Sub Prime Mortgages & Repossessions - How it Really Works

[TaffR]

I just dont know how to start a topic or whatever it is called....I honestly want to bring some education and through this help to others...cherry pick what is suitable...please believe I am not a crusader or anything different to anyone else but there is a lot of jigsaws to be pieced together to see the bigger picture and I know and have already demonstrated there are ways to stop this nonesense and put people back on track to succeed or fail on their own merits and not others.

I will stop posting if prefferred as I am not here to upset anyone.

[TaffR]

Earlier on we noted how a disproportionate number of the loans in arrears in the
CAB client survey were from what could be broadly described as sub-prime
lenders. This is perhaps not surprising as people with impaired credit records
and people on low incomes are likely to be more vulnerable to arrears
problems. However the evidence presented above suggests that this finding
might not be solely the result of the borrower’s risk, but also because the
practices of the lender seem to play an important part in the outcome of
mortgage and secure loan arrears problems. It is CAB experience that subprime
lenders are, on the whole less likely to help borrowers and more likely to

take more aggressive recovery action.


OR UNABLE AND CANNOT HELP BORROWERS....CAB ARE STILL NOT THERE AND IT IS MAY 2008

[TaffR]

here are 2 main reasons why subprime will stop litigation.....reputation maybe?

A CAB in south London reported that a man who had given up work in
order to care for his terminally ill wife and seriously ill son sought advice
about mortgage arrears with a sub-prime lender. The family were totally
dependent upon benefit and could not afford the full mortgage payments.
The mortgage lender issued possession proceedings but withdrew when
provided with medical evidence and agreed to suspend litigation
indefinitely. The action of the mortgage lender made it possible for the
client to remain in the family home and care for his wife and son without
the added pressure of court action for possession and ultimately eviction.
3.36 Indeed one of the CAB clients we interviewed for this report who had problems
with multiple debts including a mortgage, a secured loan and unsecured credit
told us that it was the second change secured lender that was:
“Probably the best ones out of the lot because they said, ‘Can you send
us proof that you’ve got cancer?’ So I sent them proof and they said,
‘We’ll give you a couple of months’, so they didn’t hassle me as much as

the rest did.”

DISGRACEFUL!! THAT CAB HAS YET TO PICK UP ON THE FUNDEMENTAL REASON OF WHY SUBPRIME CANNOT HELP OR MANAGE ARREARS.

[TaffR]

“One of the big problems we have is that the agents have no discretion.
Even when they phone the lender with the offer we have worked out,
the lender won’t accept it. The judges hate that.”

A Nottinghamshire CAB

[TaffR]

BBC NEWS | Business | Broker closed for sub-prime loans

.....All three firms are now going back though their books to see if any customers have actually suffered any financial loss.

[TaffR]

The brokers are NOT the bad guys but do play a part as do the borrowers. Brokers/mortgage Advisers play an integral and essential part in the purchasing of a home.

It is neither [either] the fact that borrowers taking out a mortgage 'expect' to miss payments in the future. Throughout the last 4 years I have seldom come across anyone who were planning to deliberatly to miss payments. The same in the prime market.

There are now new products on the market (just like in any industy) which did not exist before and businesses have to choose whether to resell these products or not and in most, if the new product fits in with their product profile, improve business opportunities, could improve their reputation, increase/expand their product offerings etc etc then this is how the world goes around.

When choosing the next product they must make a decision whether they should/should not offer as part of their product profile and sometimes by NOT taking on these products and providing the choice to the consumer could actually harm the business and of course due diligence should be caried on the suppliers and the supply chain as a whole, again, just like in any business.

Here is where it goes wrong (for me anyway).

Broker to consumer - yes I can get a sub prime loan for you (not that the phrase is well known or used by the public). You have been accepted by e.g. Victoria Mortgages, Kensignton Mortgage etc. Great names that sound prestigous and respectful.

Delighted the borrower accepts and stops shopping around.

What the broker does not tell them....

They like you as you have loads of spare dosh in your property.

Victoria Mortgages are just a 'packager' or 'originator' and not a mortgage company as you perceive and think it is

They borrow money to support the loan and repay it on the quick sale with profit

Your mortgage loan will form part of and be 'bundled' together with others in a portfolio

Your mortgage is being 'securitised'

Within a few weeks or so they will then sell your mortgage to an investor who at this time I cannot tell you who it is (although it most instances it is known)

In the contract there is a little known clause that allows them to sell or transfer your mortgage at anytime to anyone etc and if you question this before signing then the offer will (may) be withdrawn and your at the stage now where you are desperate to get the loan so don't question this.

The investor will create a Special Purpose Vehicle (SPV) which will resemble 'another' mortgage company but in fact it is only a financial instrument to manage the income from your mortgage and pass to the investor.

The SPV (by law) cannot employ people.

The SPV, pretending to be mortgage 'lender' outsource the 'servicing' or 'administration' of your mortgage account to a 'servicer' who by the way has been involved since your mortgage application started and part of the underwriting team (automated underwriting).

Your mortgage will be an admistration only type loan.

This means it is 'just' a debt

Now you will only find this out if you fall ill, become unemployed or any other change in circumstances where you 'may' experience a problem in repaying your mortgage at anytime during the 25 year term that this SPV will not be able to help you in anyway.

They do not employ mortgage advisors as this would be a waste of moeny as your mortgage has now been securitised and locked for any further or future modification.

Unlike traditional lenders there is no one there to listen to you or are really concerned in your problems

You will be advised by CML/FSA etc to inform your lender of any problems as qucikly as possible but this is only to alert and prepare them of possible litigation which they will start from Day1 of the missed payment.

Missed payments are bad as this devalues the portfolio so please do call them.

They are unable and cannot assist in anway but will frustrate the hell out of you at the worst possible time in your life by not listening but you now know why so dont be too surprised

Unlike others in society you are not able to have a problem in your life now or you will lose your home, even after many years of excellent payments being made if you do not repay the total every month and the total of the arrears immediatly

The SPV do not have the accounting systems in place to manage arrears

Your equity (the dosh) is what they are really after which will more than pay for the legal costs in repsosessing your home

There is very litle defence in court and judges normally rubber stamp these things anyway

The SPV earns its profits through the high interest rates, early ressetlement fees as well as on the sale of your mortgage

As a broker I get paid very early in this process so I am alright and the packager (who we inferred was a mortgage company) earns thier profit a few weeks later on the sale of your mortgage.

We now relinquish all responsibility for you at this stage

I could really go on...

Now....when assessing your options and the risks involved... would you prefer to take this mortgage or for example stay in rental or live with your family a little longer while you fix your credit and then get a better deal where you will be assured of being looked after, in a more acceptable way in line with FSA/CML guidance rules?

Now, if anyone tells me that brokers do not know this then I will eat Wales acre by acre!!

This is only successful by being based on what to tell borrowers and what not too. What borrowers are led to believe and works on their natutral perceptions of the mortgage market. I for one would have run a million miles away from this has I been told the whole truth.

There are many to blame but it starts with the Government, FSA and then throughout the whole process and placing these products on the market in the manner in which they have.

These products are not fit for purpose in any market. Securitisation as a financial instrument for credit cards on car loans do not have the same effects on the borrower as it does in the MBS market.

Many brokers decided not to touch these products many did and 'mostly' due to the high commissions rates involved.

I firmly believe that if they sell to the adverse then they need more levels of protection and not less. Social responsibility.

The relationship is totally balanced in favour of the lender from cradle to grave.

There is no evidence that this market has achieved its original aims of assisting those with poor credit back into the mainstream markets but quite the contrary.

Someone 'forgot' to tell the consumer about the realities of the 'new' mortgage tiers and denied them real choice and risk assessment that has resulted in taking away any future personal control of their own financial affairs. These morgages place a stranglehold on borowers for a very long time by the way they have structured.

TOO MANY SUPRISES THAT YOU DO NOT GET IN THE PRIME MARKETS

P.S. In the document I uploaded they admit that arrear levels in the sub prime have remained steady so the adverse are not to blame but, even in the prime market people will have unexpected circumstances in their life and during the term of the mortgage so why do the subprime borrowers have less protection than they and only lip service paid to FSA/CML rules to get away with it?

Look at this document and pay specific attention to the timeframes involevd in making calls and sending letters to borrowers. No where here is there is any mention of 'attmepts to make arrangements, lack of any return calls from the borrower etc etc... It admits that only now are they talking about the ability of modifying these contracts but at the same time you will observe their suggestions are again paying a lip service and designed to protect them and has no real benefits to the borrower.

The mortgage contract is 'locked' so why has the CAB or Shelter or media not picked up on this?

Taff R





Demand and supply is of course high in this market

[TaffR]

Everything you want to know about the subprime mortage market, it's lenders and how in reality it is different to the traditional mortgage market.

What they do not want you to know...

Join the debate

[TaffR]

Originally Posted by TaffR

"Talk to lenders and keep records, do not offer more than you can afford"

Now there is my point.....

why do you think borrowers should talk to their lender when they have a change of circumstances and a possible problem?

I notice that no one is responding to this question and would welcome anyone in the industry to discuss...

In the subprime market what are the benefits in informing your 'lender' Grrr! as early as possible of (1) that there 'may' be a payment problem (2) that I have a change a circumstances which may effect my repayments (3) I know I missed my last/first payment and need to talk to you about this?

Therefore, the borrower, by following CML/FSA general mortgage and debt advice will expect what type of reaction?

What do the subprime 'lenders' Grrr! think of this advice to borrowers?

How do these type of 'lenders' Grrr! regard the norgen case?

[TaffR]

Why does the FSA authorise SPV's as 'lenders' and what do they think the consumer will understand by this when these SPV's advertise this on their company communications?

[TaffR]

If borrowers were made aware very early on at the time of signing the contract that their mortage was (in the industry only terminology) an 'administration' only type mortgage then why would they be surprised of the reaction they get when they call their 'lender' Grrr! to inform them of a problem?

Perceptions and Expectations? The real cause of all disputes, arguments and even wars!!!!

[TaffR]

Why are subprime borrowers provided with less facilities and continued and ongoing mortgage advice after completion?

Why has the FSA and CML not ensured that the practices and faciltities in the prime market have not been transferred to the new subprime market?

By setting up SPV's they are aware that this provides financial and commercial protection to investors but they are also aware that SPV's are not permitted to employ directly, why therefore do they think this is acceptable to borrowers in this market but not acceptable in the prime market?

[TaffR]

'lenders' Grrr! = Me saying that I am totally unhappy of speaking about any of these as lenders!! The FSA need to justfiy why they have obscured this definantion.

[TaffR]

From:TAFFR (changed)
Sent:16 May 2008 13:44
To: ITN (name held back)
Cc: xxxxx
[Subject:RE: Expert witness

Hi XXXX (changed)

I hope you are well?

Yes, it is actually dynamite really when considering that this type of information has not been made openly available until now.

Honestly, it is only when you look at the whole picture from a commercial perspective, including systems, processes, rules, regulations employed and the timeframes of who and when different entities are involved throughout the process and the CML/FSA transparent and obvious negligence to allow commercial advantage to be taken in this market.

CAB – ‘Set up to fail’ documents have still not yet caught on to the remarkable differences and the level of discrimination being employed in this market as compared to the traditional prime mortgage, in which they utilised to attract these borrowers in the first place.

CAB/Shelter are being weak too but I mean that in a very understandable and appreciative way. They are not yet taking on board the reality of the immense change in the mortgage market and the deceit it has to employ and depend upon to succeed but also sanctioned by the FSA and others who should know better.

People need the real facts and the FSA rules (heavily influenced by these sharks from the 1980’s) do not touch how far they should go to protect the average consumer/borrower.

What a bloody mess and [I am being non-political] but doesn’t this match and fit in well with today’s Government and other short term economic strategies?

Courts are not obliged to ensure that ‘lenders have abided in any way with CML/FSA rules and guidelines (WEAK)
Mortgage companies set up and created to protect ‘off-balance sheet’ accounting investors and able to act as ‘lenders’ totally distorting the real and understood definition of lender?

Please send any economist of stature to me and interrogate me and I confirm that ‘egg on their faces’ will not even cover their embarrassment.

When was it acceptable to treat the UK public in this way?

Please forget about these statements that it is the adverse (the low life) that is the cause of today’s misery. Most of them are law abiding, decent, family people who have been duped into a market that has gone out of control and being used a commodity.

Regards,

TaffR (changed)

From: ITN (changed)
Sent:16 May 2008 13:19
To: TAFFR
Subject: RE: Expert witness

TAFFR (changed)
The Barclays capital research is very interesting

XXXXX

XXXXX (changed)
SPECIALIST EDITOR, ITV NEWS
200 GRAY'S INN ROAD
LONDON
WC1X 8XZ
UNITED KINGDOM
T +44 (0)20 7430 4347
Fax

[TaffR]

From: TaffR (changed)
Sent:16 May 2008 14:22
To: ITN (changed)
Cc: 'XXXXX
Subject: RE: Expert witness

Hi XXXX (changed)

Don’t worry…you have not woken the gorgon!!

The minimum I would like to see, considering all the fact and evidence before us is:

1. The Government to take on real responsibility and accountability for this mess
2. That their ‘spin’ of helping borrowers in difficulty and facing repossession become a reality
3. That intervention NOW in the court processes today in regard to subprime (or any) be made and independent advise and scrutiny be applied (paid for by the Government) to each and every case
4. That the courts be provided with emergency powers and new guidance and rules in processing these dubious and scandalous claims (case by case)
5. If it is found (and it will be) that these mortgage ‘lenders’ (SPV’s etc) do not have the facilities, ability, willingness to assist these borrowers then overpowering (emergency law) should be approved to release these people out of the strangleholds they are in today due to this set up.
6. Allow these people control back on their lives as they have none so far
7. Their mortgages have already doubled in the last few months ( it is now a vicious circle)
8. Release them from these early resettlement fees that place an overriding amount of hold on these borrowers above and beyond the profits already made.
9. Get rid of these International/European SPV’s (pretending to be mortgage companies and deceiving each and every borrower who are now being totally bullied with very aggressive debt collection tactics and extortionate additional charges are being incurred) where the money earned through the income of these mortgages is being siphoned off to the Cayman Island and other Offshore accounts

If the Government really do wish to help….then let’s see the action where it counts before any more families continue to be destroyed through a bad decision in entering (lured in the greater amount) into this ill thought out and selfishly created market.

I’ll go back to sleep now.

TaffR (changed)

[TaffR]

Originally Posted by JonCris

Thanks Taff

You are very welcome.

For the record...no one here are minions or any less better than anyone else regrdless of what market we are in. It is the system that is wrong.

It will take time to catch up and understand....sheesh....4 years to explore this and my head still hurts but the jigsaws do fall into place.

I am very confident of what I am saying because of the last 4 years and I have debated and argued all of this from the H M Treasury to brokers and other likewise borrowers and most people from all walks of life.

There is yet more to learn and I am very open to be wrong at anytime but as you can see, I will take this further to anyone that will listen and we must fight the right fight and stop this nonesense now.

I hope this information is helpful that is all. It is never intended to eb anything else.

My thoughts anyway

[TaffR]

the subprime 'parrot' has expired....and for good reason!