Lender forbearance becoming “a sick joke”

homelessskilledworker

After several years of government pressure on banks to find ways to keep struggling borrowers in their homes, industry experts say problems are piling up.
Nick Hopkinson, director of PPR Estates, called forbearance for borrowers who would never realistically be able to repay their mortgage “a sick joke”.He said: “The banks pretending that their struggling borrowers are likely to be able to pay up in future is becoming, unfortunately, a sick joke


http://www.mortgageintroducer.com/ccstory/243863/5/Lender_forbearance_becoming_%E2%80%9Ca_sick_joke%E2%80%9D.htm

HAMISH_MCTAVISH

PPR estates has a specialty in buying distressed properties, so seems to have a vested interest in seeing forbearance end prematurely and market carnage begin.

With repossessions far lower than expected, business must be slow.

The only "sick joke" is that the author would publish such tasteless comments without checking into the vested interests of Mr Hopkinson.

As for what the lenders actually doing the forbearance have to say.....

David Finlay, director of intermediary channel at Barclays, said he did not believe there were problems being stored up for the future.

And he added: “I think any lender that can keep a borrower in their home and work with them on an individual basis through difficult times demonstrates social responsibility.

Graham_Devon

All you have done above is screamed "VI!!!!" and shouldn't be taken seriously because of their VI, and then taken the words of probably the biggest VI you can get!

So what about Moody's Hamish?

Increased "lender forebearance" in the wake of the financial crisis whereby banks allow borrowers to extend the repayment period for their debt, switch a repayment mortgage to an interest-only product, or even allow them a holiday on interest payments, pose a risk to British banks.

In a report on the flexibility of UK banks to troubled mortgage borrowers, the ratings agency's analysts said the practice was a "credit negative" for the country's banking system.

"There is still high indebtedness on mortgages and there is potential for more borrowers to get into difficulty. As the forebearance numbers are aggregated it is hard to know the scale of the issue for any individual bank, but it is a concern," said Elisabeth Rudman, a senior credit officer at Moody's.

Or the treasury select commitee?

Andrew Leadsom, a Conservative member of the Treasury Select Committee, told The Times: 'People are switching to interest-only because it gives them smaller outgoings now, but it is storing up problems for the future.

Or the FSA?

The Financial Services Authority estimates that between 5 per cent and 8 per cent of mortgages are in forbearance, The Times reported.
This would suggest up to 314,000 people on interest-only mortgages are struggling to keep up with their repayments.
By moving people onto the loans with lower repayments, banks are able to disguise long-term problems in the housing market.

HAMISH_MCTAVISH

Graham, in case you hadn't noticed, we're in the longest and deepest recession seen for a century, and yet despite that only 5% to 8% of mortgages are requiring "forbearance". So 92% to 95% of mortgages are not requiring "forbearance".

At some point, the recession will end, employment will increase, growth will return, and most of these people will be able to get off interest only and start paying down capital again.

Obviously it's in the best interests of the banks, the government, the wider economy and society as a whole to avoid mass evictions and repossessions.

So at least we have learned a lesson from the 90's crash, as they're not making that mistake again.

I can totally see why PPR estates, which is effectively a Vulture fund set up to buy distressed property assets, is having a right old moan about it. But they'll just have to accept that they gambled and lost. The mass repossessions and distressed sales they anticipated are not happening.

Maybe they can find a more useful application for their capital, like building affordable housing or something.....

Graham_Devon

HAMISH_MCTAVISH wrote: »

Graham, in case you hadn't noticed, we're in the longest and deepest recession seen for a century, and yet despite that only 5% to 8% of mortgages are requiring "forbearance". So 92% to 95% of mortgages are not requiring "forbearance".

At some point, the recession will end, employment will increase, growth will return, and most of these people will be able to get off interest only and start paying down capital again.

Obviously it's in the best interests of the banks, the government, the wider economy and society as a whole to avoid mass evictions and repossessions.

So at least we have learned a lesson from the 90's crash, as they're not making that mistake again.

I think you miss the point.

What you have written above could simply be applied to any problem. We could have 35% under forebearance and you could trot out the same old stuff day after day.

Your post means nothing, but avoids everything. All you are saying is "one day there will be a recovery and everything will be good again".

In the meantime, we don't have a recovery and we have more and more people under forebearance. Add SMI to the pot and you have 10% of UK mortgages whereby the mortgagees can't afford their payments. Add interest only to the pot where people can't or won't be able to pay off the capital and the problem is even bigger.

You have serious issues with lenders not lending enough. But you appear to have no issues with these home'owners' sitting on billions of pounds worth of credit which is unable to be unlocked to those who could make use of it AND pay it back.

I find your analysis somewhat disjointed at times. OK....all of the time.

BTW, you'd all but need miricle growth for families currently in arrears, on interest only mortgages to suddenly "come good", find loads of cash and pay their interest and capital down over the reamaining years on the mortgage. It's fairy land analysis.

StevieJ

HAMISH_MCTAVISH wrote: »

PPR estates has a specialty in buying distressed properties, so seems to have a vested interest in seeing forbearance end prematurely and market carnage begin.

With repossessions far lower than expected, business must be slow.

The only "sick joke" is that the author would publish such tasteless comments without checking into the vested interests of Mr Hopkinson.

As for what the lenders actually doing the forbearance have to say.....

Nuff said

We currently have substantial buying funds available

ILW

HAMISH_MCTAVISH wrote: »

Graham, in case you hadn't noticed, we're in the longest and deepest recession seen for a century, and yet despite that only 5% to 8% of mortgages are requiring "forbearance". So 92% to 95% of mortgages are not requiring "forbearance".

At some point, the recession will end, employment will increase, growth will return, and most of these people will be able to get off interest only and start paying down capital again.

Obviously it's in the best interests of the banks, the government, the wider economy and society as a whole to avoid mass evictions and repossessions.

So at least we have learned a lesson from the 90's crash, as they're not making that mistake again.

I can totally see why PPR estates, which is effectively a Vulture fund set up to buy distressed property assets, is having a right old moan about it. But they'll just have to accept that they gambled and lost. The mass repossessions and distressed sales they anticipated are not happening.

Maybe they can find a more useful application for their capital, like building affordable housing or something.....

So moral hazard should not apply to homebuyers then?

HAMISH_MCTAVISH

ILW wrote: »

So moral hazard should not apply to homebuyers then?

Moral hazard does apply to homeowners. After all, a few tens of thousands of them do get repossessed every year.

But it's in the best interests of the banks, and indeed of wider society, to work with homeowners having temporary difficulties as most of them will be able to get back on track eventually.

brit1234

HAMISH_MCTAVISH wrote: »

But it's in the best interests of the banks, and indeed of wider society, to work with homeowners having temporary difficulties as most of them will be able to get back on track eventually.

Why should tax payers priced out of the housing market fund the mortgages of those who borrowed to much keeping house prices higher and them longer out of home ownership?

ILW

HAMISH_MCTAVISH wrote: »

Moral hazard does apply to homeowners. After all, a few tens of thousands of them do get repossessed every year.

But it's in the best interests of the banks, and indeed of wider society, to work with homeowners having temporary difficulties as most of them will be able to get back on track eventually.

Surely, just not having insurance is an indicator of lack of responsibility.

HAMISH_MCTAVISH

ILW wrote: »

Surely, just not having insurance is an indicator of lack of responsibility.

Many did have insurance, that as it turns out was miss-sold and wouldn't have paid out anyway.