People in thier 60's being forced to sell homes.

chewmylegoff

RenovationMan wrote: »

Does it? I thought the majority of money was just created rather than being recirculated, hence why net debt is larger than net savings within the banks.

regulators set capital requirements which (in theory at least) mean that banks cannot create money to lend without getting more capital to back the lending.

without more capital, they have to get the money they have lent out back in order to lend it again. since they are already under capitalised and facing an uphill battle to comply with increasingly stringent capital requirements, it is unlikely that a load of new capital to back new mortgage lending is going to magically appear somewhere.

chewmylegoff

silvercar wrote: »

You're assuming that the money available for mortgages is a fixed pot, which just isn't true.

Banks lend money they haven't got.

yes, but in order to lend £100 they need £7 of capital. they have been told they need to increase that to £10 over the next few years (in respect of all lending including existing lending).

so, if they want to make another £100 loan to person B they need to either (i) go and raise £10 more capital or (ii) collect the £100 they have lent to person A.

if 1.5 million IO mortgages worth £120 billion are allowed to roll indefinitely, that ties up the capital required to back 10% of mortgage lending. that capital will not be available to back new lending. hence the mortgage market will become less liquid.

banks cannot just create endless new money.

wotsthat

Graham_Devon wrote: »

Would.

Theres not a cat in hells chance of a court ruling in favour of this one.

The amount of business and personal loans out there that would just be renegaded on would be massive. Suddenly, no lender would be able to sieze an asset.

It'd be anarchy.

Imagine the compensation claims from those already having had their assets siezed.

Let's not get carried away eh.

In general debtors are treated sympathetically by courts and a judge applies the law based on the merits of the individual case.

In this case I'd argue against an eviction by pointing out that the lender was at least partly responsible by issuing an IO mortgage in the first place and they probably didn't check repayment plans at the start or during the loan. I'd also point out a solid repayment history, continued ability to pay, zero arreasrs, and the low risk nature of the loan due to the very large property equity.

The lender of course can point to the agreed contract.

I reckon she'd have a better than a cat in hells chance of showing she's ben treated unfairly.

A judge doesn't need to consider...

- it's not fair because some tenants have bad landlords
- no-one will repay a loan ever again
- there would be anarchy
- there would be massive compensation claims
- she's just a stupid greedy chancer

not that you're getting carried away in the role play eh?

sh856531

>She is perfectly able to continued on, just as people always did, until death at which time debt could easily be settled.

I think you and your client have missed a very simple point which is leading you to believe you are being treated unfairly.

You point out that when your client dies the debt will be settled. But the bank does not want a *house*. The bank did not lend your client a house - it lent her *money*. They do not want a house - an asset whose value changes and is illiquid - they want their *money* back.

I suppose what you are proposing *might* be fair if the bank took ownership of the house and then was compensated for the inconvenience of having to manage the sale of a property. But it would be entirely up to the bank if it wanted to enter into such an arrangement.

As I understand it, right now the bank is more than justified in taking steps to ensure that it gets it *money* back rather than an arbitrary bit of property which it has no interest in owning

Best Regards

S

sh856531

> Banks lend money they haven't got.

And people borrow money that they can't possibly afford to repay...

Then everyone else gets screwed in the fall out

I seem to remember something like that happening recently....

S

wotsthat

sh856531 wrote: »

I suppose what you are proposing *might* be fair if the bank took ownership of the house and then was compensated for the inconvenience of having to manage the sale of a property. But it would be entirely up to the bank if it wanted to enter into such an arrangement.

It's much much simpler than that.

The lady dies and the bank continues to charge interest to the estate. The executor sells the house and uses the proceeds to settle the debt. That's it.

Emy1501

wotsthat wrote: »

In general debtors are treated sympathetically by courts and a judge applies the law based on the merits of the individual case.

In this case I'd argue against an eviction by pointing out that the lender was at least partly responsible by issuing an IO mortgage in the first place and they probably didn't check repayment plans at the start or during the loan. I'd also point out a solid repayment history, continued ability to pay, zero arreasrs, and the low risk nature of the loan due to the very large property equity.

The lender of course can point to the agreed contract.

I reckon she'd have a better than a cat in hells chance of showing she's ben treated unfairly.

A judge doesn't need to consider...

- it's not fair because some tenants have bad landlords
- no-one will repay a loan ever again
- there would be anarchy
- there would be massive compensation claims
- she's just a stupid greedy chancer

not that you're getting carried away in the role play eh?

As has been said you would be asking the court to set a precidant in that it's a lenders duty to make sure a suitable repayment vehicle is in place. The fact that many probably didn't in past would make the repayment on an io mortgage pretty much unenforceable until death and it would be death of io mortgages.

Yes the courts would sympathetic to someone struggling in term of the mortgage but this lady has option ie equity release schemes but she is not interested in paying back the mortgage despite agreeing to when the mortgage was taken out.

Next a renter will come to end of his contract and refuse to move arguing he is paying reasonable rent and the contract is irrelevant.