Northern Rock

celticlass51

First time poster - go easy. Kind of surprised not to see more discussion on here over past couple of days about what happens now. Who is a 'good' debt, who is a 'bad' one etc. obviously my mortgage is with them, though not a 'together' one. What do people think?

opinions4u

The "good" bank will only take 20% of the mortgage customers.

This is becasue, presumably, the deposit base only covers that 20%.

How the 20% will be selected, I have no idea. If the plan is to create a level playing field for the new bank then it should, logically, include a proportion of negative equity and arrears cases that's in line with the market average.

If the intention is to move anything non-standard or high risk (e.g. together, buy-to-let, negative equity, arrears, high LTV etc) to the "bad bank" and leave the "good bank" business with all the low LTV mortgage, then this new business will have a massive competitive advantage in the market place.

picardygirl

opinions4u wrote: »

If the intention is to move anything non-standard or high risk (e.g. together, buy-to-let, negative equity, arrears, high LTV etc) to the "bad bank" and leave the "good bank" business with all the low LTV mortgage, then this new business will have a massive competitive advantage in the market place.

I hope we are put in the "good bank" category! Under 70% LTV with overpayments made every month! Finger crossed!

To the OP, there was a bit of a discussion about the good and bad bank business in the merged Northern Rock thread right at the very top of the mortgage and endowement forum page. Nothing recent though x

Deleriad

I saw that mention of the good bank only taking 20% of the mortgages and found it surprising. I'm hoping that it's the other way around and someone's typing finger slipped.

20% of the customers would probably be anyone who took out a mortgage with NR after it was nationalised and not many more. You might be looking at having over 50% equity just to be considered a good mortgage. Surely it's not the case that 80% of the loans on NR's mortgage book have either arrears or less than 10% in equity. If that is the case then there are going to be an awful lot of unhappy people when they wake up one morning to be told they are in the bad bank.

b0rker

Until I see what the specific details of any deals that I may be offered from either bank then I have no concerns as to which bank I am placed with. There seems to be an assumption that terms with the good bank will be preferential over a bad bank. I very much doubt that will be the case. Possibly this would be the case if this was an entirely private bank but as NR is so dependant on tax payers (my!) money then it will not be happening in this instance. They cannot create an environment where my debt is described as bad and then offer me a poorer deal than those they have described as good. I would not stand for that and I am sure that there are many others who would feel the same. I took my mortgage out with Northern Rock not Bad Bank Inc. They cannot transfer my debt to a bank with such negative connotations and then not offer me a good deal. I can imagine it could be difficult to move the debt elsewhere for many people. I have about an 82% LTV so I am sure I can escape if need be but I can imagine all hell breaking loose if people on 100% LTV are dumped into a bad bank and put on 10% IRs etc... If anything they will need to offer people in the bad bank very low IRs in an effort to avoid repossession. They cannot take people who are surviving on the current 4.9% SVR and kill them on a higher IR in a "bad bank". That would be against all kinds of terms and conditions. As I say I signed up for a mortgage with Northern Rock and I will be offered the same terms (or better) as the good bank customers or massive amounts of !!!! will hit the fan for Northern Rock.

Thrugelmir

NR securitised and sold on a high % of its loan book during its boom years. In 10 years NR securitised £129 billion of debt through its Granite Offshore subsidiary.

So as early posters have said its more likely to be post nationalisation customers that will be move to the new.

In answer to some questions. A bank is within its rights to sell on any part of its business as it owns the debt.

I wouldn't expect the remaining part of the bank to impose onerous interest rates. Rates will reflect the risk though. Rates may well remain above market average to encourage borrowers to reduce their debts and remortgage elsewhere.

b0rker

Where in my terms and conditions does it say that I am happy for NR to move all of their positive mortgage book into a seperate bank and to leave me in a bad bank with very negative connotations therefore potentially making it very difficult for me to move my debt to another bank? If it is possible to move my debt to another lender then possibly I will attract a less favourable deal as I would be coming from what may end up being seen as a sub-prime lender. I did not sign up with a recognised sub-prime lender, I signed up with a high street lender who up till mid 2007 had a very positive image. In what world is it legal to move a borrower who owes only 74% of their original loan, has not missed a single payment and is gainfully employed to a sub-prime lender?

Not the real world that is for sure.

opinions4u

b0rker wrote: »

Where in my terms and conditions does it say that I am happy for NR to move all of their positive mortgage book into a seperate bank and to leave me in a bad bank

I would hazard a guess that there is a condition that says they can flog the debt to whoever they feel like.

with very negative connotations therefore potentially making it very difficult for me to move my debt to another bank?

People with clean credit ratings have had few difficulties moving from sub-prime lenders to the mainstream market.

If you meet the criteria for a new lender, having your existing mortgage with "Northern Rock's Crock of Ship plc" will not make the slightest bit of difference.

If it is possible to move my debt to another lender then possibly I will attract a less favourable deal as I would be coming from what may end up being seen as a sub-prime lender.

Why do you think this?

Thrugelmir

b0rker wrote: »

Where in my terms and conditions does it say that I am happy for NR to move all of their positive mortgage book into a seperate bank and to leave me in a bad bank with very negative connotations therefore potentially making it very difficult for me to move my debt to another bank? If it is possible to move my debt to another lender then possibly I will attract a less favourable deal as I would be coming from what may end up being seen as a sub-prime lender. I did not sign up with a recognised sub-prime lender, I signed up with a high street lender who up till mid 2007 had a very positive image. In what world is it legal to move a borrower who owes only 74% of their original loan, has not missed a single payment and is gainfully employed to a sub-prime lender?

Not the real world that is for sure.

If you are a creditworthy individual there you should have no issues transferring your mortgage.