The Cause of the GFC Continues.....

olly300

antrobus wrote: »

Fortunately or unfortunately (depending on your point of view) mortgage lending in the UK is made on a recourse basis, and so that option is unavailable.

In the 90s recession I know 2 people who walked away from their housing debt and weren't chased for it at all.

They both made the right decision as in one case the house never reached it's boom value as it was put on the list to be demolished. In the other case the person would have had to wait nearly 15 years to get to the price they brought it for.

It wasn't actually that rare for this to happen. Now you can't do so as the bank/bs will chase you.

Generali

ash28 wrote: »

We've not long returned from holiday in the US and in addition to the on going foreclosure crisis, something else has jumped up to bite them on the bum. The mistakes of the banks when setting up mortgages and selling mortgage bundles on, and now the fraud or forgery or incompetence of the banks and the firms they hired to handle foreclosure.

The US banks and lenders screwed up mightily during the boom - they tended to use a system called MERS - Mortgage Electronic Registry - that saved money and speeded up the process of securitising and selling on mortgage bundles.
Along the way 2 elements seem to have been mislaid (in a lot of cases) one was the mortgage agreement and the other the mortgage assignment. Not too clever.

When instigating the foreclosure process they (banks) didn't always process the documents correctly and used what are termed "robo signers" to rubber stamp thousands of foreclosure documents and affidavits with out checking they were accurate. Sometimes forging signatures and back dating documents.

The ensuing claims ranging from forgery to fraud has cast doubt on who owns the title to the property and who actually owns the loan.

The banks have even tried to foreclosed on people who don't actually have a mortgage.

An investigation has been set up by the 50 state attorneys general.

Here is a pretty good article about "foreclosuregate" or "fraudclosure" - well worth a read.

http://finance.yahoo.com/news/Robosigners-Mortgage-apf-382327091.html?x=0&sec=topStories&pos=main&asset=&ccode=

There was a very interesting thread started a few days ago on this very topic:

https://forums.moneysavingexpert.com/discussion/2777738.

This is worth a read too:

http://www.frontlinethoughts.com/gateway.asp

John Maudin is a little excitable but very interesting at the same time.

ash28

Generali wrote: »

There was a very interesting thread started a few days ago on this very topic:

https://forums.moneysavingexpert.com/discussion/2777738.

This is worth a read too:

http://www.frontlinethoughts.com/gateway.asp

John Maudin is a little excitable but very interesting at the same time.

Thanks for the links - didn't see the mse thread, sorry, one step behind the game is the story of my life!!

Generali

ash28 wrote: »

Thanks for the links - didn't see the mse thread, sorry, one step behind the game is the story of my life!!

No apology needed. I just happened to go from the piece I linked to to your post so it seemed pertinent.

The bloke I link to is an interesting writer if a little bit 'tin hat'.

borntobefree

olly300 wrote: »

In the 90s recession I know 2 people who walked away from their housing debt and weren't chased for it at all.

They both made the right decision as in one case the house never reached it's boom value as it was put on the list to be demolished. In the other case the person would have had to wait nearly 15 years to get to the price they brought it for.

It wasn't actually that rare for this to happen. Now you can't do so as the bank/bs will chase you.

I also know lots of people (all my friends/peers ) who had negative equity in the early 90s. They simply rented their properties out and moved up the ladder (buying homes at cheap deflated prices). They didn't have to wait that long to make a hefty profit, since prices were rising steeply by the mid 1990s. Trust me they all made a packet when they eventually sold.

We sold a flat in 1993 for £500 less than we bought it in 1987. It didn't matter as the house we bought was one that we couldn't have afforded at peak prices!

I don't know what sort of areas you are talking about, as I can't imagine what sort of an area is so awful that it has to be demolished! I don't think the 2 people you mention are typical of what happened in the early 1990s.

Wookster

Thrugelmir wrote: »

UK banks and financial institutions are now known to have been lending at minimal margins some even at loss making rates. With a restoration of new mortgage lending to at least 2% above base rate. Commercial normality will be returned in due course. As the previously extended credit lines wind down.

One of my mates worked for a UK bank in their risk division. He had an uphill battle trying to persuade the marketing chaps that having the best interest rates and the most competitive mortgage rates was not good for business.

Looking at the billions that need to be refinanced in Europe over the next 2-3 years its hard to see how any sort of normality will resume, particularly if the ECB is closing liquidity lines.

A huge proportion of this seems to be down to commercial property deals.

I can see huge problems for us all if another domino run starts and Obama can't push through another bail out.

Thrugelmir

Wookster wrote: »

Looking at the billions that need to be refinanced in Europe over the next 2-3 years its hard to see how any sort of normality will resume, particularly if the ECB is closing liquidity lines.

I've seen an SME have its overdraft squeezed over the last 6 months. As the bank wanted the facility reduced by 20%. Not easy managing a cashflow with that sort of contraction.

This is how the banks are getting back into financial shape though. By forcing companies to either seek alternative credit lines, the shareholders to stump up further equity or Companies continuing to squeeze their cost base.