John Stupid Bull

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  • Agree JU

    Applegarth was a Director, I’d like to see proper investibation into the release of the 125% mortgage product which cannot be described as anything other than reckless.
    Never mind Golden Goodbyes and 60k per month pensions.

    If shown to be responsible for these products this man should be behind bars. And there are plenty more.

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  • str 2007,

    It’s easy to blame Brown and co, and they are certainly culpable; but when will the opposition stop waffling and come up with some sound policies?

    Here’s my list, as a starting point:

    1) A ban on mortgage redemption penalties, covering both new and existing mortgages.

    2) A national standard mortgage – a fixed rate repayment mortgage for up to 25 years (not passing oldest applicant’s 65th birthday) with maximum LTV 95%. Maximum advance to be no more than the sum of the applicant’s pre-tax earnings over the previous three years. Maximum arrangement fee £500. Maximum 2 applicants per mortgage, multiple mortgages not permitted.

    3) Non-standard mortgages to be subject to a 0.2% stamp duty, payable annually by the mortgage provider on the capital sum outstanding.

    4) Stamp duty on home sales to be reduced to 0% on first £100k and 1% on the balance.

    5) A new national self-build scheme, providing cheap plots and assistance for those who want to build their own homes, with a target of one million such homes in ten years.

    What have I forgotton?

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  • Obviously, she didn’t manage to get an audition on Britain’s Got Talent, so she thought she would get her 5 minutes of fame in the newspaper.. I wonder how much the “Daily Mail” paid these people? And did the hubby, give them a lift home?

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  • People seem to think they have a right to have three children and a five bedroomed house while not earning much money…idiots.

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  • Sounds like these people think they have a “right” to have three children and live in a five bedroomed detached house while earning a very modest salary…idiots.

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  • Does anyone think that Mrs Georgiou looks remarkably like Kirsty Allslopp without makeup?

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  • More like Jordan to me

    Sorry am I looking at the wrong bit !

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  • mark wadsworth says:

    Uncle Tome, you are just looking at the lending side. That’s pointless. What you should worry about is the ‘spending’ side. Land Value Tax will keep property prices low and stable and be a useful source of local government finance as well as replacing loads of other really stupid taxes.

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  • UT

    1/Certainly the tie/redemption stops people swapping and canes someone being reposessed. The redemption I assume is part of the calculation for gaining the teaser rate.
    Would you ban the current redemtions in place or ban the marketing of future ones ?

    2/ I’d like to see a lower LTV personally 90% max, there should be some commitment to save before buying a house.
    Based on your wage multiple, I’d like to see 3x1st and 1x2nd giving families a real choice for one of the parents to stay at home until the youngest child reaches school age. (Allowing 3x 2nd income forces both parents to work).
    I take it multiple mortgages not allowed means no second homes. Should these even be allowed by cash purchasers ?

    3/ Are non standard mortgages those for self employed ?

    4/ Would the stamp duty rates raise enough money ?

    5/ Got my vote with that one, I’d like to see a level of control to make sure people are building house fopr themselves not just property development. These should also be made available to every single town/village in the country so everyone has the chance.

    6/ I’d like to see a ban to BTL but have it replaced with rental property, car parks, leisure centres etc. coming under the control of local authority, the funding for which would come from locals being able to purchase shares in the scheme much as you would a PLC.

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  • waiting for the crash says:

    The 60k was a unsecured loan, even after repo, they will still be chased for the 60k. I know this as a mortgage advisor last year (yep he did tell me) that any amount over 100% was a loan not a mortgage and I would be chased it. I never took out a mortgage.

    60k – did it consolidate any debt? Debt to pay debt.

    As for these guys spliting up will mean she’s a single mother and goes to the front of the housing queue.The nightmare just begins for everyone.

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  • Noticed this very sad story linked on the same page. Daily Mail scoop…

    “Bikini-clad Cambridge student arrested for attacking spectator at jelly-wrestling match”

    http://www.dailymail.co.uk/news/article-1027964/Pictured-The-bikini-clad-Cambridge-student-arrested-attacking-spectator-jelly-wrestling-match.html

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  • Landedgentry says:

    “Bikini-clad Cambridge student arrested for attacking spectator at jelly-wrestling match”

    We should send this elephant to Iraq, be done in no time, punched a bouncer, got to love her for that!

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  • it_is_going_with_a_bang says:

    “They were given the money despite relatively low earnings – Mrs Georgiou earns less than £100 a week working part-time in a cafe and her husband is a taxi driver.”

    300k oh sorry 360k to people on that money? … and this bank was bailed out? No wonder…

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  • They will be chased for both loans if they are in negative equity.

    The proceeds of the house sale will go to the secured loan first, but after that, I expect they will chase the unsecured loan first, as they have 6 years to get that money vs 12 years for the mortgage.

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  • Don’t they teach kids basic arithmetic in school? Oh I forgot no…

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  • How more like that are out there?

    Some must be making ends meet by borrowing from family, friends, credit cards…..until no more

    And the crash has just started

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  • it_is_going_with_a_bang says:

    Anyway – whats that going to be £1,800 a month interest only?

    What happened to the “Monthly outgoings” sheet you fill in for your mortgage / lending?????

    “A Northern Rock spokesman said he could not discuss specific cases.
    But he insisted: ‘Credit quality at Northern Rock remains tightly monitored and controlled. We carry out checks on applications that may not be evident to the applicants.’ ”

    And this policy started when??! Tightly monitored? You have to be joking!

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  • str 2007,

    1) Ban all redemption penalties, including those on existing mortgages

    2) No multiple mortgages means favourable lending terms on one property only. Nothing to stop you buying a second place outright. Variable income multiples used to be the norm, but the gays would kick up if you tried it now. Better to give everyone the same multiple, but keep the multiple modest

    3) By basing the lending multiple on past income rather than projected income, the self employed have a level playing field (provided they’ve been declaring what they earn!)

    4) Depending on the take-up rate of the standard package, the stamp duty revenue would be somewhere close to where it is now – might need to tweak the non-standard rate to make the numbers balance.

    I think the lenders will get so badly burned, the concept of BTL will be killed off by the mortgage industry without the govt having to do a thing.

    Mark,

    Your pet concept of the land value tax is very similar to the old rating system, which preceded council tax (with the ill fated ‘poll tax’ briefly in between)

    The problem that emerged was that values do not change evenly over time, and properly re-valuing some 25 million separate properties was considered too big an expense, and endlessly deferred until the discrepancies were immense.

    A good taxation strategy should focus on minimal administration and collection costs. A land tax fails badly in that respect. However, giving local communities a bonus (paid by the developer) for every new house built in their midst, would certainly lessen antipathy towards new housing development.

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  • UT

    2/ My proposal was for the community, if someone chooses or otherwise not to have a family they can by all means spend their extra cash on something else, but to give them a 3x income multiple on the 2nd salary simply moves all property upto that level which is unaffordable to the people who actually need the extra space/larger house for their family. Gay or not my system is fair.

    4/ I have to be honest I’m just not comfortable with the whole BTL model. It forces prices above that of a repayment mortgage which ultimately forces the then priced out to rent. Bad for the community and the less well off. Far better to come up with a system that allows everyone to buy at sensible levels, giving the ones who would have rented/been suupported by the local authority a stronger sense of commitment and belonging to their community.

    All in all what we’re achieving here today is far more than the Conservatives with the help of Kirsty Allsop have achieved in the last 2 years.

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  • mark wadsworth says:

    Uncle Tom, keeping up to date values is a doddle, bearing in mind that HMLR already have most of the info they need. If Land Value Tax is too complicated, we could just have ‘Property Bubble Tax’, i.e.

    1. On day one Council Tax, Business Rates, SDLT, Inheritance Tax, TV licence fee, VAT on domestic fuel etc are all scrapped, making a note of the required tax take to fund local expenditure (about £60 billion, for sake of argument)

    2. Properties are valued for each postcode sector (a few thousand properties) using actual sales for the period divided by area of those plots sold and then averaged out, everybody gets sent a bill saying plot size x value.

    3. Let’s say the total value of all property by end of next crash is £3,000 billion. The first 80% in value would be exempt (in perpetuity) and a 10% PBT would be payable on the balance of 20% each year. So in Year One everybody pays roughly 2% of the value of their land/property/buildings.

    4. The valuation exercise is repeated every year as part of updating HMLR, every year, the original exempt amount gets updated for inflation and 10% is due on the excess. The 10% rate will act like a much higher interest rate in future, so price rises will be dampened (and you will be part-insured against falls in value!). And if receipts go up, then great, central gummint can pass on more responsibility to local authorities and cut VAT or Income Tax.

    Sure, it’s neither scientific nor perfect but it’s got to be better than all the crap taxes it could replace.

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  • £385k for that dump of a house. You’re having a larf?! Are we meant to have sympathy for this woman? This is completely and utterly self inflicted.

    What distresses me, is that my savings are going to be inflated away because of this credit binge. What’s worse in my opinion, pensioners are going to see the value of their pensions evaporate due to this criminal theft of the population’s future productivity by the banks and indirectly by the fools who went along with this pyramid scheme. Many of them will be past their “work by date” and have little chance to do anything to prevent a spiral into destitution.

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  • well said d’oh – I take it yo’re not a pensioner?

    also checking I’m still allowed to post.

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  • yup seems OK for now

    meant what I said anyway d’oh

    communicating via digital techno is not easy

    best wishes

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  • malct – I’m nowhere near being a pensioner (38), and in fact this financial upheaval has been one of the greatest money making opportunities I have had in my life…thanks to, amongst other things, the heads up from people on this site I’ve been laughing all the way to the bank.

    However, my parents and grandparents are pensioners and one day I (hopefully) will be one too. There is something deeply wrong with our society, and the inflation of commodities and deflation of asset values that is beginning to hit us will hit pensioners very hard. Your average pensioner’s main outgoings are council tax, energy and food…all of which have been rising much faster than the pitiful amounts many of them receive from the government and/or private top ups. I really don’t know how some of them can do it. I’m highly skilled and have all sorts of ways of making extra money, but what of those who are now in their late 70s and had manual jobs all their life? What is 20% inflation of the basics of life going to do to them? I’ve been thinking about bubbles a lot since 2001, and the more I have thought about it, the more it has hit home to me that the modern financial system, banking and pensions, is nothing short of highway robbery. So many older people I know have had their life savings more or less stolen by the investment industry because they trusted supposedly professional financial advisers, who were nothing more than snake oil salesmen. How many people do you know who put say, 70k into a financial scheme 10 years ago who have less than that left now? I know quite a few. I find it interesting that this year the government has allowed cash ISAs to be transferred into share ISAs…for who’s benefit do you think that is?

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  • d’oh thank you for taking the time to explain, I hope people have read this and learned from it.

    I wish I’d realised what was really going on at your age, I’m 61.

    hope you catch this before it disappears into the archives

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  • malct – I did catch your reply. Good luck to you. I think in some ways I would have seen these things a little more clearly a little earlier in my own life if I had been born a few years later. I grew up in Australia in the 1970s where it still seemed to be the case that hard work and professional careers paid off in the long run etc. I worked very damn hard. Something, however, changed dramatically in the late 1980s, but by that point in time I had already internally shaped my beliefs and desires about a future career and did not completely understand what was happening socially…it took some time for me to realise that the world was changing under my feet and that, in my case, a career as an academic was more or less financial suicide. The whole picture did not click until sometime around 2001 and since then I have changed my career and future planning based on those rather depressing realisations about where things are headed. Wish I had worked it all out 10 years earlier, as the warning signs were all there…I just did not put it all together.

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