Why it will be worse than before...

Rabiddog_2

That graph only shows RBMS as opposed to GDP.. that really says nothing without a lot of further explanation. I suspect Spain will be the hardest hit country in Europe as construction is such a large part of their GDP, and so many of their props were bought by Flush, wealthy northern europeans. Also as GW takes hold 120f summers will be a disaster. I'm investing in Iceland (not the Shop).

RHemmings

julz1982 wrote: »

This is my point, every loan that was taken out to be paid back as interest only, will not be paying back the loans the banks made they will just be covering the costs. The banks need to have Assets of X to justify lending of Y (all banks have different ratios and i dont know them). They overlent and Y got way to big but they didnt mind as they thought X would cover it. It turns out X was in fact only worth x and its getting smaller all the time. Solution to keep ratios in tact and banks solvent is to reduce Y, but Y will not be reducing on any IO loans, Y will be the same. This is why the banks are instead making X bigger, through rights issues and Sovereign wealth funds.

That is a very interesting point. Of course, in the "old days" the banks would reclaim their loaned out assets via securitisation. But this doesn't happen so much any more.

lostinrates

Generali wrote: »

Would you explain the difference please?

I have a couple of links with some explanation if its useful to you....
http://www.crown.org/library/ViewArticle.aspx?ArticleId=399

http://www.memphisbankruptcylawyer.com/view/6

They are both US sites, so Neverdespairgirl might be able to confirm if the definitions stand in UK law?

neverdespairgirl

I could write a long essay on it - but the practical difference in today's terms is that repossession is a UK proceedure, with specific powers and safeguards, and foreclosure is the American one.

One crucial difference, as I understand it, is that in the US, the debt ceases to exist when the keys are handed back. But I could be wrong on the UK law.

Foreclosure has different, historic (in essence) consequences in the UK.

tradetime

RHemmings wrote: »

That is a very interesting point. Of course, in the "old days" the banks would reclaim their loaned out assets via securitisation. But this doesn't happen so much any more.

It is my understanding that mortgage securitisation is alive and well, and quite widely used, this is after all I believe what the government are swapping treasuries for. I'd have considered it to be a relatively new practice rather than one of "the old days"
Northern Rock I believe securitised some £70 billion last year, and I believe B&B used the process to considerable extent.

Dan:_4

neverdespairgirl wrote: »

I could write a long essay on it - but the practical difference in today's terms is that repossession is a UK proceedure, with specific powers and safeguards, and foreclosure is the American one.

One crucial difference, as I understand it, is that in the US, the debt ceases to exist when the keys are handed back. But I could be wrong on the UK law.

Foreclosure has different, historic (in essence) consequences in the UK.

Better off going Bankrupt before getting repo'd under UK law

m00m00

neverdespairgirl wrote: »

I could write a long essay on it - but the practical difference in today's terms is that repossession is a UK proceedure, with specific powers and safeguards, and foreclosure is the American one.

One crucial difference, as I understand it, is that in the US, the debt ceases to exist when the keys are handed back. But I could be wrong on the UK law.

Foreclosure has different, historic (in essence) consequences in the UK.

the debt ceases to exist in the US, but you have a tax liability on any 'gain' you made by foreclosing. ie if you walk away from a $100k debt, the IRS will consider you earned 100k, and chase you for the tax on it.

I know who I'd rather have chasing me for money, a bank or the IRS ....