Help!!! Suspect fraud in valuation

Rachman_2

Alan_M wrote:

Really you'd be astonished at how uneducated a large proportion of the population is. This is the reason banks have lending criteria, it's there to protect their investment and also to protect the consumer from borrowing more than they safely should.

What frustrates me is how the population plays it when it suits it - I'll be sassy, smart and wise to get the money, but when it falls to repay it and my house has stopped rising in value to fund it, suddenly, they are all Kermits and Rolfs with no idea and the big nasty man in the suit should not have lent them the money to buy that new car and those long haul holidays now their house price has stopped rising - if the bank had said no at the time, they would have gone somewhere else and got it.

[I also understand what you are saying about the large corporate lending - the old adage "If you owe the bank a grand, it's your problem, if you owe the bank £100M, it's their problem" really does ring true too.]

Alan_M_2

I have no problem with finance provided for an assest, lets say a car for example, if you default there is something to reposses, in the same way mortgages operate.

However the unsecured lending has got out of hand.

I've just gone through the process of financing an expansion of my business, I was in that awkward positon of wanting to borrow an amount too small for venture capitalists but too large for high street banks to be comfortable with (more than the regular persons Mortgage).

It's taken a year to organise but we're almost there now, everything should be in place by the end of January. Every aspect of my finances has been explored and as a result of these investigations it actually gave us other ideas like sourcing different credit terms from our supplier via trade finance.

If lenders made this much effort when lending to joe public they would recoup all the extra admin costs in reduced bad debts, and highly likely keep house prices at a reasonable level, after all, if you can't borrow enough you can't buy it can you.

Rachman_2

Alan_M wrote:

If lenders made this much effort when lending to joe public they would recoup all the extra admin costs in reduced bad debts, and highly likely keep house prices at a reasonable level, after all, if you can't borrow enough you can't buy it can you.

Alan, problem is, all of that as you know, costs money - the public wants it done for nothing - can you see them paying to effectively reduce the likelihood of getting credit.... - VCs are like keeping poisonous snakes as pets and letting them loose round the house, you are less likely to get burgled, but you could end up being the victim yourself (I do a bit of VC work acting for the VC people - and mainly working for private equity locusts - you see management walk out of meetings with kerching on their mind - mostly they've not got a clue]

Alan_M_2

Reasonable argument, but I see the extra administration costs comfortably covered by lower default rates, after all the lenders expect a certain amount of defaulting.

Rachman_2

Alan_M wrote:

Reasonable argument, but I see the extra administration costs comfortably covered by lower default rates, after all the lenders expect a certain amount of defaulting.

Agreed, but how does the economy survive a strangulation of retail credit supply - which is what it runs on at the moment ?

magyar

Alan_M wrote:

Again, like many people who post here, you're assuming people are intelligent enough to know this and that's the problem. This is why parameters exist for terms of lending and it's as much the responsibility of the lender to say know as it is for the borrower to be certain that they can afford it.

Really you'd be astonished at how uneducated a large proportion of the population is. This is the reason banks have lending criteria, it's there to protect their investment and also to protect the consumer from borrowing more than they safely should.

I take your point, Alan, and I know you're coming at this from a 'society' perspective rather than an individual one, but I think the key issue is the "blame" factor.

I really start screaming at the telly when I hear people interviewed about their debts and they say "[This institution] said they were here to help; now it turns out they were just out to make money". I mean, just what sort of a society have we created when people don't realise basic things like 'financial institutions exist to make money'?

Alan_M_2

Rachman wrote:

Agreed, but how does the economy survive a strangulation of retail credit supply - which is what it runs on at the moment ?

Ahh and there we have now reached the very crux of the problem, we're in this position through oversupply of easy credit. Now we've reached crunch time and the banks and lenders are starting to bleat about bad debt and irresponsible IVA's.

Of course you're right, how will the economy survive? Answer, It can't, this is one of the factors that could lead or may contribute to a recession, along with many other possibilities.

Economy at it's most simple - if you can't borrow enough money, you can't buy things you can't afford. This in turn keeps prices down, it doesn't stop boom and bust, but it does make the curve a little less steep in both directions.

Alan_M_2

magyar wrote:

I take your point, Alan, and I know you're coming at this from a 'society' perspective rather than an individual one, but I think the key issue is the "blame" factor.

I really start screaming at the telly when I hear people interviewed about their debts and they say "[This institution] said they were here to help; now it turns out they were just out to make money". I mean, just what sort of a society have we created when people don't realise basic things like 'financial institutions exist to make money'?

Oh don't get me wrong, I agree with your point of view, and I have to say I have very little sympathy with people who find themselves in irretrievable financial positions through ignorance. But we have to accept, (from a society point of view - which is absolutely what I'm getting at) that an element of blame should fall with the lenders.

There are people who clearly have no or limited means to repay loans that are borrowing and really should be told not to.

A good example is one of the threads on here where the young lady with a £16K income is desperate to buy a flat, she has a deposit , has saved hard and is intelligent enough to seek out a forum and ask pertinent questions about what she intends to do.

I have absolutely no doubt a lender could get her a mortgage and get into a property, but from the explanation she provided I'd see that as unsound, and advised as such on the thread.

There's a very fine line between a nanny state, sensible lending and wreckless lending and many grey areas in between.

brasso

This thread was mentioned by the misfits on HPC a couple of days ago so I think a few of their bitter trolls have been over here.

Alan_M_2

Bring them on, troll bating can be quite interesting sometimes:)