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So much for the Governments 'rescue' package

mystic_trev
Posts: 5,434 Forumite


The Government's £200m mortgage rescue package will do nothing to ease the suffering of struggling homeowners in negative equity, as they will be barred from the scheme even if they desperately need to raise cash.
Timesonline has learnt that homeowners struggling to pay their mortgage will be prevented from benefiting from the rescue package, announced on Monday, if their property is worth less than the value of their mortgage.
That includes thousands of customers who took out a Together mortgage with Northern Rock, the nationalised bank, which offered cash-strapped first-time buyers loans worth up to 125 per cent of the property value.
A spokesman for Communities and Local Government, the department overseeing the rescue package, said: "Homeowners in negative equity will not be eligible for the mortgage rescue scheme. However, it is important to remember that mortgage rescue is only part of a range of options the Government has put in place to help families at risk of repossession, including expanding free legal representation at county courts, more free debt and advice, and on-going work with lenders to help ensure repossession is only ever a last resort."
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4668568.ece
Priceless!
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Comments
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You seriously couldn't make it up. So many people have clung on to the believe that the government 'won't let it happen' when others have spoken of recession and a crash in house prices. Wonder if they will now realise that they're just not capable of doing anything to stop it.0
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I have to say firstly that this is very good news. The idea of the government bailing out the banks basically by clearing all the negative equity situations was one of my biggest concerns. It was wrong on so many levels.
However, it does make the whole scheme somewhat pointless, as anyone with equity can surely sell and rent, which will put them in the same position as the government taking over their house and renting it to them financially.
So a load of administration and cost for no actual gain. Sounds about right... :rolleyes:Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Re reading that it sounds a bit harsh so to explain further. You simply can't have a scheme whereby people can borrow (and the banks can lend) any amount with the government effectively underwriting any shortfall should the payments not be met and the value of the house fall short of the loan.
It would be financial armaggedon as there would be no incentive not to "have a go" at buying and paying the mortgage, with the government having to mop up all the mistakes.
Home buyers need to be aware of a downside when making serious financial decisions and banks need to be responsible when they lend imprudently.
To remove that situation at tax payers expense would be utter folly and it was of deep concern to me that this is what it appeared might happen.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
A NR Together mortgage is made up of a 95% Mortgage and the rest is a SEPRATE UNSECURED LOAN. The only thing that links these two elements together is that NR give you the same mortgage rate for the unsecured loan.
So, any NR Togther Customer will not be NE until the property falls less then 95%.0 -
Max_Headroom wrote: »I have to say firstly that this is very good news. The idea of the government bailing out the banks basically by clearing all the negative equity situations was one of my biggest concerns. It was wrong on so many levels.
However, it does make the whole scheme somewhat pointless, as anyone with equity can surely sell and rent, which will put them in the same position as the government taking over their house and renting it to them financially.
So a load of administration and cost for no actual gain. Sounds about right... :rolleyes:
I thought the scheme should work along the lines of those facing repossession should be able to apply and the government makes an offer to the lender of the market value for repossession. The bank takes a hit as they would for repo and people get to rent the existing home at a rent that covers interest on what the gov paid for it. If the person gets back on their feet they can buy back the house at a price of the original mortgage.0 -
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If someone is struggling to make mortgage payments and is facing repossession then the government settles the mortgage with the bank and takes ownership of the house. The majority of people have loads of equity so the government should really be bagging some bargains.0
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mystic_trev wrote: »On that basis they're nearly all in Negative Equity already!
well, depends what year they brought but I see what your getting at.0 -
If someone is struggling to make mortgage payments and is facing repossession then the government settles the mortgage with the bank and takes ownership of the house. The majority of people have loads of equity so the government should really be bagging some bargains.
But do the majority of people facing repossession have 'loads of equity'? I would suspect that most of these people have overstretched their finances and do not in fact have much in the way of equity.0 -
If someone is struggling to make mortgage payments and is facing repossession then the government settles the mortgage with the bank and takes ownership of the house. The majority of people have loads of equity so the government should really be bagging some bargains.
If you have loads of equity in your home then it means you bought a good few years back or with a decent deposit - so your payments should be extremely manageable anyway as - and it bears emphasising this - interest rates are currently on the low side of average.
The sorts of people having trouble paying are likely those who bought recently at bubble prices and now can't service their debt as they come off of 2 year fixed rate deals onto SVRs.
This is almost exactly the same group of people likely to be facing negative equity!
So who will this scheme help exactly?
(Not that I'm complaining that taxpayer money isn't being used to pay off negative equity).--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0
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