Individual(s) Issuing A Mortgage ?

grey_gym_sock

ok, slightly more on topic ...

so start a new building society. or put your money in an existing 1. mortgage lending can be very safe, but then it isn't very profitable.

kingstreet

spyrogyra wrote: »

Consider the 3 individuals as investors, not happy with current interest rates, not happy with volatile markets,annuities,etc. They wish to lend the money SECURELY. What better security that a house ? The question is how this could be done the simplest way.

As you don't wish to re-invent the wheel why not do it the same way a bank or building society does it.

Find a capable borrower and offer to lend it to them. Take a charge over the property they wish to buy and have a contract which stipulates how capital and interest will be paid over the term.

Mortgage lenders don't buy the property first, so I'm sticking with their plan...

spyrogyra

Yeah, we all know these options. The idea is a somewhat a different model, alternative which might appeal to many - even existing landlords, or people with £50-80k to invest who can't buy a house on their own and do not wish to offset part of the rental income to pay for a BTL mortgage. On the other side - too many decent folks, eager to get on the property ladder but being refused mortgage, still paying rent - which they very rightly consider as absolute waste. So a broker (company,etc) who would manage to connect those two groups would practically establish P2P mortgage lending.

Thrugelmir

spyrogyra wrote: »

The idea is a somewhat a different model,

Difficult to see what's different.

too many decent folks, eager to get on the property ladder but being refused mortgage

So what expertise do you all have in risk management or underwriting?

spyrogyra

Ok. I do not insist that the investors have to buy the house. I am trying to establish if there is an option for a P2P mortgage lending model, having in mind that P2P lending is still not a regulated activity, but mortgages are. And the very next question is - is taking charge over a property as a save option for the lender as a mortgage loan ?

grey_gym_sock

you're putting it in a rather confusing way. if it's a mortgage (a loan secured on a property owned by the borrower), then the lenders don't buy the property at all.

i guess (i don't know) this is all just about possible. if you do it properly and carefully, and pay ppl with expertise to manage it, then you basically have a building society. great idea, IMO: we should have more of them. but i don't think you'll get significantly higher interest rates than you can already get from a building society account.

spyrogyra

The idea of peer to peer platforms is to cut red tape,overheads and connect lenders with borrowers. In reality they constitute micro-banks without banking license. Less regulated and with lower overheads, the P2P lending platforms cruised through the financial crisis in USA unbruised and now they flourish. Senior CEOs of collapsing banks oversaw the potential of P2P platforms and invested in such or joined their management. Of course, they are not perfect, and platforms differ.
If there is a way of building a P2P mortgage business model in compliance with FSA regulation, then I pretty sure that it will strive and attract wide support.Nowadays BS are banks' arms. Imagine Jonh, Paul and George (JPG LTD :rotfl:) have pooled £200 and through Brian's platform, helped Ringo to call a dwelling home. If Ringo is doing well, everybody will be happy. If over time Ringo somehow fails to pay the installments, JPG LTD have to have the right to repossess the property relatively easy. Ringo wouldn't have to be so sour - if he wasn't given that chance, his money would have been wasted on rent. The authorities shouldn't be so much concerned about Ringo's failure and shouldn't erect obstacles for the investor to repossess the property. Actually if the authories are so much concerned about Ringo's lost asset, it should be them providing advice/help,etc. The idea is that unlike with Building Societies, JPG know would know they have invested through Ringo's house.

grey_gym_sock

p2p platforms be unbruised when banks are suffering from defaults. p2p lenders on the other hand ...

building societies have already cut out the cost of paying dividends to shareholders. i don't believe there's a huge amount of red tape to be cut. of course, you can cut out the risk control, too, and then you might have higher returns to lenders, but it would be much higher risk.

i fail to see why it would be any less upsetting than it usually is to have your home repossessed if you happen to have borrowed via p2p.

Thrugelmir

spyrogyra wrote: »

If over time Ringo somehow fails to pay the installments, JPG LTD have to have the right to repossess the property relatively easy.

Sounds so easy. People don't pay so kick them out.

Have you factored the costs into your business model?

getmore4less

spyrogyra wrote: »

Consider the 3 individuals as investors, not happy with current interest rates, not happy with volatile markets,annuities,etc. They wish to lend the money SECURELY. What better security that a house ? The question is how this could be done the simplest way.

Flaw NO.1

There are houses in the US that are worth NEGATIVE amounts.

edit:

some in the UK worth a lot less than the mortgage