It's getting close.... the great IO mortgage miss-selling scandal

dunstonh

Is that right? I have my doubts. Weren't lots of the endowment mis-selling thingies from the 1980s?

Endowments are an investment class product and investments became regulated in April 1988. Mortgages became regulated in October 2004 and insurance in Jan 2005.

Mallotum_X

I didnt get a interest only, and so wont be able to get compensation... have i been missold as i may now lose out...

shortchanged_2

Mallotum_X wrote: »

I didnt get a interest only, and so wont be able to get compensation... have i been missold as i may now lose out...

Unfortunately not, you'll be one of those who has to bend over and take it up the tailpipe for being prudent while thousands of people who took out IO mortgages get rewarded for their financial incompetence.

ILW

shortchanged wrote: »

Unfortunately not, you'll be one of those who has to bend over and take it up the tailpipe for being prudent while thousands of people who took out IO mortgages get rewarded for their financial incompetence.

Sadly that is probably true.

wotsthat

shortchanged wrote: »

Unfortunately not, you'll be one of those who has to bend over and take it up the tailpipe for being prudent while thousands of people who took out IO mortgages get rewarded for their financial incompetence.

Do you think thousands of people who took out IO mortgages are going to get compensation?

Stranger things have happened but it just doesn't seem that likely. Even the name of the product describes how it works.

Even the oddest of judges isn't going to rule in favour of an IO mortgage holder and I've not heard the MSE bandwagon revving up yet either.

shortchanged_2

wotsthat wrote: »

Do you think thousands of people who took out IO mortgages are going to get compensation?

Stranger things have happened but it just doesn't seem that likely. Even the name of the product describes how it works.

Even the oddest of judges isn't going to rule in favour of an IO mortgage holder and I've not heard the MSE bandwagon revving up yet either.

Well we now have a very well established compensation culture in this country so anything's possible.

wotsthat

shortchanged wrote: »

Well we now have a very well established compensation culture in this country so anything's possible.

Anything being possible doesn't make it likely or probable.

I can't think of many things where there has been such broad board agreement - no-one thinks IO mis-selling claims have any merit.

Graham_Devon

wotsthat wrote: »

Do you think thousands of people who took out IO mortgages are going to get compensation?

I can't see it happening, mainly as it would cause uproar for all those who have taken alternative, less risky methods.

However, I feel as if something is going to happen, and it's going to work to the advantage of the government and banks.

Let's say banks get fined....brilliant, slap on the wrists. But that suggests there was wrongdoing, and therefore people with interest only mortgages are due help.

Step in the government to provide loans, payable on sale or death, attracting no interest. Or maybe just an extension of SMI to cover these eventualities.

No one loses their homes, the government have only done it because it's be proven that these poor souls didn't have a clue they weren't paying off the debt, and repo's and mass selling (and all the "problems" associated) are eradicated.

Banks don't have to face the bad debts, and therefore don't have to pull out of the market or raise even more capital.....the fine will be tiny in comparison to the fallout of the interest only mortgage crisis, passed back to them through funding schemes or QE.

Ta da....two birds, one stone, everyones a winner, bar those who took the right products at a higher cost.

Let's face it, thats exactly what has just been done with the mortgage rules from the FSA. I agree with them entirely, but basically it states everyone who doesn't yet own has to take higher charges and more difficulyt to start with....anyone currently in homes, however, who happen to struggle for whatever reason (IO issues being one of them as confirmed earlier today)....well, the rules are dropped to make sure the repo doesn't happen.

Everything but everything so far has protected the person staying in the home. I can see a LOT of wrongdoing with IO, and I can see a landmark court case possibly.....but it will only serve to protect those who took a risk at the expense of everyone else.

Can't see compensation, that would be downright absurd.

Thrugelmir

grizzly1911 wrote: »

The money will still be wasted it is just front line services that will suffer and all those trying to deliver them.

Government isn't just about employee costs.

BIS (Department for Business, Innovation and Skills) currently operates out of 100 locations.

Its stated objective is to reduce this to 25. (All state owned so no commercial rent to pay).

All part of a target 22% reduction in its administration budget of £684 million a year.

cotleigh

wotsthat wrote: »

Do you think thousands of people who took out IO mortgages are going to get compensation?

Stranger things have happened but it just doesn't seem that likely. Even the name of the product describes how it works.

Even the oddest of judges isn't going to rule in favour of an IO mortgage holder and I've not heard the MSE bandwagon revving up yet either.

Payment Protection Insurance was "mis sold" because it was offered to people whose financial circumstances meant that they could never actually claim on the policy - basically anyone self-employed or just not working for whatever reason.

For someone in a permanent job taking out a loan, PPI often made good sense, by insuring against losing their job and not being able to make the payments on a mortgage or other loan.

For banks to offer it (or bundle it automatically with a loan) to students, pensioners, self-employed, housewives, temp. workers, who could NEVER be entitled to benefit from the policy, was totally dishonest, hence the whole "mis-selling" scandal.

Offering an IO mortgage is not comparable. It is just a type of loan.

The very name explains it, and everyone who has a mortgage will get regular statements showing interest charged, payments made and the outstanding balance.

I cannot see how anyone could claim to have been "mis-sold" a loan.

You can repay chunks of the sum borrowed at any time if you want.

I have quite a few IO mortgages on BTL properties, and pay off parts of the sum borrowed as and when I can. If in 15 - 20 years I haven't paid it all off, I can always sell the houses. Although the way things are going, we could clear them in 5 or 6 years.

It's just like a big overdraft - you either just pay the interest each month, or else you pay down the actual sum borrowed.

How would you "compensate" someone for not paying off the capital they borrowed anyway?

With PPI, people can get back the premiums they paid, what would you do for someone who took a mortgage for £100K on IO ten years ago?

Just get the bank to write off part of their mortgage? Why?

This would just be giving people a load of free money!