Abbey LTV "threats"

MissMoneypenny

napoleon wrote: »

Abbey shouldn't have been lending people so much money in the first place and then they wouldn't have to do this. They should have been demanding at least a 30% deposit.

In a rising market the lenders do allow large LTVs. I think the speed of this property crash has caught a lot of people out.

abaxas

So let me get this straight.

People are complaining becasue a bank has NOT used a term in their contract to top up the LTV?

!!!!!!!

JonnyBravo

Oh no, I'm far from complaining.

I was simply surprised that a bank had even considered this to be viable.

I had written it off as unachieveable months ago.... now seems as if one bank has considered it but decided against it.

WTF?_2

Hmmm, ISTR a few people being very vocal that margin calls on residential mortgages were never going to even be an issue. Looks like they were wrong on that if it's now mainstream news.

Remember, we're only at the start of the recession. It's going to get a lot worse before it gets better and could last a couple of years so if it's an issue now expect it to get bigger. Still, given the sensitivity of demanding a large quantity of cash and the fact that the government now controls more than half of UK residential mortgages (that would have been inconceivable 18 months ago!!!!) I'd guess that they will reach into the taxpayers pocket again and nick a few more quid to stop it being a pesky 'bad PR' issue for them.

WTF?_2

udydudy wrote: »

Trust the banks to push the blame on borrowers!!

There's guilt and greed on both sides. Plenty of people and media pointing the finger at the banks but I don't see many individuals admitting that they were stupid and irresponsible to borrow so much.

What hacks me off is that as someone who was responsible enough to manage finances properly and avoid buying an overpriced property, I am now being soaked for cash to bail out both sets of greedy, reckless fools.

Honestly, a major factor for me in favour of buying a house is that I will no longer have a big lump of cash for this cretinous and duplicitous government to steal from any more. :mad:

JonnyBravo

!!!!!!? wrote: »

Hmmm, ISTR a few people being very vocal that margin calls on residential mortgages were never going to even be an issue. Looks like they were wrong on that if it's now mainstream news.

Yep. As I stated I was one of them. To dismiss me as wrong is clearly, at the least, premature. Possible downright wrong.
Please don't join the brit camp of reading into this something that isn't there.... even if it is only "yet".

!!!!!!? wrote: »

Remember, we're only at the start of the recession. It's going to get a lot worse before it gets better and could last a couple of years so if it's an issue now expect it to get bigger. Still, given the sensitivity of demanding a large quantity of cash and the fact that the government now controls more than half of UK residential mortgages (that would have been inconceivable 18 months ago!!!!) I'd guess that they will reach into the taxpayers pocket again and nick a few more quid to stop it being a pesky 'bad PR' issue for them.

So we agree it isn't going to happen?

space_rider

udydudy wrote: »

Infact abbey has been hard selling ppl who have been remortgaging!!!. Last year(4th Qrtr 2007) a friend remortgaged her house(which was with abbey on 2 yr period), the abbey rep kept asking her during that conversation whether she would like to borrow more despite my friend telling she did not want to borrow more!!

In a conversation of 15-20 minutes she was asked 4 times even though she had said no the first time. She is grateful that I had told her not to borrow more as she had 77% LTV and in the scenario of the US(at that time in 2007) I was expecting UK to follow suit into recession.

She found out last month that due to computer valuation(abbey base it on the Halifax Index) her LTV is now 86%.

I would blame Abbey if she had taken the money then and now gone beyond 90%. Even though all of us are responsible for every penny we borrow if the lender hard sells and the borrower borrows but is not told explicitly that if her LTV goes beyond 90% she would have to pay it back then it is a case of misselling!!.

My friend needed to do up her house but on friendly advise from some of us decided to wait until the recession settles down. Though she can easily afford to pay the added monthly outflow surely she can not afford topay abbey just because after 1 year they had a change in heart and want the monmey back because the LTV is now 90%

Trust the banks to push the blame on borrowers!!

Abbey have asked me if I want to increase my mortgage when I have phoned and my answer is and will always be no. They also at least a couple of times a month send me a letter encouraging me to get a loan secured on my property. Those letters go straight in the bin. I guess they have to try and get new business in other ways.

WTF?_2

JonnyBravo wrote: »

Yep. As I stated I was one of them. To dismiss me as wrong is clearly, at the least, premature. Possible downright wrong.
Please don't join the brit camp of reading into this something that isn't there.... even if it is only "yet".



So we agree it isn't going to happen?

I think that the government will ensure that their nationalised banks don't do it - by nicking more money from those of us paying taxes. The rest of the banks, who knows?

However, the point is that it is now very much on the agenda. Before, the line was that it was just some sort of 'doom monger fantasy' or whatever....

Kez100

I've had an abbey tracker for 9 years on - at peak prices - 15% LTV. Always been lower than my required repayment balance, but has gone up and down as we save for holidays and home improvements through it before spending out. I have never been asked to take out more debt and the only junk mail letter I have received from them was for their zero credit card.

As I have an old tracker, I only have one account which I can manage online but my savings aren't in a separate pot.

Generali

!!!!!!? wrote: »

Hmmm, ISTR a few people being very vocal that margin calls on residential mortgages were never going to even be an issue. Looks like they were wrong on that if it's now mainstream news.

Remember, we're only at the start of the recession. It's going to get a lot worse before it gets better and could last a couple of years so if it's an issue now expect it to get bigger. Still, given the sensitivity of demanding a large quantity of cash and the fact that the government now controls more than half of UK residential mortgages (that would have been inconceivable 18 months ago!!!!) I'd guess that they will reach into the taxpayers pocket again and nick a few more quid to stop it being a pesky 'bad PR' issue for them.

Well I was pretty sceptical about margin calls on residential and BTL mortgages mostly because nobody ever came up with an example of a potential one in the T&Cs and my attempts to find a clause in the contracts of mortgage providers proved fruitless.

It seems that we still don't have an example of a margin call although we have 2 people that claim to have received something akin to one.

The pertinent part of the article seems to be this:

It said according to the terms of the flexible mortgage agreement, if the value of a customer's home fell so their mortgage balance exceeded 90%, the bank would withdraw any available balance over 90%.
Customers who went on to complain about the limit then received a further letter that referred to a clause in the mortgage contract that reserved Abbey the right to ask people to pay back any balance used above 90% within three months.

I read that as saying that if you had a pre-agreed credit line and 90% of the value of the house was less than that value then the credit line available would drop.

There is then a further (untested) clause stating that Abbey can require you to repay any money owing above 90% of the value of the house within 3 months. The article doesn't say what the sanction is if the funds aren't repaid in 3 months. Repossession? Borrower required to take out a further loan, secured or unsecured? 2nd charge against the property? Lots of annoying phone calls from the bank asking for money?

PS A proper margin call is when the lender requires that you present a certain amount of money by a certain date otherwise they will sell the asset against which they've lent from under you. At present my understanding of UK law is that can't be done without a court order for residential property.