Lloyds Checking IO Mortgages for Fraud and other stories

Graham_Devon

antrobus wrote: »

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

It kinda states they are already doing that.

Radiantsoul

A._Badger wrote: »

The degree of that risk has still to be quantified. My twitching antennae suggest the presence of spin.

I used to work for Lloyds TSB Recoveries department and we tended to assume repossessed houses would sell for 90% of their mortgage value. Legal costs would typically be £2k+, estate agents fees a couple of percentage points and their would be costs in changing locks, etc. Add onto all of that the costs of bank staff and it is quite reasonable to assume that you only get 80% of the value of a repossessed property back.

A._Badger

Radiantsoul wrote: »

I used to work for Lloyds TSB Recoveries department and we tended to assume repossessed houses would sell for 90% of their mortgage value. Legal costs would typically be £2k+, estate agents fees a couple of percentage points and their would be costs in changing locks, etc. Add onto all of that the costs of bank staff and it is quite reasonable to assume that you only get 80% of the value of a repossessed property back.

No doubt the case, but not my point.

What I am wondering is what proportion of interest only deals fail, compared with repayment loans. Indeed, what proportion of loans fail at all and has it changed?

Radiantsoul

A._Badger wrote: »

No doubt the case, but not my point.

What I am wondering is what proportion of interest only deals fail, compared with repayment loans. Indeed, what proportion of loans fail at all and has it changed?

I think it has remained very low by historic standards. In part because interest rates have been low though. The other issue is deals that banks to which are not precisely repossessions but still force a sale. These are not reported.

Kenny4315

Seems like another round of closing gates after the horse is already down at the pedigree chum factory.

Heyman_2

Graham_Devon wrote: »

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

Good question. I suspect they would be looking to use this as grounds to increase their monthly payments to include capital repayment. If that resulted in a repo then so be it I guess.

Graham_Devon

Heyman wrote: »

Good question. I suspect they would be looking to use this as grounds to increase their monthly payments to include capital repayment. If that resulted in a repo then so be it I guess.

Can they force someone over to another product? That was my reasoning for asking what they would do.

If they could, and moved them over to repayment which ended up in a repo, I guess it kinda proves their point!

drc

I wonder if anyone will do a spot check on Lloyds to see if it can afford to pay back the massive taxpayer funded bailout it received?

Heyman_2

Graham_Devon wrote: »

Can they force someone over to another product? That was my reasoning for asking what they would do.

If they could, and moved them over to repayment which ended up in a repo, I guess it kinda proves their point!

I don't know - perhaps they could cite it as a breach of terms and then offer movement to another product as an 'option'.

The mere fact that they're doing it suggests to me that they have action in mind should they find anything improper.

olly300

shortchanged wrote: »

A sensible way forward is to get rid of all interest only mortgages therefore many people with all their jackanory stories, combined with the banks cannot help to fuel another stupid house price boom in the future and hopefully house prices can return to a more stable realistic level again.

Lots of business owners and self-employed people have IO mortgages.

What they do is when they have surplus funds is pay of part of the mortgage capital.

So it's wrong to assume that everyone on an IO mortgage took out a 100% or 90% LTV mortgage.

The issue is off course that mortgage brokers being greedy gave out IO mortgages to the wrong type of people.

And it's a bit late in the day for Lloyds to try and see what repayment vehicles people have when they should have asked in the first place.