Here's a list of Building Societies lending to sub prime borrowers!!

Conrad

I've written to Radio 4 Money Box Live to question whether 'reputable' old fashioned Building Socieites should have advised thier members they have been heavily involved in lending to sub prime borrowers (the very type that have been defaulting in the USA).

Here are some of the BS involved:

Nationwide
Portman

Yorkshire
Derbyshire

Coventry
Scarborough

Skipton
Stroud & Swindon

Chelsea
Cheshire


I keep hearing people are taking money out of N Rock to put into 'safe' BS like those above!!!!!!!!!!!!!!

I'm thinking of making this into a campagn - what do you think, are people concerned or not?

wombat42_2

Conrad wrote: »

I've written to Radio 4 Money Box Live to question whether 'reputable' old fashioned Building Socieites should have advised thier members they have been heavily involved in lending to sub prime borrowers (the very type that have been defaulting in the USA).

Here are some of the BS involved:

Nationwide
Portman

Yorkshire
Derbyshire

Coventry
Scarborough

Skipton
Stroud & Swindon

Chelsea
Cheshire


I keep hearing people are taking money out of N Rock to put into 'safe' BS like those above!!!!!!!!!!!!!!

I'm thinking of making this into a campagn - what do you think, are people concerned or not?

What about switching it around and listing subprime free safe havens. Also the above list needs refining to put it in subprime exposure order for example Nationwide might just have 1% in subprime in which case it doesnt matter much.

noh

Is it relevant?
Northern Rocks problems weren't caused by their sub prime lending. They were caused by their reliance on the wholesale money markets for their funding.

Nigel

Conrad

noh wrote: »

Is it relevant?
Northern Rocks problems weren't caused by their sub prime lending. They were caused by their reliance on the wholesale money markets for their funding.

Nigel

I why do you think investors do not want to give N Rock funds for mortgage lending?

Sub prime lending is the reason no investors have an appetite any longer.

And why do you suppose they no longer want to provide funds?

Could it be they recognise THE HUGE DEFAULT POTENTIAL.

Chelsea BS for example; Thier total lending book last year featured 52% 'specialist' mortages which means sub prime and self cert (no income proof).

Not sure I'd trust my money to such people, but you go ahaed.

noh

Also when you say "heavily" what does that mean? What is the source that backs up your claim?

Nigel

nrsql

sub prime lending in itself is not a problem.
The issue in the states is more misrepresentation - giving sub prime loans to people who can't aford them (misrepresenting the cost) then misreprensenting the financial status of the buyer so the risk allocated to the loan is incorrect. When this is then sold on (which is the whole point of the excercise for the seller) it will have an incorrect status and the buyer (and all other buyers of various derivatives backed by the product) will have incorrect risk and hence valuation.
Institutions balance the risk against profit for these products and the issue is that assessment is believed to be incorrect to such an extent that many are considered junk. They don't know how much to devalue the book and also believe other institutions are in the same situation hence can't value the risk of interbank lending - hence the rise in rates and reluctance to participate. Put that with the certainty that a number of hedge funds will have big trouble and be lost as a source of funds...

In the states companies have been targeting people with no earned income for large mortgages in this fashion.

I don't believe the selling is such a problem in the UK - certaionly not on that scale but it is more the participation in the derivatives that is the concern. As long as a reasonable valuation is put on the sub-prime mortgage it isn't so much of a problem.

Also consider that the derivative products will have been repackaged several times - each time containing less of the original mortgage and you see why no one knows the scale of the problem. A single mortgage can eventually participate in hundreds of products and a single product can contain parts of thousands of mortgages so tracing back is not really a possibility.

Conrad

Nigel I work in the industry. I dont have exact figures admitedly but this is;'nt the point.

The point is these so called reputable pillars of civilisation ought to go out of thier way in revealing the extent of thier activities to thier members. This info should be the first bthing a potential saver hears along with the savings AER

Conrad

nrsql wrote: »

I don't believe the selling is such a problem in the UK -

2/3rds of all mortages are sold through brokers in the UK.

I can tell you as an insider that a mainstay of sub prime and or self cert lending have been the Building Socieities.

Now as the non balance sheet lenders are withdrawing (for example Kensington have reduced LTVs from 95% to 75%, and Lehman Bros have closed 3 UK lenders) the Building Socieities become even more important.

Here's an example of Skipton BS (concealed as the 'Amber' brand) current lending criteria:

90% LTV - self cert (no income proof) defaults ignored, 1 ccj allowed up to £2000, mortgage arrears over 12 months old ignored. Interest rate 7.69% fixed for 2 years and currently 8.9% svr thereafter.

Here is Derbyshire BS (concealed under the 'SALT' brand): 90%ltv, Bankcrupts acceptable as long as discharged 1 year ago (so could have been made Bankrupt just 2 yrs ago). Bankcruptcy featuring up to £100,000 unsecured written off debt acceptable.

noh

Conrad wrote: »

Nigel I work in the industry. I dont have exact figures admitedly but this is;'nt the point.

The point is these so called reputable pillars of civilisation ought to go out of thier way in revealing the extent of thier activities to thier members. This info should be the first bthing a potential saver hears along with the savings AER

Is offering subprime mortgages disreputable?

Nigel

Agri47

noh wrote: »

Is offering subprime mortgages disreputable?

Nigel

Would you lend your own money to someone with a poor credit record?

noh

Agri47 wrote: »

Would you lend your own money to someone with a poor credit record?

Yes max 90% LTV if i had a charge on his property and the interest rate he was paying me was at least 4% above base rate.
Is that disreputable?

Nigel