Sub Prime Mortgages & Repossessions - How it Really Works

[Guest TaffR]

Ok thanks

 

so when the portfolio value starts dropping and investor is losing what happens then?

Do they try and sell on again?

 

Well...your contract states quite clearly that they can sell/transfer etc at anytime to anyone....so yes.

 

The portfolios have already started to go down by the severe increase in interest rates (from fixed teaser to normal) and anything else they can do and get away with as these are desperate times and they have already shown that they can make indiscriminate increases or just take a little more each month and manage any complaints by exception....who is going to protest and where? They know we dont collectivly get together as they lent on equity all over the UK. This is why forums such as these is sometimes our only voice....but there is more we can do as you see.

 

They have the ability to 'push' people out of their homes (not scare tactics - honestly) if their bottom line continues to show a loss or possible loss....

 

It is interesting times as this is the very first test that they are going through since this market took off and one that I have always said will be coming (sadly)...it did not take a rocket scientist to see that if the economy goes bad and property prices decrease (for reasons other than the adverse not paying their bills such as today) then the subprime market will fail considering the whole strategies and processes adopted.

 

keep smiling though.

 

Go back to your 'lender' and ask them to provide the assurances you need and make them tell you what their current financial status is....get it in writing and if they tell you nothing to worry about and avoid the question and then something happens to them....you have got them!!

 

They already know what the next 6 months is if not more is. They have 12 months financial projections just like any business. If the portfolios have dried up...then what is the future for them?

Edited May 17, 2008 by TaffR

[Guest TaffR]

In November of last year Southern Pacific Mortgages which is owned by Lehman Brothers investment bank was forced to buy back £13m of mortgages it had sold on after discovering they had all been sold fraudulently.

 

Lehman Brothers = CAPSTONE MORTGAGES....SERVICER TOO!!![/font]

 

These are the people illegally searching your credit file through Experian...waiting for an explanation from both

 

If your mortgage is with Capstone.....ask them....now you have seen it yourself in the Barclays Research Report.

 

Write to:

 

customerservices@capstonemortgageservices.co.uk

Edited May 17, 2008 by TaffR

[Guest TaffR]

NEWS

 

Repossessions on course to be highest since 1991 - Cable

9 May 2008

 

cablev@parliament.uk

 

 

Commenting on the 17% rise in repossession orders in the past year in England and Wales, announced today by the Government, Liberal Democrat Shadow Chancellor, Vince Cable said: "The number of families threatened with repossessions is on course to be the highest since 1991, at the height of the Tory recession.

"Repossession claims have skyrocketed since last year. Many families could well end up losing their homes in the months ahead.

"The Prime Minister's pride and stubbornness has made him completely unwilling to recognise the dangers in the housing market. It is overstretched households that will pay the price.

"This Government must stop having vague discussions with mortgage lenders and instead clearly lay out the procedures which must be followed before a property can be repossessed.

"Repossession must only ever be a last resort. Lenders must seek all possible alternatives before taking such action."

 

 

Applicability: this item refers to England and Wales. Due to devolution, detailed policy may be different in other areas of the UK.

 

Related link(s):

About Mr Vincent Cable

[Guest TaffR]

From:TAFFR

Sent: 15 May 2008 18:36

To: Catherine_Grannum@shelter .org.uk

Cc:

Subject: Subprime - The Credit Crunch and The real story

 

Dear Catherine,

 

I hope you are well. It has been some time since we last talked and of course I do not expect you to remember. It was in 2005 and 2006. I have made some recommendations below in consideration of today’s economic crisis. I make no apologies for the length of this email and ask for your indulgence and patients in the knowledge of my continued and serious attempts to improve others lives and evolve this forward to a more balanced, open and visible subprime sector that can be respected but more importantly and essential to stop these absurd, wholly unnecessary, destructive & escalating repossessions.

 

When we first talked I was at the start of a long road looking into this spurred on only by the new incredible findings each day and since this time and as previously discussed with you, I had grave concerns in regard to the set up of the subprime market and how these deceitful practices have been to their own ruin to some extent. We further discussed the high rise and escalation of repossessions through these periods and how the FSA allowed these structures to operate.

 

Very few people listened then but now everyone is standing back and blaming each other, from Gordon Brown, the FSA, CML and worst of all the subprime lenders themselves blaming their own customer base (the adverse) for the economic crisis we are witnessing today and the worst is yet to come.

 

Shelter, like other charities are being inundated today and I am sure you are busier than ever before. CAB too, with the CEO recently remarking on this topic only to be accused of scaremongering and sensationalising the situation by the Chief Executive of the CML and others.

 

I warned back then this was a short lived economic strategy by the Government and after investigating the sector, I found (via the Freedom of Information Act Act) what the FSA agreed to allow potential borrowers to know and what they should not tell them and as a direct result of this the new market thrived, commercial opportunism grew and vast profits made on the backs of the vulnerable and those they professed to be in business to help improve/repair their credit and move forward into home ownership.

 

Nothing about this sector has shown it accomplishes any of this but to the contrary, totally balances, at every single stage in favour of the ‘lender’ resulting in discriminatory practices that are shrouded in deceit, adopting stealth practices to lure, attract, profit upon and dump at the first sign of any problem and indeed, they have practices implemented that entice borrowers to advise of problems so that they can act swiftly in protection of the portfolio value.

 

The devil is always in the detail and once the jigsaw is pieced together and understood from a commercial viewpoint from the ‘cradle to grave’ the real gravity and extent of the long term damage it incurs can be observed.

 

Repossessions were escalating in this relatively new market since early 2000. Shelter, CAB and others, in my mind have been extraordinary lazy in their pursuance of attaining an appreciation and understanding of this growing market with new entrants increasing by the day, to get on this cash cow bandwagon. Many, if not most in the legal profession and those outside the financial industry do not understand the diverse nature of this new secondary market thrust upon the UK public, as being on par with traditional mortgage lending, but could not be more different in so many ways.

 

When did it become acceptable to portray to potential borrowers of being a traditional mortgage company only to find that they were ‘originators’ or packagers’ (terminology not heard outside the industry)?

 

When did it become acceptable that obscure clauses could be used without definition or reason for the above to sell or transfer your mortgage?

 

When was ok to create Special Purpose Vehicles (SPV’s) and authorise these as ‘lenders’ as if to provide confidence to the general public and potential borrowers of the same status of high street banks and building societies?

 

When was it ok to authorise the originators, packagers and SPV’s as ‘lenders’ when in actual fact they do not ‘lend’ other than too each other?

 

When was it ok for these SPV operations to pretend to be mortgage companies when indeed they are financial instruments and transactional entities only?

 

When was it okay to allow these to set up and ‘administrate’ only these now securitised mortgages without employing the basic requirement of an FSA Authorised Mortgage Advisor to cater at the minimum for those who just may have very short term issues?

 

When was it approved by the FSA and CML that these entities do not have to follow the guidance rules of treating their borrowers with fairness and sympathy during critical times in their mortgage life?

 

At what point in following the CML advice that borrowers should inform their lenders as quickly as possible of any changes in circumstances does this benefit the borrower in any way?

 

There is so many more questions to be asked and after 4 years of research into this market I am now able to see every single element that is designed only for the profit and greed.

 

Did someone forget to tell to the public of this newly created 2nd, 3rd and 4th tier mortgage market that with sometimes gullibility borrowers entered into and deprived of real choice and options by the sheer lack of being denied essential information and denied them the options that would make a real difference in their lives. H M Treasury advised me that securitisation is not the problem and that the MBS market helps the economy, well we can now see that is very true today but however, it is the incredible deceitful practices in which this market has to operate to succeed that is to blame. Without any inference of being rude, they have treated the general public like pawns in their profitable games and at worst, mugged them into a false sense of security towards their dream of home ownership.

 

Shelter will now see the true cost of this while the fat cats run back to Cayman other Off shore Islands with the bonuses they have really earned. IT has been very difficult few years for them hiding behind closed doors, deceiving borrowers and taking their homes and destroying lives and relationships. I make no exaggeration or apologies for really reemphasising again the true cost of this market has had on the UK and society as a whole.

 

The H M Treasury, Gordon Brown and The Labour Government are the author of this mess and not the adverse borrowers, as by the way, I now have admissions direct from this sector of this.

 

The Prime Minister spins that he is doing everything he is can to help those people stave off repossessions. He further ‘spins’ that he has had meetings with the major banks with subsequent conclusions that they will not pass down the interest rate cuts despite the injection of £500b or so into the system. What they do not tell the public it is the LIBOR rates that the subprime borrow against and as the banks are making great losses and write downs today they are not in a position to commence interbank lending anyway and as such the ‘parrot is dead’… for now.

 

One sided and stuck in a stranglehold mortgage with high increases in outlay!

 

The Government today can help. They must pass immediate legislation to allow these people, mostly duped into this market with higher expectations of being treated like normal mortgage holders in traditional style markets to get out of their stranglehold mortgages by omitting now the early redemption fees.

 

The courts must now be told immediately that the subprime lenders do not have the ability or the facilities (or willingness) due to the nature and uniqueness of their mortgage, in that it is now locked following securitisation in a larger portfolio, without hope of reversing, to provide any assistance and as such this becomes discriminatory in reality and unfair wholly. It makes a mockery of informing your lender of possible issues where they can only provide a lip service to these guiding rules whilst simultaneously starting immediate litigation action from just one month’s missed payment without the decency to be set up to listen to the borrower. The whole process is set up to duped.

 

These mortgages must now be unlocked and independent mortgage advise and help should be provided to these borrowers before any rubber stamping of repossessions ensue. Today.

 

Had they been told or had they been informed of the real and true scenario of their mortgage being locked and will be with an outsourced debt collection agency only for the next 6+ years and that their equity will also be locked then I am convinced that this market would not and could not thrive. As did the consultation group comprising of these subprime entities, in the formation of the FSA fully knew and demanded that information be withheld from the general public.

 

My evidence is complete in regard to this market and I have attached a report that the general public should not see.

 

When did become acceptable to treat people only as a commodity with systems and practices set up that only ‘psychologist studying human behaviour could conjure up?

 

In this report you will see for the first time many admissions of how this market thinks, how it operates and its aggressive and very proactive repossession actions and their true aims of course, that only now due to the media coverage they will start to think of ways that these mortgage contracts can be modified in the future but again, when reading this correctly actually plays more lip services to the rules and will not benefit the borrower what the last moment has found him/herself with these debt collector only type operations with high expectations of being treated with dignity and respect.

 

Not all borrowers in this market are the lowest of the low. Most are decent people who have slipped up and not unlike those in the prime market. The subprime lenders extended their remits to the self employed and other with teaser rates and the prime market tightened up their underwriting to push more people into this market so that they could be purchased by the back door attaining a better return and higher margins that they would achieve in the sales of their own very competitive products deriving lower margins.

 

1. Considering the reality and the facts of this market from cradle to grave, I firmly believe now that all borrowers going through repossessions today from within this market should be and deserved to be provided with independent advice on their mortgage and an opportunity to leave mortgage without further damage or penalty and allow people choice and option again on their lives.

 

2. As a second step this should be extended to all these in this market and release them from the stronghold they have really been and proved to have duped into.

 

3. If this means that the Government or other investment/insurance entity cover the losses then this is far better than dumping these people on the street with no hope of recovering.

 

4. The third step today is to set up a new consultation group of experts to further determine how the subprime could succeed but this time ensuring that there is a real voice on behalf of the borrower. For certain it cannot go back to the status quo.

 

Thank you for your time and please do contact me again if you feel I can be of any future assistance.

 

For your information I am copying this email to the BBC and ITN and other groups that I presently in consultation with.

 

I live and work in London mainly with a home in XXXX and I would welcome a meeting to discuss further ways this situation today can be helped and if only one aspect I say makes a real difference then it will be worth the chat.

 

With kind regards,

Edited May 18, 2008 by TaffR

[midge61]

Hi Taffr

 

Have you had any response to your e-mails yet?

Edited May 20, 2008 by midge61

[JonCris]

Bump

[midge61]

Hi

Well I have today sent off a sar to my mortgage broker which should be interesting.

 

I have not had a reply from Capstone as yet but I am due to make a mortgage payment next week so they better let me know how much to pay!

[midge61]

This is from todays guardian. They make sound so good but fail to tell you effect on the poor people whos mortgages have been sold on.

 

Halifax, the country's biggest mortgage lender, today launched the first issue of bonds backed by mortgages in the UK since the credit crunch put the brakes on the once-burgeoning form of financing used to fund home loans.

Owned by HBOS, Halifax has bundled up £500m of its existing mortgages and sold them on to investors through what is known as a securitisation. As a result it has £500m of extra funding which can be used to give loans to customers.

Securitisation was a crucial form of financing for banks and mortgage lenders until the market mayhem that led to the collapse of Northern Rock last September.

The £500m issue is small in comparison with the £3bn or so a bank the size of HBOS might have expected to raise before the credit crunch. It is also paying a higher price for the funding.

The market appears to have stomached the issue earlier than HBOS had expected. In April HBOS chief executive Andy Hornby said the securitisation market would not reopen until 2009.

The £500m is used for financing its business rather than contributing to its regulatory capital which it is trying to boost by a £4bn rights issue.

HBOS used to raise around 5% of its financing through securitisation. A spokesman said: "Our objective was to test the market, to see what appetite there was securitisation. We've been very pleased with the outcome".

The bank conducted the securisation through its financing vehicle Permanent Master Trust, which has previously been used for 12 such deals. Prior to the crunch it would have paid just 10 basis points more than the prevailing London inter bank offered rate (Libor) - the price banks charge each other to borrow money - for the funding while today's issue was priced at 85 basis points over Libor.

The bank's shares, which plunged almost 20% on a single trading day in March on concern about its financing, were up 2.7p at 465.25p - one of three shares in the FTSE 100 to end the day higher. The Financial Services Authority is still investigating the cause of the rumours that caused the share rout.

[JonCris]

To anyone who understands what Halifax are doing I suggest that this is a disaster for those borrowers who's mortgages have been bundled into the SPV's.

 

I strongly suspect Halifax have securitized (sold) these loans because they want to put as much distance as possible between themselves & the inevitable defaults & the resulting large number of evictions that will occur

[midge61]

Good morning JonCris

 

I see I am not the only one awake at this silly time. I'm working whats your excuse?

[JonCris]

None:D

[midge61]

Oh dear oh dearie me

 

UBS sells loans at 32% discount

 

 

 

 

 

 

Swiss bank UBS has sold a bundle of debts - with a nominal value of about $22bn - to fund management group Black Rock for $15bn.

UBS said that the move was "risk reduction" which was "a critical part" of its ongoing financial restructuring after its exposure to sub-prime loans.

The deal represents a $7bn loss for UBS on the assets it had accumulated.

BBC business editor Robert Peston said he was "almost speechless with shock" at the size of the discount.

UBS is also lending Black Rock $11.25bn to help it finance the deal.

 

My brain can't quite come to terms with the extraordinary financial implications of all this

 

 

Robert Peston

BBC Business Editor

 

 

Read Robert's blog

 

The assets being sold include sub-prime, prime mortgage-backed securities and Alt-A (a grade of US mortgage debt that is just a bit better than sub-prime).

Job cuts

"UBS has suffered a genuine, eye-wateringly large loss on the sale of assets it should never have accumulated, but is remaining exposed to those assets to the tune of $11.25bn," our business editor said.

The cut-price sale of the assets were "not a notional accounting loss, but a real loss of hard cash", he added.

UBS chief executive Marcel Rohner said the sale was "a big step towards further reducing our positions in this asset class".

The Swiss bank, which has suffered huge losses as a result of the US sub-prime mortgage crisis and credit turmoil, said earlier this month that it was cutting up to 5,500 jobs.

The job losses - 7% of the workforce - will go by mid-2009 through redundancy, redeployment or natural wastage.

The bank made losses for the first quarter of 2008 of 11.5bn Swiss francs ($11bn; £5.5bn).

 

The blog is quite interesting too.

[JonCris]

Its' going to get a lot worse.

 

It's also clear the media can't get their heads around what's really going on.

 

Have tried myself to explain the machinations of the banking world such as router accounts, contractual interest, PJI etc, to reporters only to find their eyes glaze over after about 30 seconds.

 

Now someone has to explain securitization & it's very real adverse ramifications for the consumers to them. I don't envy whoever is tasked to do it.

 

One good bit of news I received last night is that a very prominent Parliamentarian who does understand the concept is to have a meeting with an expert to discuss these very issues and their impact on ordinary consumers

[JonCris]

Bona Your in box is full!

[RFC1872]

This is one superb and informative post. With the understanding this post brings gives the wee guys like myself some opportunity in begining the fight back. Sadly I am being managed by Crapstone Mortgages. I fell into some arrears. I agreed repayment plan to allow my regular monthly payments to be maintained whilst contributing to the clearance of my arrears. 4-5 days later gets written confirmation of the agreed repayment plan. Week later receives a default notice and a letter from their solicitors statong that it s their intention to press ahead wth obtaining a repossesion order on my property. Now realised that just want to get their hands on the equity tied up in my property.

[JonCris]

Has Taffr left the building????

[andrew1]

This is an amazing thread. Well done.

 

Question. If a high St Lender provides a mortgage and ten years later you change the 'product' ie: to a % discounted mortgage for 2 yrs, does this actually change the original mortgage as to its legal status? ie: is it a continuous financial relationship? Reason I ask: come the time of repossession proceedings the mortgage company rely upon the Terms & Conditions, Deeds and content of the original mortgage when filing for repossession. So are all the other transactions, further advances and changes in package just 'Variations' to the original mortgage ( I took mine out in 1989)?

 

This important, because I challenged a further Advance taken back in 2003, had a change of package twice since then and I need to find even the tiniest legal link between the original mortgage the Further advance and the changed product, anyone any ideas?

 

 

Sarah

[JonCris]

without seeing your paper work I can only remark that the mortgage you committed to, if it's been securitized, no longer exists

 

nor does a securitized agreement offer the same protections that the original did. In other words the management company do not have the authority to amend the terms of the contract to assist the mortgagee in meeting any arrears

 

This may mean that the agreement does not comply with the UCCT

[andrew1]

When you say :

a) "that the mortgage you committed to, - which mortgage are you referring to - the very first one or the one? I never changed my provider, just the package in lower interest rates - you might call that a new 'product'

 

if it's been securitized - I take it you mean sold on - I've always been with this provider who are one of the big 4 Hight Street Banks -, no longer exists

 

In other words the management company - which Management company - it's still with the same bank...?"

 

Is there an assumption here JC that when I got a new product the bank changed? I have never been informed that my debt/mortgage has been mover or sold on if that's what you mean...

[JonCris]

When you say :

a) "that the mortgage you committed to, - which mortgage are you referring to - the very first one or the one? I never changed my provider, just the package in lower interest rates - you might call that a new 'product' I know, you merely extended your exsiting mortgage

 

if it's been securitized - I take it you mean sold on - I've always been with this provider who are one of the big 4 Hight Street Banks -, no longer exists Your mortgage, if securitized/sold will now be part of an SPV (Special Purpose Vehicle which the banks trade to raise capital) & although you think your dealing with the same entity your not

 

In other words the management company - which Management company - it's still with the same bank...?" See above & check with your bank

 

Is there an assumption here JC that when I got a new product the bank changed? I have never been informed that my debt/mortgage has been mover or sold on if that's what you mean...

See above

[Notty]

Hi JonCris

 

I have a mortgage (self-cert) with Northern Rock. My fixed rate came to an end in September last year and since then I have been paying the SVR. I have been offered another mortgage with HBOS but not sure if I should take it. It is a tracker for 2 years. To get rid of the NR mortgage and pay HBOS their fees it will cost another £5000 but I am very nervous of staying with NR and wonder if HBOS could turn out to be the same? Any help would be much appreciated.