Tuesday, December 2, 2008

RBS’s six month stay-of-execution will cause a backlog of repossessions later

Housing market adjustment cannot so easily be halted

"One of the reasons RBS can afford to give six months breathing space to delinquent borrowers is that it was never a particularly big mortgage lender in the first place, with only 7 per cent of the market, and has in any case largely managed to avoid buy-to-let and other distress areas of the mortgage market. As unemployment rises, ever more mortgage holders will find themselves in arrears. Yet the problem is hardly going to be solved by a six-month stay of execution. Indeed, it might make it even worse, as a backlog of eventual repossessions builds up in the system. A period of necessary adjustment is under way, in the housing market and elsewhere. Politicians still like to think they can buck the market by ordering the system around. They are likely to be cruelly disappointed."

Posted by drewster @ 02:09 AM (2702 views)
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23 thoughts on “RBS’s six month stay-of-execution will cause a backlog of repossessions later

  • Quite.

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  • i remember the 90`s says:

    King cunute !!!!!!

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  • Is that an echo? Has he been reading my posts?

    ;p

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  • ” ……….. They are likely to be cruelly disappointed.” – Not as cruelly disappointed as those who ultimately find they’re still gonna be repossessed but owe even more now.

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  • planning4acrash says:

    No, The delay of 6-months is the backlog!! They are spinning the vastness of the crisis and the inability to deal with it as a PR stunt, it will get worse, and they could collapse before they get your house.

    How to use it? Filibuster any attempts to misappropriate your house, use whatever delaying tactic you can find, do not co-operate with anybody, let nobody in your house. Don’t answer the phone. Get a humungus lock to stop bailiffs, literally spending your last wage packet on security, bar yourself in. Only the nice people who co-operate will loose their home first.

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  • mark wadsworth says:

    After dozens of pathetic and feeble attempts* over the past two or three years to stave off the price crash and prop up house prices, surely Nulab must realise that the game is now up (even though by mastery of Doublethink they will never admit it).

    Presumably they hope to prevent a flood of repo’s coming on to the market in order to win themselves time to have a quick general election in May 2009?

    * I have documented the main ones on my blog, I can’t do a full list yet because they keep thinking up new ones.

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  • little professor says:

    All that the six month stay of execution does is allow further arrears to be built up, and means that the property is sold at auction six months further along into a falling market, meaning the customer ends up owing even more.

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  • p4ac – Again, not good advice – if someone really has taken on more debt than they can handle and do not keep up payments the case will get to court unless a renegotiation is successful. The less cooperative this person has been so far, the less lenient the judge will be. Furthermore if someone really cannot renegotiate terms, the course of action you suggest leaves them in a worse position due to the build up of interest and legal fees. Remember – the lawyers will always take their share! Better advice would be to cooperate but be forceful in your renegotiation, and to keep something in the forefront of one’s mind – the bank does not want to have to repossess and recover, but would prefer to keep income stream and eventual full recovery.

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  • “Part of what’s gone wrong in the US housing market is that householders who get themselves into difficulty can just hand the keys back and leave the bank to sort out the resulting mess.Any liability is left with the lending bank.”

    Eh ? I that true ? If so it is a HUGE difference to how the UK works. Why would anyone with negative equity carry on paying the mortgage if they can simply walk away ?

    This blows a hole in the idea that the UK is just a year behind the US. The two markets cannot be compared.

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  • mark wadsworth:
    “Is the government also prepared to subsidise all tenants who are up to six months in arrears? Probably not, and if so, they shouldn’t be.”
    Nice.

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  • Sane article.

    It does look as though the government cannot bear to count the cost of residential repo’s, although trying to appear caring is also a likely motive.

    My best guess is that the eventual total losses resulting from UK residential repo and resale will be in the order of £60 – £75bn, and it now looks likely that a high proportion of that will be born by the taxpayer, in the form of yet more government debt.

    But until this pain is suffered, the black clouds will continue to hang over the economy. Attempts to delay the inevitable will only make matters worse.

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  • p4ac

    Are you getting home owning confused with squatting ? The aim is to stop the court transferring ownership to the bank. Hancuffing yourself to the loo won’t stop that.

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  • P4AC thinks he is rambo! What he can’t see is that come his (dearly awaited) day of reckoning (described yesterday as collapse of fiat money and western govt in 2009) he assumes he will be able to hold onto any of the things that he has squirreled away. What he fails to see is that in his scenario (whether its totalitarism or chaos) every last thing will all be torn from his relatively feeble grasp.

    P4AC this is what I find least convincing about your perspective, that and the fact that if you really believed in what you say, the ABSOLUTE last thing you would do would advertise your ownership’hoarding of food and gold on this site.

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  • After six months defaulters will be eligible for interest only benefit payments on mortgages under 200,000. Spring election anyone?

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  • … and given a financial apocalypse – a breakdown of the fiat currency system – gold won’t be what one wants anyway, well not much of it since it won’t be very liquid.
    What one wants at the outset is: tinned / dried food; dried milk; spirits [a liquid liquid ;)]; tobacco, guns & other weapons; ammo; and pharmaceuticals (oh and some weed). Gold is what one will eventually accumulate from the trading of these other goods in preparation for the reintroduction of a monetary system.

    The only real point in hoarding physical gold now is for any excess capital you wish to lock up until AFTER the end of the non-centralised system!

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  • Has anybody considered if mortgage lenders delay repo for 3 to 6 months. The goverment is due to cut its state help for homebuyers in difficulty to cover mort interest repayments to 13 weeks. Maybe there wont be as many forced sales and it may even help the housing market…
    Just a thought.

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  • I don’t know where he hoard all that food when his mum needs to rent the spare room out.

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  • gardeniadotnet says:

    14. 51ck-6-51x, 13. bellwether

    The very fact that you two are even considering the possibility of financial collapse is significant in itself.

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  • I have always considered it, but as I point out, there is little point in trying to hold on to accumulated wealth in such a scenario. The best way to go would be to prepare a way to help out your local community if you want future comfort – unless you enjoy lying on a pile of gold ;p

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  • If I was an RBS shareholder I’d be pretty PO’d by this, for the reasons mentioned by little prof @ 7. This is atrocious business practice, especially when they are in such dire straits already, and gives me even less faith in RBS.

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  • @a saver
    As far as I am aware, I am an RBS majority shareholder – and I am pissed off.

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  • Lucky Jim at 15 – sweet!

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  • nopensionnohouse says:

    “Don’t answer the phone. Get a humungus lock to stop bailiffs, literally spending your last wage packet on security, bar yourself in. Only the nice people who co-operate will loose their home first.”

    Bailiff “Knock knock. Come on Mr. P4aC, we know you are in there”
    P4aC “You’ll never get in for I have a humongous lock on my door”
    Bailiff “Hmmm, I was worried about that. Usually people are so nice when I visit and I don’t want any trouble. Better go to the next house. This one is too difficult. Have a nice day”
    P4aC “Phew, that was close”

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