Is it ok to let HBOS go under

pickles110564

pickles110564 wrote: »

I have always wondered if a Major mortgage bank went under, surely that would cause a huge property crash. How would the people with NE get mortgages with a new mortgage company as they would not have any equity and would probably not be able to raise a new deposit.

Please can someone answer this please but we will probably have to wait for Generali

Dan:_4

I would guess some other financial institution would buy up the mortgage debt (cheaply). So the mortgage would just transfer over to a new 'owner' as far as the end customer is concerned.
Im not really sure, so as you say it's probably best to wait for Generali for a more intelligent answer.

ray123

Leave Halifax alone, I will soon be receiving £5 per month from the halifax reward current account.
The whole scenario is a joke. RBS can go bust, i dont have an account with them!

Dan:_4

ray123 wrote: »

Leave Halifax alone, I will soon be receiving £5 per month from the halifax reward current account.
The whole scenario is a joke. RBS can go bust, i dont have an account with them!

I have just upgraded to the Reward Account too. £5 for just paying in £1000 a month...nice!

I am considering opening 3 Reward Accounts (the max your allowed) 3 more for the MRS - 3 Bank of Scotland Reward Accounts and again 3 more of them for the MRS. and just transfer a grand around the accounts over the month to receive a free £60 a month.

According to the guys over on the current account board this definitely possible.

Anyway back on topic, HBOS going bust... :rolleyes:

Generali

pickles110564 wrote: »

I have always wondered if a Major mortgage bank went under, surely that would cause a huge property crash. How would the people with NE get mortgages with a new mortgage company as they would not have any equity and would probably not be able to raise a new deposit.

Please can someone answer this please but we will probably have to wait for Generali

Sorry mate, this site is getting busy and I don't follow every thread. Feel free to PM me if you want me to answer something specific.

If a major mortgage bank went under that would imply large amounts of funds being unavailable to be borrowed to buy houses with. That is the impact that the credit crunch is having on the housing market at present so it would be much the same as what is happening now.

The existing borrowers with the bank wouldn't have a problem as such as they already have their money and are merely repaying it. The mortgage would be sold to another bank or investment company, probably at below face value. If they were unhappy with the new owner of their mortgage for some reason and in negative equity they would either have to find more money to put in to the deal or persuade someone to lend more than 100% of the value of the property.

In situations where lenders have gone bust in the States, people buy up the debt at a discount and then go to the borrowers and offer them a discount if they repay within a short time frame, by refinancing or dipping in to savings, the lender doesn't care which.

The people lending money to the bank (eg savers) would become creditors and ordinarily would be repaid by the FCSC up to GBP50,000 and then would receive xx pence in the pound after that like all the other unsecured creditors. At present the UK Government has stated that they will repay all of everyones money. I hope this is never tested because they can't afford to do it.

pickles110564

Generali wrote: »

Sorry mate, this site is getting busy and I don't follow every thread. Feel free to PM me if you want me to answer something specific.

If a major mortgage bank went under that would imply large amounts of funds being unavailable to be borrowed to buy houses with. That is the impact that the credit crunch is having on the housing market at present so it would be much the same as what is happening now.

The existing borrowers with the bank wouldn't have a problem as such as they already have their money and are merely repaying it. The mortgage would be sold to another bank or investment company, probably at below face value. If they were unhappy with the new owner of their mortgage for some reason and in negative equity they would either have to find more money to put in to the deal or persuade someone to lend more than 100% of the value of the property.

In situations where lenders have gone bust in the States, people buy up the debt at a discount and then go to the borrowers and offer them a discount if they repay within a short time frame, by refinancing or dipping in to savings, the lender doesn't care which.

The people lending money to the bank (eg savers) would become creditors and ordinarily would be repaid by the FCSC up to GBP50,000 and then would receive xx pence in the pound after that like all the other unsecured creditors. At present the UK Government has stated that they will repay all of everyones money. I hope this is never tested because they can't afford to do it.

Thanx, so in some ways people that have mortgages and are cash rich could profit from their mortgage lender going broke by being able to repay their debt but at a smaller amount.

Generali

pickles110564 wrote: »

Thanx, so in some ways people that have mortgages and are cash rich could profit from their mortgage lender going broke by being able to repay their debt but at a smaller amount.

That's right.

Normally in the examples I've come across in the US it's been bundles of car loans. I don't see why mortgages should work differently though.

You wouldn't necessarily need to be cash rich, just to have a decent amount of equity in your home and a very good credit rating. Stories I've heard have been discounts in the 10-20% range.