Lloyds Checking IO Mortgages for Fraud and other stories

antrobus

Graham_Devon wrote: »

If borrowers can't show these things, what would happen?

antrobus wrote: »

They're going to charge them an extra 0.2%.

Graham_Devon wrote: »

It kinda states they are already doing that.

OK I see. Then they'll charge them an extra 0.2%, or 0.5%, or whatever.

A._Badger

antrobus wrote: »

It was the banks that sold the securitised debt in the first place, and the securitised debt is only a problem to the extent that the underlying debt that was securitised has become non-performing. I'd presume that you would find many examples of IO loans in the non-performing category.

Banks sold it to other banks, surely the root of the problem? The status of UK IO loans within that category is unclear, but the impression I've gained is that it is not UK debt that is primarily the issue.

This still looks like a bit of spinning from the banks and a fair bit of schadenfreude from some of the commentariat.

antrobus

A._Badger wrote: »

Banks sold it to other banks, surely the root of the problem? The status of UK IO loans within that category is unclear, but the impression I've gained is that it is not UK debt that is primarily the issue.

Not really. Northern Rock for example had (shortly before it went down) a £275 million exposure to US securitised debt, whereas it was responsible for creating £50 billion of its own securitised debt. The losses it suffered on holding other banks debt were quite dwarfed by the losses generated on its own loan book. In fact, as we now know, Northern Rock had been deliberately hiding the problems that were then emerging in its mortgage lending. And as far as UK banks are concerned UK debt is most definitely the issue.

A._Badger wrote: »

This still looks like a bit of spinning from the banks and a fair bit of schadenfreude from some of the commentariat.

I must admit I don't really understand this sentence.

RenovationMan

Thrugelmir wrote: »

In 2007 around 35% of all mortgages were made on an IO basis. With prices peaking that year. It is highly probable that many don't have the spare cash to fund the saving required to repay capital.

Can you supply a link to back this up?

Kenny4315

Thrugelmir wrote: »

Both Skipton BS and N&P BS have broken their mortgage promise. Citing the exceptional circumstances clause to increase increase rates. So a lifetime tracker may not be "lifetime".

Don't see why that would happen on my product, and hasn't done so far, even though rates have been rock bottom for ages. Also given I have £220k equity in the BTL, and rock solid rental income, they'd not really want to lose my long term business. Also the bank was bailed so I think that puts pressure on them to be reasonable and not try dirty tricks to get out of a contract, and also I reckon there are some very reasonable legal arguments against what the other 2 lenders have done. This situation was not beyond the control of the banks, in fact they contributed to it, hence my argument would be the exceptional circumstances have been created by your own actions, and in my banks case proved by the requirement for a government bail-out and a no-further lending policy.

This has not been a economic meltdown caused by an act of god, and in fact recessions have occured before. So I don't see any legal justification in what the 2 societies have done. Perhaps they are trackers that track below the base rate and effectively the bank is paying them, in which case setting it at 0 above base is fair enough.

My tracker is 1.65% above base, so 2.15% at present, the bank I talked to recently compared my rental income on that property at 6% currently.

Thrugelmir

Kenny4315 wrote: »

Don't see why that would happen on my product, and hasn't done so far, even though rates have been rock bottom for ages.

Finance houses don't fund lending at base rates. It costs them whatever it does, to obtain the necessary funds to comply with current capital regulatory requirements.

Thrugelmir

RenovationMan wrote: »

Can you supply a link to back this up?

In the current economic climate I'm not sure why you'd expect it to be otherwise.

Independent research commissioned by Callcredit Information Group has today revealed that British consumers are storing up considerable problems for themselves and lenders by failing to keep their bank or building society informed about their financial woes. 69% of adults suffering from financial pressures over the past two years admit to failing to speak with their bank or building society about their financial difficulties, and 42% have not come completely clean about their financial situation when problems arise.

The results reveal that two thirds of British adults (65%) have experienced some form of sudden change in their finances during the last two years, particularly those with children (74%). Only 8% contacted Citizens Advice or a debt charity when they first received the bad news - the same percentage as those who contacted their own bank or building society - leaving the vast majority of lenders ignorant of their possible debt stress and unable to offer support. Of those that did contact their bank or building society in the long term, 8% admitted they were not completely honest with them about their financial situation.

The results highlight that 24% of people who said they had suffered an unexpected financial shock over the past two years had seen their income suffer - with 6% taking a pay cut, 9% seeing a cut in working hours and 9% losing their job.

http://www.callcredit.co.uk/press-office/news/2010/09/uk-consumers-keeping-lenders-in-the-dark-about-their-financial-woes

antrobus

RenovationMan wrote: »

Can you supply a link to back this up?

There's this one;

http://www.thisismoney.co.uk/mortgages-and-homes/tips-and-guides/article.html?in_article_id=415637&in_page_id=53957&in_advicepage_id=97

"Statistics from the Council of Mortgage Lenders showed 33% of borrowers took out interest-only mortgages as house prices peaked in 2007."

It also contains the statement that "The FSA's mortgage market review said the vast majority had no repayment vehicle, ie no way of clearing that debt " which would presumably explain why Lloyds is doing what it's doing.

RenovationMan

antrobus wrote: »

There's this one;

http://www.thisismoney.co.uk/mortgages-and-homes/tips-and-guides/article.html?in_article_id=415637&in_page_id=53957&in_advicepage_id=97

"Statistics from the Council of Mortgage Lenders showed 33% of borrowers took out interest-only mortgages as house prices peaked in 2007."

It also contains the statement that "The FSA's mortgage market review said the vast majority had no repayment vehicle, ie no way of clearing that debt " which would presumably explain why Lloyds is doing what it's doing.

That just says that the vast majority had no repayment vehicle, not that they didn't have the cash to repay the mortgage (which is what thruglemoor stated).

I have no repayment vehicle as far as the FSA definition of one is concerned, but I do have £70k in savings (and a further 23 years to add to those savings).

shortchanged_2

antrobus wrote: »

There's this one;

http://www.thisismoney.co.uk/mortgages-and-homes/tips-and-guides/article.html?in_article_id=415637&in_page_id=53957&in_advicepage_id=97

"Statistics from the Council of Mortgage Lenders showed 33% of borrowers took out interest-only mortgages as house prices peaked in 2007."

It also contains the statement that "The FSA's mortgage market review said the vast majority had no repayment vehicle, ie no way of clearing that debt " which would presumably explain why Lloyds is doing what it's doing.

To be honest there are no suprises in that. It must be blatantly obvious that when house prices were at their peak that so many people must have been taking out IO mortgages as the only way to afford the silly house prices back then.
The problem is they aren't really able to afford them. As soon as interest rates rise I think we will see a flood of repossesions come onto the market.