Sub Prime lenders

emmaHarris_2

even if all this info was disclosed up front ( together with a contract to give up their first born) many customers of sub prime ( mortgages and secured loans) would still want the product.

You may be right but it can’t be tested. We do know that some people would not. If you are right then there should be no concerns for Brokers, Advisors and/or Lenders to provide this information up front. We wonder therefore why they do not? Why they typically use the clause "...we 'may' sell or transfer your mortgage to anybody at anytime etc".

Why use 'may' when they know they will anyway? At the underwriting stage they do know which 'bucket' this applicants will be placed in and who it 'is' going to be with concluding the acceptance of the borrower.

Why provide this clause right at the last minute when they know they have the borrower close to signing and after providing them with a verbal agreement in principle and obtaining the potential borrowers affirmation and contentment. We have evidence through a mystery buyer project that borrowers were provided an agreement in principle over the phone and then when asked about transferring they were suddenly denied.

Conrad

emmaHarris wrote:

even if all this info was disclosed up front ( together with a contract to give up their first born) many customers of sub prime ( mortgages and secured loans) would still want the product.

You may be right but it can’t be tested. We do know that some people would not. If you are right then there should be no concerns for Brokers, Advisors and/or Lenders to provide this information up front. We wonder therefore why they do not? Why they typically use the clause "...we 'may' sell or transfer your mortgage to anybody at anytime etc".

Why use 'may' when they know they will anyway? At the underwriting stage they do know which 'bucket' this applicants will be placed in and who it 'is' going to be with concluding the acceptance of the borrower.

Why provide this clause right at the last minute when they know they have the borrower close to signing and after providing them with a verbal agreement in principle and obtaining the potential borrowers affirmation and contentment. We have evidence through a mystery buyer project that borrowers were provided an agreement in principle over the phone and then when asked about transferring they were suddenly denied.

The FSA are very keen to avoid 'information overload'.

Your particular area of concern is but one of many potential flashpoints, for example; valuations, life insurance (includes hundreds of important clauses and questions), interim interest, payment holidays, penalties, fees, legal matters etc.

Where do you draw the line?

People have busy lives and often sign for a mortgage with thier kids screaming all over them, and the car park ticket running out. If one went into every detail the client would a) suffer from information overload and b) not accept the time cost.

The mortgage application is but one document amongst many clients need to read. In the real world most people simply want the basics and quickly.

Even something as seemingly innocent as contents insurance has hundreds of points to consider and vast amounts of regulation and paperwork attaching (for example some ask 'are you within 100meters of ANY source of water', which could include tiny brooks the clients are'nt aware of. Most Clients simply cant absorb everything they ought to.

emmaHarris_2

The FSA are very keen to avoid 'information overload'.

Yes and I can agree with you on much of what you say.

I think that anyone walking into the Woolwich Building Society after researching all the competitive mortgage providers (including: company profile, before and after care customer services, different products and rates, and taking out a suitable product for themselves to find that a week later that their mortgage has been sold to 'Obscure Mortgage Ltd' with quite differing service standards, only hold 200 mortgages, works out of an office somewhere in Skipton, has no Mortgage Advisors and cannot meet my expectations if (god forbid) a life changing occurrence happens during the course of the mortgage term.

The borrower is given no choice to who the mortgage can end up with and it can be sold many times. What happens if your new mortgage company goes into receivership?

Quite a fundamental change and quite significant information to be told from the outset I would have thought? Especially, when they advertise themselves as being perceived as the same as prime lenders. It is naturally accepted in today’s world that the company you take your mortgage out with is normally the company you remain with unless the borrower decides to change. It based on this natural expectation that the sub prime lenders continue to operate within. There has now been a 'split' or a 'redefinition' of the word 'lender' to lender that retains the mortgage book and one that trades your account as a commodity.

Your mortgage (due to the transfer term) could well be held by foreign companies or indeed person. Unless information about the difference between prime lenders and sub prime lenders is fully known then borrowers cannot make an informed choice. many do not take out a mortgage to become a commodity. Is Kensington or Beacon therefore just 'super brokers'? They borrow money to lend to the borrower and make a fast return by selling you to a pre-selected purchaser. They dispense entirely then on any verbal obligations of supporting the mortgage, they may have made through the selling process.

It is naive to think that people just select a mortgage lender based on the best rate only. This where the FSA do not go far enough. Personally speaking I think its an insult to the borrowers intelligence and one to serve commercial purposes & gain only. Kensington/ Beacon and all of them send a letter to the borrower saying "..we wish you a long and happy life with KMC/Beacon..." 2 weeks later the borrower find her/himself with another company they have never heard of before. Such as MAS6 (even the FSA had to ask us..." who the heck are they"!

emmaHarris_2

p.s there is nothing in the transfer clause of "We may sell or transfer your mortgage to anyone at anytime" that stipulates that it will be to another FSA regulated body or company and maybe the Unfair Relationship Act should be modified or inded the whole term itself. Redstone Mortgages is a fairly new entrant to the UK market. European based. Maybe I could buy YOUR mortgage in the future (if I have few millon pounds)? I'll do the lottery this week.

poopscoop

Hi, could you list in bullet points what the problem is here?

emmaHarris_2

Please be assured, I am only providing food for thought and hope that visitors to the forum will keep an open mind. We are not being argumentative, honestly:) The real impact of house repossession cannot really be understood until someone has gone through it or been able to watch the process first hand. It is degrading and there is no recourse. It kills peoples and causes immense health and relationship problems never mind 'dumping' the problem onto local taxpayers and councils. We are just looking at some of the main causes and effects of this and maybe just maybe find a new solution that could meet every party involved. There are those we recognise that deserve to be evicted but there are many being caught in a trap that do not.

Spend a day at your local county court, see them full everyday, listen to the ushers calling out the mortgage company names, speak to some of the people involved, do this at 3 or 4 courts chosen by you, see how the 'judge' rubber stamps the orders without recourse. See the husband & wife and small children. There is a real side to this.

emmaHarris_2

poopscoop wrote:

Hi, could you list in bullet points what the problem is here?

Yes of course we will

emmaHarris_2

When you do visit the courts...notice who is not there....the orginator of the loan, the current company/lender, the parent company of the SPV, the mortgage advisors or brokers....nowhere to be seen

homer_j_3

I have got to say that if you are trying to debate something, you should be debating on facts not generalisations and assumptions gained through poorly supplied information. I couldnt sit back and watch some of this tripe be provided to the forum any longer.

You clearly have a political agenda here and I am not bothered that you have one, I just dont like the way you are trying to promote it. Lets hope this thread gets removed sooner rather than later.

emmaHarris wrote:

The FSA are very keen to avoid 'information overload'.

Yes and I can agree with you on much of what you say.

I think that anyone walking into the Woolwich Building Society after researching all the competitive mortgage providers (including: company profile, before and after care customer services, different products and rates, and taking out a suitable product for themselves to find that a week later that their mortgage has been sold to 'Obscure Mortgage Ltd' with quite differing service standards, only hold 200 mortgages, works out of an office somewhere in Skipton, has no Mortgage Advisors and cannot meet my expectations if (god forbid) a life changing occurrence happens during the course of the mortgage term.

I still dont understand what you mean by this. How can you say for sure that the original lender would have dealt with this life changing occurence any better? Sometimes a smaller company might be better at dealing with customers than a larger one?

Once again you make generalised statements and tar every lender with the same brush. You have not given allowances to why these companies may warrant an exception to your generalisation.

If a person has researched a product and lender all by themselves and not used a mortgage advisor, why would it matter that there is not one based in skipton? A broker did not sell the product in your example? Also, if the situation did require advice from a mortgage broker, then the lender would have to state this and ask them to seek it. Just because they may be a prime lender, it doesnt alter the rules for them.

Lets take your example and say that the woolwich didnt sell the account to the obscure. The same life changing incident happened. Firstly, as said above, there are no more guarantees that the woolwich are going to help this person any more than the obscure was.Secondly, if the product had been sold by a mortgage adviser based then the advisor would have very little power over any lender if the companies policy was stopping helping the customer. Thirdly, a mortgage adviser could not be held responsible or accountable, for an occurance that was unforseeable.

The borrower is given no choice to who the mortgage can end up with and it can be sold many times. What happens if your new mortgage company goes into receivership?

I have never heard of this, can you provide me of an example where this has happened. To become a financial institution and secure lending lines of credit then you have to have some experience and market stability. Sounds like you are scaremongering to me.

There has now been a 'split' or a 'redefinition' of the word 'lender' to lender that retains the mortgage book and one that trades your account as a commodity.

Who has done this?

Your mortgage (due to the transfer term) could well be held by foreign companies or indeed person.

Have you an example to back this up or are you scaremongering again. Any mortgages held in the UK must be done so by a company that is authorised by the FSA. You make it sound like some wealthy business man in Moscow could end up with it...

Unless information about the difference between prime lenders and sub prime lenders is fully known then borrowers cannot make an informed choice.

Agreed. Lets educate consumers and the sooner the better. However, remember that some people do not have a choice and as a broker, we should only be providing recommendation to a subprime lender if its there isnt a prime product that is suitable.

many do not take out a mortgage to become a commodity.

No they take it out because they want to live in their house and cannot afford to buy outright.

Is Kensington or Beacon therefore just 'super brokers'? They borrow money to lend to the borrower and make a fast return by selling you to a pre-selected purchaser.

I dont think Kensington are major players in securitisation. They certainly do not set out knowingly that Mr Smith will be sold as soon as possible. I believe that Kensington are a mortgage company that lends money to people who do not conform to the lending criteria of the high street banks.

They dispense entirely then on any verbal obligations of supporting the mortgage, they may have made through the selling process.

What are you on about? They offer to lend a customer a set amount at a set rate and that they agree to honour the terms and conditions of the mortgage offer. If that person then becomes a customer of somebody else then these contractural agreements do not change? Do you think that we should rip up all the paperwork that explains everything to the customer in view of verbal agreements and gentlemans handshakes?

It is naive to think that people just select a mortgage lender based on the best rate only.

Its sceptical to think that every lender is going to flog the mortgage you have just taken. In fact you might just go into mental breakdown with all these conspiracy theories.

This where the FSA do not go far enough.

I agree that they should maybe allow a notice period to move the mortgage elsewhere to give consumer choice, however, I am sure there would be arguments at what cost. There would be the costs incurred for setting up the loan, the costs of valuations, legal feess etc.

Personally speaking I think its an insult to the borrowers intelligence and one to serve commercial purposes & gain only.

Maybe a small percentage of people (less than 1%) will feel this way. Most will only be bothered if they had an ethical reason for not choosing that company in the first place. If the customer has understood how their mortgage operates, ie on a variable rate type agreement then they should be prepared for rate increases or decreases. It should be also explained that the a lot of subprime lenders seem to use LIBOR rate over the BOE. The LIBOR rate can be more fluctuating than the BOE, however, because the news doesnt report on LIBOR (due to it changing daily) then consumers get confused. We need to educate here, not slate lenders because of lack of understanding.

Kensington/ Beacon and all of them send a letter to the borrower saying "..we wish you a long and happy life with KMC/Beacon..." 2 weeks later the borrower find her/himself with another company they have never heard of before. Such as MAS6 (even the FSA had to ask us..." who the heck are they"!

I doubt they will have heard of MAS6, I am sure that they will have heard of Mortgage Agency Services though as they are on the FSA register. Maybe it was just unfamilir to the person you spoke to?

emmaHarris_2

Brb I promise in the meantime can I suggest you look at KMC accounts:)