Friday, November 13, 2009

Landmark repo forbearance case

Sub-prime lender in legally binding repo forbearance

Blemain Finance, a sub-prime lender, has agreed to not repossess Peter Bentley, a carpenter from Bridgend, for at least six years, through a legally binding deal. Bentley had fallen into arrears as a result of caring for his sick father after his mother died. Blemain initially sought an order to repossess him and Bentley, represented by Cartel Client Review, tried to counter sue but once the lender became aware of his situation it sought an alternative deal. Blemain will not charge interest on the £40,000 mortgage and has cut monthly payments from £549 to £150 until the capital has been paid off.

Posted by mountain goat @ 01:51 PM (1223 views)
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10 thoughts on “Landmark repo forbearance case

  • There were 26,215 repossession claims against borrowers for the quarter April and June 2009, this is down from 38,832 for the same quarter 2008.

    The 09 figures annualise at 105,000 which is a figure lower than almost every year througout the 1990’s when there were fewer home owners and when unemployment was lower and affordabilty far far better.

    Normally about 50% of repo claims go to repossesion but this time the % foreclosing is also materially lower.

    What we see is the hand of the government hugely concerned not to allow asset prices (and with those bank capitlisation and consumer spending) to be driven down by a high volume of repos forcing house prices down to true value.

    With prices and income increasingly dislocted, bad in 2007, worse now with prices rising and income falling, I suspect we will be first in line for a true currency crisis, as the depth of the rot spreading through our fools paradise becomes increasingly apparent abroad.

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  • Figures are artificially low through gov pressure and support schemes, plus home owners are taking BANKRUPT route instead and not adding to the figures

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  • Whatever it takes.

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  • Blemain finance may well be heeding the pressure from the Gov via FSA not to throw people out on the street – for example here is the latest FSA investigation – “The Finanical Services Authoirty has revealed that it is investigating a further five firms over their handling of arrears” “Our enforcement team is still investigating five more firms about poor treatment of customers in arrears” “The industry should not be deluded about the strength of our commitment in this area.”

    Full story @ http://www.mortgagestrategy.co.uk/fsa-investigating-five-more-firms-over-arrears/1002155.article

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  • mountain goat says:

    I posted this partly because I am still making my mind up and wanted to know what other people think. Do most people think repo’s are a good thing? Pressure on lenders to show forbearance is certainly happening, and helping to prop up hp. I resent this gov interference but do I support forcing someone out of their house because they are caring for a sick parent? I suppose it depends on the ability of the person to service the loan in future, say after his father dies. Since it is a subprime loan perhaps the guy wasn’t credit worthy in the first place?

    There was a different story in FT Alphaville about a case in the US of forbearance on the principal “the homeowner bought the house in May 2005 for $420,000; the house is now estimated to be worth about $325,000. BoA is offering to reduce the principal owed by the homeowner to $334,400 — almost the market value of the house — from $445,835…” I take it this is a financial decision that must benefit the bank in some way?

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  • MG if you decide to base your economy on consumer spending, and related to that house prices, then if you believe in capitlism to any extent you have a responsibilty to repossess to ensure the health of your economy.

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  • mountain goat says:

    Thanks BW, appreciate your views.

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  • markj69 str05 says:

    @mg 4. I guess the difference will be written off against some bad debt insurance, or gov’t payout (Taxpayers money?).

    Then the homeowner may at least be able to service the rest of the debt. Homeowner kept in a house, no repossession, and the bank only writes-off a small ammount (Possibly covered by you and me). I wonder who’s going to give me 25% towards my next house purchase! Any ideas?

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  • Enough Already says:

    Hasn’t anybody else had a gutsfull of bailing the feckless out? I’m sorry in this case – but how many other “similar” (yeah) cases will need MY financing (through my taxes). I feel like going out and buying up a palace I can’t afford so you slobs can pay for it!

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  • Moral hazard.

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