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Debate House Prices
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Standard & Poor's warns of wave of house repossessions
Comments
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mystic_trev wrote: »
At last, someone talking sense.0 -
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.
Because the rules are different in the US. If you can't pay your mortgage you can hand the keys back and walk away from the debt however big your arrears. If the bank sell your house and get less than the amount of your debt, then that's the bank's loss. If your arrears are out of control, then that's what you do.
In this country, you can't do that. If your house is repossessed, the bank will sell it to recover some of what you owe, but they can still chase you for the balance of the debt. So you don't walk away. You do everything you can to stay put and hope you can hang on until prices recover.
So, in the US, you get more people handing back the keys, so more properties for sale by lenders, so more downward pressure on prices. Here, you get the market seizing up so hardly anybody is selling or buying, and volumes are tiny.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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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.
The matter is up for debate. As under IFRS banks make no provision against bad debt until the loan has soured. Whereas prior to 2001. Banks under the previous rules were allowed to guess and forward provision for bad debt. Thereby smoothing results and carrying a buffer in their balance sheets.
If the old rules had been followed its probable that both NR and B&B would have become technically insolvent long before they actually ceased to trade.0 -
IFRS is for tax calculations, surely? It doesn't affect what is a true and fair view?No reliance should be placed on the above! Absolutely none, do you hear?0
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IFRS is for tax calculations, surely? It doesn't affect what is a true and fair view?
Under IFRS, impairment provision for financial assets is to be created on an incurred loss model which would mean for assets which have actually been impaired. So there cannot be any set rules for the creation of provisions. It has to be tested either on a case by case basis (for significant customers) or collectively (for relatively insignificant customers)0 -
Because the rules are different in the US. If you can't pay your mortgage you can hand the keys back and walk away from the debt however big your arrears. If the bank sell your house and get less than the amount of your debt, then that's the bank's loss. If your arrears are out of control, then that's what you do.
Not all over the USA. Varies from state to state....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
Not convinced that 'true and fair view' comes into it - Central Banks are doing the printy-printy thing to keep asset values up, and quite likely there's more than a bit of Mark-to-Jackanory going on (not many bank failures here, but most of the USian failures have struggled to realise a third of their 'mark-to-market' asset values) http://problembanklist.com/fdic-sells-failed-bank-loans-at-steep-discount/IFRS is for tax calculations, surely? It doesn't affect what is a true and fair view?
Presumably a better idea to keep on writing off the interest at 4-5% pa and hope something turns up rather than take several years write-offs in one trading/bonus year..?0 -
Does anyone know how long your credit history is damaged for after your house is repossessed?
Could you get another mortgage less than 10yrs later?
What other negative effects result from repossession that may effect buying/renting/credit cards?
There's lots of help on preventing repossession, but nothing on the effects of it afterwards.
Can anyone help with this please?0 -
- lower SMI (support for mortgage interest) payments starting this month (when will the government remove the temporary amount of, SMI of up to a 200k mortgage and revert back to 100k)
- SMI only for 104 payment for those on income based JSA
- those on JSA who will get their rent money reduced by 10% when they are on JSA for 2 years.
- Rent benefits being reduced
- many losing tax credits as the means tested amount is lowered
- welfare bogged down with claims for rent to be paid, so big delays in landlords getting rent (lots of accidental landlords with no spare cash to pay their mortgage without rent and their own credit rating being damaged)
- all those single parents having to come off income support when their youngest child is 7 (soon to be age 5, but use to be 15) which will mean that they will not have the interest on their mortgages paid once they have to come off income support (unless they get onto JSA for two years on go on the sick)
- The proactive stance being taken on those who claim JSA for more than 6 months, work groups and sanctions if they don't take jobs offered to them.
- The proactive stance on those on the sick and now being made to go to (and pass) medicals if they claim sick and go into work related groups.
- those being forced off the sick payments and declared fit to work and onto JSA
- stopping interest only mortgages for some home owners
- the proposed welfare cuts (whatever those will be)
- inflation problems and a rising interest rate
- anything that I missed
RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
Read the sticky on the House Buying, Renting & Selling board.0 -
neverdespairgirl wrote: »Not all over the USA. Varies from state to state.
Thanks NDG. I didn't know that.
It would be interesting to know how the sub-prime crash has played out in states with different rules about this, and whether there's a correlation. I've no idea where to look for that kind of information, though.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.0
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