Northern Rock going bust question

hookie

I have been watching the fiasco with NR since it first surfaced. My concern is not as a share holder ( feel sorry for them but as is often quoted "the value of shares can go down as well as up!"), but a holder of a NR mortgage. If as it appears that no one wants to buy into NR due to it's poor management and debts so readily propped up by all of us, what is likely to happen to my mortgage. If the whole outfit goes bust and bits sold of to various carpet baggers, is my home at risk from being snatched from under me? Could the buyer levy some unreasonable charges or interest rate on me. Do I believe our good friend Gordon? Could (or rather would) he do anything to prevent such a thing happening? Would I be advised to change to another company ASAP? Who can give me some advice that is actually worth having.....?

catwoman150

hookie wrote: »

I have been watching the fiasco with NR since it first surfaced. My concern is not as a share holder ( feel sorry for them but as is often quoted "the value of shares can go down as well as up!"), but a holder of a NR mortgage. If as it appears that no one wants to buy into NR due to it's poor management and debts so readily propped up by all of us, what is likely to happen to my mortgage. If the whole outfit goes bust and bits sold of to various carpet baggers, is my home at risk from being snatched from under me? Could the buyer levy some unreasonable charges or interest rate on me. Do I believe our good friend Gordon? Could (or rather would) he do anything to prevent such a thing happening? Would I be advised to change to another company ASAP? Who can give me some advice that is actually worth having.....?

I am in the same boat as you, but I have a fixed mortgage until aug 2009. If I was to pull out now I would have to pay thousands to NR in interest and then try and find a cheapest mortgage rate as I have had a fixed rate for the last 3 years.
But you are right as the news and everyone else is not interested about the people who have NR mortgages. I think that the government would have to do something about it as it would be thousands and thousands of people in the same situation as us.

inmypocketnottheirs

MiserlyMartin wrote: »

Well now its pay back time for all these years of easy money and cheap credit and Gordon Brown must be having restless nights worried that ordinary people will see his miracle economy was nothing but a sham.

Personally, I don't think he is that bright!

homer_j_3

huggy45 wrote: »

i've read all the previous posts with interest, but am still confused about whether the fixed mortgage i have for another three & half yrs will be honoured by who ever buys nr as that looks like happening, if it does happen, would nr be forced to pay a penalty clause to its customers ??????? i seem to think if i changed my mortgage i'd have to pay an early settlement fee. Or is this me being very silly??

The original terms of the contract have to be honoured. If your mortgage is sold then the rate and features of your current mortgage have to remain.

homer_j_3

hookie wrote: »

I have been watching the fiasco with NR since it first surfaced. My concern is not as a share holder ( feel sorry for them but as is often quoted "the value of shares can go down as well as up!"), but a holder of a NR mortgage. If as it appears that no one wants to buy into NR due to it's poor management and debts so readily propped up by all of us, what is likely to happen to my mortgage. If the whole outfit goes bust and bits sold of to various carpet baggers, is my home at risk from being snatched from under me? Could the buyer levy some unreasonable charges or interest rate on me. Do I believe our good friend Gordon? Could (or rather would) he do anything to prevent such a thing happening? Would I be advised to change to another company ASAP? Who can give me some advice that is actually worth having.....?

The Government is now a major creditor of NR and as such they have a great say in who can buy NR.

As I have confirmed before - the terms of your mortgage cannot be altered and I would believe if someone did manage to get the government approval of buying it, any charges that they could legally raise, could be challenged under the FOS (whether or not successful would be down to how and what they did). They cannot alter your interest rate if it is fixed, nor can they alter your tracker rate other then in line with the current parameters. IE if you are tracking at 0.25% above Bank Base Rate then they cannot increase this 0.25%.

I am led to believe from our new chancellor that the tax payer is contributing £900 each to NR to keep it going and as such, the government will not allow this to go for a pittance. There will be losses and I believe that these should first and foremost be the shareholders that suffer this as their is a risk involved with investments in shares - however, it is difficult to see where these losses will be at this stage other than possibly across the board.

This story has a bit to run yet so we can only guess what will happen through opinion and judgement, however, what is guaranteed is that peoples savings are protected and the mortgage book, if sold, will remain under the same terms as they are currently on. We know this because of existing legislation and regulation.

Dylanwing

There will be losses and I believe that these should first and foremost be the shareholders that suffer this as their is a risk involved with investments in shares - however, it is difficult

But now the shareholders are planning to block any rescue plan unless they get a 'reasonable price'. IMO, no bidder will pay enough to satisfy shareholders and ensure the taxpayer is fully repaid. NR seem to have been given an infinite credit limit by the B of E (Or is it a case that they are in so deep they have no choice?), but the shareholders (Who should be the losers) have the final say in any sale. So it looks like, yet again, the Private Sector will profit at the expense of us taxpayers. Still, at least Applegarth 'only' gets £380K pay off.

free4440273

This from today's FT Money section: "Things seem to be getting worse rather than better and shareholders are least likely to be compensated. There is every chance they could be left with absolutely nothing" (Henk Potts, Barclays).

"People are hoping for a bounce. A lot of people are buying thinking that it's a bargain because there's only limited downside" (Tom Hougaard, City Index): The important caveat here is that such people are spread-betting, they are NOT actually purchasing shares.

Dylanwing

The Shareholders were on the BBC, does that trump the FT? The argument was that THEY own the business, and will not agree a sale unless they get a decent price. They know that the B of E is in so deep that they will not want the Bank to collapse, and Darling seems to have given a blank cheque to support NR, so they are happy to sit and wait for such an offer.
I don't know the techicalities and legalities, but with an intellectual pygmy like Darling representing the Government, my suspicion remains that the taxpayer will end up as the big loser.