Standard & Poor's warns of wave of house repossessions

mystic_trev

The government's planned spending cuts and tax rises could trigger a fresh wave of house repossessions as hard-pressed borrowers find it impossible to meet their mortgage payments, the ratings agency Standard & Poor's said today.

In a downbeat assessment of the UK property market, S&P stressed that house prices remained overvalued and many families were vulnerable to George Osborne's budgetary squeeze.

http://www.guardian.co.uk/business/2010/sep/09/standard-and-poors-repossessions-warning

ILW

It does seem daft that the market is currently being distorted by a policy whereby the taxpayers will go on covering a mortgage for years when it is evident that it will never be repaid by the mortgagee. These prop up schemes should be short term (poss 1 year only) at which point the property is either sold or repossed and put back onto the market.

treliac

ILW wrote: »

It does seem daft that the market is currently being distorted by a policy whereby the taxpayers will go on covering a mortgage for years when it is evident that it will never be repaid by the mortgagee. These prop up schemes should be short term (poss 1 year only) at which point the property is either sold or repossed and put back onto the market.

The alternative is that rented accommodation will have to be found, a move funded and the new rent payments funded. All the upheaval where children are involved. They're not going to be put out on the street.

I'm not disagreeing with you but there don't seem to be any easy answers. The best answer is for people to be in work but how realistic is that for everyone at the moment?

lemonjelly

I was speaking with a colleague recently in a similar line of work.

They were telling me they are seeing a lot more people are starting to seek help as they are in mortgage arrears. The usual level is arounf £4k+.

They are also seeing more bankruptcies.

Interestingly, at a debt advisers meeting we have seen a lot of examples where those declared bankrupt have yet to have the house sold. It is fairly usual following the bankruptcy that the OR sells off the assets, with the home being the last thing to go. Generally, this will take a year. (NB, bear in mind that these bankrupts will, at this point be living in the property rent free...) Once the OR is ready, they sell the property. This time scale is rising. At a recent meeting, we the record was 3 years.

I doubt this is isolated. The OR is sitting on a fair few properties nationwide. They will have to be sold off at some point.

zappahey

lemonjelly wrote: »

The OR is sitting on a fair few properties nationwide. They will have to be sold off at some point.

OR? Official Receiver?

lemonjelly

zappahey wrote: »

OR? Official Receiver?

Yep.

Gotta add some useless text, as my answer above is too short for posting. So please ignore this pointless drivel...;)

chucky

lemonjelly wrote: »

So please ignore this pointless drivel...

don't worry - we always do :j:T

michaels

I feel it may be time to update my signature to this!

lemonjelly wrote: »

Yep.

Gotta add some useless text, as my answer above is too short for posting. So please ignore this pointless drivel...;)

michaels

Does anyone know what the accounting implication for banks is of repossessing as opposed to having a borrower in negative equity and the mortgage interest paid by the govt?

Repossession obviously crystallises the loss whereas if in the latter case the loss can be kept off the books as the interest is being paid then it looks like it is in the banks interest not to repossess - as the property might increase in value removing the negative equity, the borrower might be able to start making payments again or the delay in accounting for the loss might help smooth income and protect capital in the short term.

nearlynew

lemonjelly wrote: »

yep.

gotta add some useless text, as my answer above is too short for posting. So please ignore this pointless drivel...;)

?


..........................................

macaque_2

lemonjelly wrote: »

I was speaking with a colleague recently in a similar line of work.

They were telling me they are seeing a lot more people are starting to seek help as they are in mortgage arrears. The usual level is arounf £4k+.

They are also seeing more bankruptcies.

Interestingly, at a debt advisers meeting we have seen a lot of examples where those declared bankrupt have yet to have the house sold. It is fairly usual following the bankruptcy that the OR sells off the assets, with the home being the last thing to go. Generally, this will take a year. (NB, bear in mind that these bankrupts will, at this point be living in the property rent free...) Once the OR is ready, they sell the property. This time scale is rising. At a recent meeting, we the record was 3 years.

I doubt this is isolated. The OR is sitting on a fair few properties nationwide. They will have to be sold off at some point.

Reading between the lines, you seem to be implying a sub prime cover up? I must admit I have been very suspicious. How come only the US got hit. Our house prices are even more overvalued, we had self certification mortgages, BLTs buying up lorry loads of houses on credit etc. Another dead mackerel in the curtain pole from Gordon Brown.