Yes we will get distressed mortgage payers, but do you think they will be repossessed? Not a chance

[spunko]

Many forget that banks love to repossess, they claw back the property and resell it, plus the payments made.

It isn't surprising frankly that many forget this though, watch a bank advert on the idiot box and it is portraying an inaccurate image. But they haven't spent millions of pounds on loveydovey advertising campaigns over the past few years for nothing.

Building societies may act to repo a bit later, but even that isn't a given.

However the big difference between the 90s recession and this one, is if you got repo'd you could go into council housing if you were really overstretched. Nowadays you have to join a 12 year waiting list.

If I had to guess I'd say the government will come up with some sort of scheme for those in financial dire straits whereby they pay the equivalent of what they would pay to the local authority for a council house, but to their bank, for a few years.

In return they keep the house, for at least another year or two. But like all government meddling it'll make the original problem worse.

[One percent]

2 hours ago, belfastchild said:

I was about to come on and post something similar. There were repossessions in the North but every one I heard of was where people voluntarily gave back the keys after the banks said they were going to repossess after trying every possible route to keep them paying something, anything.
One of my good mates fell into this category, wife kicked him out of the home as he was working all hours trying to save his business, bought a big house (could afford it) to make sure the kids could be housed (3 teens) when they came to visit, lost a couple of contracts and business went pop. Took in lodgers but a few of those refused to pay after a while so eventually he just gave the keys back and said fuck it, ended up in my spare room for a few weeks.

Another mate almost identical situation except he was employed finally sold the flat he bought at the peak during divorce last year. Sold it at a 60k paper loss but had been paying the mortgage anyway for 12 years so had paid it down.

BTLs in my street went very quickly, were taken over by NAMA but that was years in the resolution where they continued to rent to the sitting tenants and eventually sold on but you are talking about 10 years or so later so prices werent that  bad. The BTLs were fair game but it was the large scale buyers and funds that bought them, not joe public.

As lovelyboy said, the level of write offs (if you could afford to pay, which is key) was ridiculous. I said to a few people who had means to do exactly what was mentioned above, say they were in difficulty and ask for a settlement figure to just fuck off. I tell people with 5 years or so left on their mortgages now to do the same. Very few takers over the last couple of years due to the cheap loans but might well be a feature soon enough.

I think you are touching on this but the early 90s crash, people ended up on very high interest rates and significant negative equity that they were posting the keys back to the banks and walking away.  It’s not always the bank that makes the decision 

2 hours ago, belfastchild said:

I was about to come on and post something similar. There were repossessions in the North but every one I heard of was where people voluntarily gave back the keys after the banks said they were going to repossess after trying every possible route to keep them paying something, anything.
One of my good mates fell into this category, wife kicked him out of the home as he was working all hours trying to save his business, bought a big house (could afford it) to make sure the kids could be housed (3 teens) when they came to visit, lost a couple of contracts and business went pop. Took in lodgers but a few of those refused to pay after a while so eventually he just gave the keys back and said fuck it, ended up in my spare room for a few weeks.

Another mate almost identical situation except he was employed finally sold the flat he bought at the peak during divorce last year. Sold it at a 60k paper loss but had been paying the mortgage anyway for 12 years so had paid it down.

BTLs in my street went very quickly, were taken over by NAMA but that was years in the resolution where they continued to rent to the sitting tenants and eventually sold on but you are talking about 10 years or so later so prices werent that  bad. The BTLs were fair game but it was the large scale buyers and funds that bought them, not joe public.

As lovelyboy said, the level of write offs (if you could afford to pay, which is key) was ridiculous. I said to a few people who had means to do exactly what was mentioned above, say they were in difficulty and ask for a settlement figure to just fuck off. I tell people with 5 years or so left on their mortgages now to do the same. Very few takers over the last couple of years due to the cheap loans but might well be a feature soon enough.

I think you are touching on this but the early 90s crash, people ended up on very high interest rates and significant negative equity that they were posting the keys back to the banks and walking away.  It’s not always the bank that makes the decision 

[spunko]

18 hours ago, lovelyboy said:

In Ireland, following the 2008 financial crisis, very few 'primary residences' were repossessed. The banks were desperate for cash and were more than willing to take pennies to the pound to shift bad debts off their books. Independent Financial Advisors were making a killing advising people to simply refuse to pay their mortgage and let the banks come begging. I'm talking about people who were perfectly able to service their debt.

My father paid £250K for a run down two bed cottage in the west or Ireland. Despite advising him against it, he was too wrapped up in the housing mania to listen. Anyway, he had the last laugh when the bank accepted £60K in full settlement of the debt. No one thought to ask how a poor impoverished pensioner could pull £60K out of his back pocket just like that. No one thought to look at his pension income which was above the national average in addition to his full state pension.

The Irish government made the decision to go cap in hand to the IMF then let the tax payer foot the bill to pay off the IMF loan. The banks suffered, the developers suffered, the taxpayer suffered, but it was a small lottery win for most borrowers. If you don't believe me, read the following blog. In the whole country, the number of repossessions barely got above double figures per year...

Actual repossessions versus perceived repossessions | Irish Mortgage Brokers

Out of interest how much of that £250k purchase price was mortgage debt? And did the banks offer £60k settlement or did your dad use that as the starting point?

Part of me thinks I should go buy a place now and hope this might happen here. It's not that unlikely frankly.

[spygirl]

2 hours ago, spunko said:

Many forget that banks love to repossess, they claw back the property and resell it, plus the payments made.

It isn't surprising frankly that many forget this though, watch a bank advert on the idiot box and it is portraying an inaccurate image. But they haven't spent millions of pounds on loveydovey advertising campaigns over the past few years for nothing.

Building societies may act to repo a bit later, but even that isn't a given.

However the big difference between the 90s recession and this one, is if you got repo'd you could go into council housing if you were really overstretched. Nowadays you have to join a 12 year waiting list.

If I had to guess I'd say the government will come up with some sort of scheme for those in financial dire straits whereby they pay the equivalent of what they would pay to the local authority for a council house, but to their bank, for a few years.

In return they keep the house, for at least another year or two. But like all government meddling it'll make the original problem worse.

Actually, no, they dont.

If a banks resi repos get out of control then they are dragged in and have BoE crawling over them.

Repos are v v v v expensive for a bank.

Banks love large deposits. Thats why, if it goes tits up  they keep their capital.

This is why min deposit is now 20%

[Wight Flight]

38 minutes ago, spygirl said:

Actually, no, they dont.

If a banks resi repos get out of control then they are dragged in and have BoE crawling over them.

Repos are v v v v expensive for a bank.

Banks love large deposits. Thats why, if it goes tits up  they keep their capital.

This is why min deposit is now 20%

Why, in a falling market, would a bank not want a rapid repo to minimise their loss?

They only answer to their shareholders.

[Boon]

26 minutes ago, Wight Flight said:

Why, in a falling market, would a bank not want a rapid repo to minimise their loss?

They only answer to their shareholders.

Here is one I been following:

https://www.rightmove.co.uk/properties/129537356#/?channel=RES_BUY

This went to auction at £350k and had no bidders. What did they do? Upped the price to £375k!

The previous listing was here and they tried several price points at £450k down and nothing.

Now I would think the bank ain't dum dums and they must know the interest rates have moved significantly since August. They also would know that this combined with the price makes it not viable for investors.... considering the £375k asking price even if you had a £150k deposit it would still lose you money every month taking into account service charge and manage fee.

So why not just get a rapid repo to minimise loss? After all it will cost £500/month + costs to keep it empty. And the market for this type of property is falling.

I would guess at £250k it would sell quickly. But what would that mean for the valuations for the rest if all repos in this block started getting that? 

[Wight Flight]

1 minute ago, Boon said:

Here is one I been following:

https://www.rightmove.co.uk/properties/129537356#/?channel=RES_BUY

This went to auction at £350k and had no bidders. What did they do? Upped the price to £375k!

The previous listing was here and they tried several price points at £450k down and nothing.

Now I would think the bank ain't dum dums and they must know the interest rates have moved significantly since August. They also would know that this combined with the price makes it not viable for investors.... considering the £375k asking price even if you had a £150k deposit it would still lose you money every month taking into account service charge and manage fee.

So why not just get a rapid repo to minimise loss? After all it will cost £500/month + costs to keep it empty. And the market for this type of property is falling.

I would guess at £250k it would sell quickly. But what would that mean for the valuations for the rest if all repos in this block started getting that? 

You are suggesting they will run a price protection racket?

[Boon]

I just think, someone made a decision not to take the loss to get it off the book.

Their choices are: 1) accept a big loss now, 2) hope that someone with more money than sense turns up, 3) hope that interest rates fall and then prices catch up, 4) if get in the shit maybe governments might bailout.

Not too much different from the average owner of one of these. But for the bank if these style of flats started regularly going at sub £300k, would there be implications for all similar flats they have? And a bank might own tens of thousands of similar ones.

Sure I could imagine the bank trying to protect the value of its assets. It's already done that by refusing to liquidate and continuing to hold out for a certain price.

[lovelyboy]

4 hours ago, spunko said:

Out of interest how much of that £250k purchase price was mortgage debt? And did the banks offer £60k settlement or did your dad use that as the starting point?

Part of me thinks I should go buy a place now and hope this might happen here. It's not that unlikely frankly.

For context, the banks were in big trouble and running scared. Time was ticking and they literally had no idea how much of their loan book was good and how much was bad. The government set up a 'bad bank' (NAMA) to buy up the worst of the debt for pennies to the pound. It didn't take long for Independent Financial Advisors to figure out that NAMA had, in effect, set a 'floor' for the price of debt. The IFAs seen the opportunity and set about shamelessly tapping up any mug with a sob story.

I wasn't living in Ireland at the time but I understand that my sister had a conversation with one to these IFAs and realised my dad was a prime candidate. He was in his late sixties and retired when the bank readily lent him the full E250K with zero deposit and INTEREST ONLY. Clearly unsuitable for his circumstances and certainly irresponsible lending. Apparently my sister and my dad just filled out the forms and the IFA did the rest. I assume the IFA had a good idea how much hard cash was needed to sweeten the deal.

In case I haven't mentioned it already, my dad was well able to service his debt. This was pure opportunism on his part. Indeed I had warned him against buying a near derelict cottage for E250K in the arse end of nowhere. I remember sending him links to beautiful cottages in England being sold for considerably less. I was trying to make the point that prices in Ireland had parted with reality. He wasn't interested, everyone else was buying houses so he wanted to join in. In the end it turned out I was the fool and not him.

[Gloommonger]

Why wouldn't the banks put the distressed repayment mortgage onto interest only? Repayments would be affordable until rates come down or the 'owner' effectively becomes a tenant.

[spygirl]

9 hours ago, Wight Flight said:

Why, in a falling market, would a bank not want a rapid repo to minimise their loss?

They only answer to their shareholders.

You migth have missed my point.

Having a non performing loan loan cost the bank ££££££

The repoing process is long painful and expensive.

Banks really dont want to repo. But, put in a corner, facing a hit to their capital,  they will.

When a bank starts repoing then the bank or the economy is in trouble. Normally both.

In terms of share holders ... that may the UKGOV still in a lot of banks.

I have no interest in taking an equity position in a bank. Equity doesnt work in banks.

Banks are pay to play. The BoE controls them via access to reserves to lend. Equity holders can go and spin as far as banks are concerned.

Banks dont want to upset the BoE. They cant.

 

[Guest]

The private rented sector went from about 10% of UK residential properties in the mid-1990s to about 20% now. Absolutely enormous transfer of capital that never gets talked about despite it being far bigger than the number of council houses Thatcher sold off.

The minute a BTLer misses a mortgage payment it will be wham-bam-repo time. That's millions of properties.

[Lightscribe]

wrong thread.

[Wight Flight]

2 hours ago, Darude said:

The private rented sector went from about 10% of UK residential properties in the mid-1990s to about 20% now. Absolutely enormous transfer of capital that never gets talked about despite it being far bigger than the number of council houses Thatcher sold off.

The minute a BTLer misses a mortgage payment it will be wham-bam-repo time. That's millions of properties.

Will it?

I know banks don't want to own properties, but a rent paying tenant might be better for them than a repo sale if there is negative equity?

[Phil]

8 hours ago, Wight Flight said:

Will it?

I know banks don't want to own properties, but a rent paying tenant might be better for them than a repo sale if there is negative equity?

If they can’t afford the mortgage, how will they afford the rent to the bank. Are you suggesting the bank will accept the going rate from the gov for the area?

[Wight Flight]

10 minutes ago, Phil said:

If they can’t afford the mortgage, how will they afford the rent to the bank. Are you suggesting the bank will accept the going rate from the gov for the area?

I don't know.

It's a mess, isn't it?

[Phil]

Just now, Wight Flight said:

I don't know.

It's a mess, isn't it?

 

1 minute ago, Wight Flight said:

I don't know.

It's a mess, isn't it?

I’m guessing this and following gov are that bad they wouldn’t have a clue

( proven imo) and when the brown stuff  does hit, so do they . Not long now imo. 

[Rare Bear]

On 03/01/2023 at 22:23, Wight Flight said:

You are suggesting they will run a price protection racket?

Wouldn't be ethical would it?