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Shared Ownership - A Scam???

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  • Ali2000
    Ali2000 Posts: 15 Forumite
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    People think of shared ownership as a scam because they don't know all of the information.

    Many people are still unsure as to what is shared ownership, this is what leads people to the conclusion it is a scam.

    Depending on where you are looking there can be many properties available, from Leeds to Wembley there is something for everyone.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    The problem is that the properties available are too expensive for people to buy without government schemes aimed at propping up the market. Stop propping up a debt bubble and more people will go out and buy a house, giving a massive boost to the economy.
  • letitbe90
    letitbe90 Posts: 345 Forumite
    edited 21 May 2019 at 2:10PM
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    AdrianC wrote: »
    100% mortgages didn't work out too well, did they?

    110%+*

    To be fair the reason they didn’t work is actually nothing to do with deposit amount, it is to do with accounting fraud in the securities market - where mortgages which were highly likely to default had been sold on as a CFD rated fraudulently as A+ grade to investors. This of course incentivised lenders to sell mortgages to people even if they can’t pay them because they knew investors would buy this debt and they won’t lose out, creating the whole !!!! storm.

    Had they been graded correctly, it would have forced lenders to take income assessments seriously, we wouldn’t have created false supply of mortgages and 100% mortgages would have worked fine. If you remove the risk away from the lender which was the case with these CFD’s, of course they will sell dodgy mortgages. They could have sold 90% LTV mortgages to people who couldn’t afford mortgage and still we would have had the same problem. The LTV wasn’t the issue, just the affordability criteria which was only possible due to the fraud
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    letitbe90 wrote: »
    110%+*

    To be fair the reason they didn’t work is actually nothing to do with deposit amount, it is to do with accounting fraud in the securities market - where mortgages which were highly likely to default had been sold on as a CFD rated fraudulently as A+ grade to investors. This of course incentivised lenders to sell mortgages to people even if they can’t pay them because they knew investors would buy this debt and they won’t lose out, creating the whole !!!! storm.

    Had they been graded correctly, it would have forced lenders to take income assessments seriously, we wouldn’t have created false supply of mortgages and 100% mortgages would have worked fine. If you remove the risk away from the lender which was the case with these CFD’s, of course they will sell dodgy mortgages. They could have sold 90% LTV mortgages to people who couldn’t afford mortgage and still we would have had the same problem. The LTV wasn’t the issue, just the affordability criteria which was only possible due to the fraud

    The whole thing was only possible due to the illusion of ever rising prices, people lined up for debt because they thought they were borrowing to buy an ever increasing asset, and if house prices were cheaper defaults would have been minimal. The appetite for SO and HTB will also evaporate when it is obvious prices are falling.
  • letitbe90
    letitbe90 Posts: 345 Forumite
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    Crashy_Time wrote: »
    The whole thing was only possible due to the illusion of ever rising prices, people lined up for debt because they thought they were borrowing to buy an ever increasing asset, and if house prices were cheaper defaults would have been minimal. The appetite for SO and HTB will also evaporate when it is obvious prices are falling.

    The ever rising price was possible due to the fraud - as soon as you made it profitable to sell mortgages to people who can’t afford it (an obvious no no), of course the prices were going to rise!

    Remove that and suddenly lenders suffer from defaults and they will do income assessments properly, reducing supply of buyers and hence house prices don’t go bezerk as demand is controlled.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    letitbe90 wrote: »
    The ever rising price was possible due to the fraud - as soon as you made it profitable to sell mortgages to people who can’t afford it (an obvious no no), of course the prices were going to rise!

    Remove that and suddenly lenders suffer from defaults and they will do income assessments properly, reducing supply of buyers and hence house prices don’t go bezerk as demand is controlled.

    You can have the same demand with reduced supply of credit and prices will still be controlled. You have to make people believe that prices are controlled by "supply and demand" before they will borrow, if prices are obviously falling they won`t borrow as much, no matter how loose the lending criteria.
  • Mr_Singleton
    Mr_Singleton Posts: 1,891 Forumite
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    yllop1101 wrote: »
    I don't think everyone thinks it is a scam. It works for many people, suiting their financial situation and giving them security.
    Personally, i'm a massive fan of it- for me, it worked.

    I obviously don't know your personal circumstances but having a friend that bought a "shared ownership" property I can FULLY understand why so many people think it is a scam.
  • AdrianC
    AdrianC Posts: 42,189 Forumite
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    Yet another old thread dragged up by a linkspammer.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    AdrianC wrote: »
    Yet another old thread dragged up by a linkspammer.

    What is your view on SO?
  • AdrianC
    AdrianC Posts: 42,189 Forumite
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    Crashy_Time wrote: »
    What is your view on SO?
    I have zero conceptual issue with it, and it works just fine for several friends.

    But what's that got to do with the fact that a spammer's necroposting?
This discussion has been closed.
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