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Am I the only one thinking like this? Do I have something here?

I'm not challenging the numbers that the Council of Mortgage Lenders (CML) and Ministry of Justice (MoJ) put out; my argument is that many people believe the situation is getting under control when in my view it isn’t. These press releases are not giving a true reflection of current market conditions, my reasons are as follows;

  • the number of homes being sold by families to private landlords, under 'sale and rent back’ schemes, is not taken into account.
  • It takes between 6 and 12 months to have a home repossessed, and the figures released are based upon house holders who experienced difficulty up to almost a year ago.
  • The CML is only collecting the number of first charge holders. There is no record of how many second charge holders, usually secured loans, that are repossessing homes.
  • The introduction of the Mortgage Pre-action Protocol last year could be delaying what will be eventual repossession for some home owners.

Sale and rent back schemes are conducted to prevent the home being repossessed and the seller then usually remains in the property, albeit owned by someone else, paying rent and effectively becoming a tenant.

The Financial Services Authority (FSA) estimates that some 50,000 of these homes have been sold under this scheme over the past few years and it is thought that up to half of these have been sold in 2008 alone. No one knows what the figure will be for this year.

I believe that because 'sale and rent back' was not an option back in 1991 when 76,000 homes were repossessed , the true figure for this year, without 'sale and rent back', would be 80,000 - 85,000 homes, making it higher than those figures back in 1991.

Read more: House repossession figures, all smoke and mirrors?

 

Spare a thought for the unemployed

Although the rise in unemployment is slowing down it is still a worrying trend for many families on how they will cope, previously we all thought it would not happen to us which meant we never put funds aside, there was no safety net.

Another concern is how these individuals will motivate themselves into getting back to work having had rejection time and again when applying for jobs, some firms don't even acknowledge the applicants letter.

From experience many will not address their debt issues for well over a year from when they first arose and will often ignore the fact that they have a serious debt problem growing everyday. Some will unfortunately drop into depression or turn to alcohol, gambling or even crime in an attempt to solve their debt problems.

Many will eventually find new jobs but some will not match or improve on their previous salaries and as a result thousands will free-fall into debt. From this a segment will end up proposing either an Individual Voluntary Arrangement, (IVA) or go bankrupt.

There will also be others who will not be able to pay their mortgages and who will eventually lose their home. The high unemployment figures will have an impact on both the insolvency and house repossession figures.

Creditors also need to be more understanding and sympathetic towards borrowers who find themselves suddenly out of work and should take note when someone is a ‘can't payer’ instead of a ‘won’t payer’.

Debt can consume your life. These people need support from their families, friends and creditors both emotionally and financially. They also need to have clear goals on how they can manage their debts. The best way to start is to draw up a budget wizard, prioritise which creditors need to be paid first such as mortgage and rent, followed by utilities.

It is a clear fact that once you get control of your debts you regain control of your life.

Why the consumer watchdog needs to weed out dodgy debt firms.

Read more: Spare a thought for the unemployed & Why the consumer watchdog needs to weed out dodgy debt firms.

 

RBS Nationalised?

Just been hearing that RBS have posted a loss of 2.2 billion and that they are 84% owned by us, the tax payer. I call this pretty much Nationalisation don't you and confirmation that we are not out of the woods yet with the banks, that old spinning top is coming back again.

Personal insolvencies hit record levels in the UK

Disappointed that the BBC only gave 13 seconds to the news released today from the Insolvency Service on the number of consumers going insolvent.

Let's get it in perspective, for UK personal insolvencies, combined bankruptcies and Individual Voluntary Arrangements (IVAs) these are the highest since records began in 1960, worth more than 13 seconds in my book. They also never covered the number companies going bust either! Got to be a first for the BBC.

Unfortunately someone felt it was important to do a two and a bit minutes on the 40th birthday of Sesame Street. I know what I find more interesting, come don’t tell me you would prefer this?

I'm forecasting for 2010 personal insolvencies to peak at around 200,000, which dwarfs the forecast for the preceding year. At the moment I am still on target for my estimate of 130,000 for this year, we are at 98,568.

I believe these figures would have been even higher had the consumer been made aware that as from April 6th this year the Insolvency Service removed the mandatory requirement to advertise someone’s bankruptcy in the local paper. This massive change in policy which has received little media attention could impact on future insolvency figures as it is common knowledge that many consumers have put off going bankrupt for fear of having their name and address inserted in the local paper.

Read more: RBS Nationalised? & Personal insolvencies hit record levels

 

Shocking debt stats for last month

Been reading the new debt statistics for October 2009 and they look pretty grim what with 2,000 Consumer County Court Judgements (CCJs) being issued every day in the first 3 months of 2009.

Another bad one is that there are 25,250 applications for consumer credit being turned down every day and the good old Citizen Advice Bureaus are dealing with 9,300 new debt problems, again every day in England and Wales.

On the brighter side the average household debt will increase by £0.34 today (it grew by £11.11 a day in January 2008), so there is some good news I suppose. If you want to read more then go to UK debt numbers for October 2009.

Diamonds are definitely not this lady's best friend

Just been into London all afternoon with a major newspaper listening to a very very sad case of fraud and theft, it's got it all, vulnerable well to do single lady, crooked mortgage broker, first rate fraudster, hundreds and hundreds of thousands of pounds and of course diamonds.

Will let you know when this comes up, thus far it is unreported. This lady, who has my up most support, wishes to prevent others from falling fowl to this international fraudster which is why she is revealing all. This could make a book and Hollywood movie. This fraudster is so good he would have had most of us for breakfast.

Read more: Debt stats, Massive unreported fraud case, In a spin over the banks & Date to watch out for.

 

Credit cards to get their comeuppance

This issues raised by the White Paper should have been aired several years ago, with any leglislation not likely until  ‘after’ the next election.

Many would argue that it is the borrower’s own fault for getting into credit card debt, but remember over the past decade this country’s economy has been fuelled by around 1.5 trillion pounds of consumer borrowing.

Morally and socially we have been encouraged to spend and pay later through slick marketing and the easy availability of credit.  From this we have developed a culture of must have now.

We also have triggers in our life, perhaps when a relationship breaks up, with a loss of employment or with an illness and it has been all too easy to fall on the credit card back up.

That said, consumers should not feel as if they have been exploited or disadvantaged and they have a right to clear information to enable them to help them avoid that. However they also have a responsibility to manage their finances properly.

One concern is that the plans could mean that some borrowers will be forced to pay back more of their debt earlier, which they may not be able to afford.

The proposals could go further by capping interest rates on credit cards making them in line with the bank base rate; for example, the card interest rate would always be say 10% above base rate, that way the card provider is protected should interest rates go up and the consumer if they come down, a bit too simple really.

One last point, I can see credit card providers laying off staff in the future as these proposals will seriously reduce their income over the coming years and reverse their current business models! Can't say I’m sorry to see this, they had it coming. Full article here.

Need help with your budgeting? If so then try our free budget wizard.

Thinking of a 0% credit card balance transfer? You may think again after reading our 0% credit card balance transfers - warning

Read more: Credit cards to get their comeuppance, FSA fines GMAC-RFC for mis-treating mortgage customers &...

 

Bohemian Bankruptcy

This is a brilliant piece work by some very talented individuals, we have had numerous comments on the website, here are just a few:

'Superb! Excellent lyrics and production which well illustrates a lot of people's problems at present. Sure it would do well if released.'

'They should go on the x-factor. Christmas No1.'

'Amazing arrangement. Particular reference to..."I sometimes wish I'd never gone buy to let"; "Foreclosure and summons, very very frightening fees" & my personal favourite..."Have to sell the wife on the streets of the city". Just brilliant.'

'Probably the best vodcast of the year!'

Drag Queen sings you through the economic crisis demonstrating that there is no better way then to illustrate this story in song describing the heart-wrenching tale of greed, power and loss with...

No longer available to view.            

Is it time to issue steel toe caps to the FOS?

The British Bankers Association has a voluntary code which says that Banks ‘Will deal quickly and sympathetically with things that go wrong and consider all cases of financial difficulty sympathetically and positively.  Under Financial Services Authority (FSA) rules, banks are supposed to treat hardship claims sympathetically.

But the FOS is still receiving complaints from hard up consumers complaining that the banks are just rejecting their legitimate claims.

It is so frustrating and annoying when I read that banks have been ‘asked’ to ensure that they do what they should be doing as of right.

Clearly the bank’s don’t think it is in their interest to help out on financial hardship cases, even though it is in the BBA voluntary code, (see page 25) and the 'Guidance for Subscribers code' (then see page 46), as the longer they can take to fob people off, the less it will impact on their business, as it COSTS them money!

Read more: Bohemian Bankruptcy and Is it time to issue steel toe caps to the FOS?

 

Halifax is certainly not ‘giving that little bit extra’ instead they plan to take it from its one million customers as it engages in what some see as day light robbery.

Under the new charges those account holders that have an authorised overdraft will have to pay up to £31 per month on overdrafts under £2,500, and a £2 per day charge on authorised overdrafts above £2,500. If the overdraft is unauthorised then the fee will be £5 per day, around £150 per month.

Although those with large authorised overdraft balances may benefit, this will seriously penalise customers with relatively small authorised overdrafts and who stay within their limit.

In some instances this increase on fees for certain customers could be as high as 300% at a time when we are waiting for the outcome of the test case. The test case currenlty in the courts is all about whether the OFT can investigate and assess bank charges. Once we know the outcome, which I understand will be within the next 10 days, then it will be round two if OFT win and virtually the end if the banks win, for the record I back the OFT.

It is difficult to comprehend when all we see on the news and in the papers bankers giving themselves massive six figure bonuses, part funded by bank charges from honest hard working consumers that have felt the need for an overdraft to help ends meet.

Halifax claim that the move is part of its plan to bring overdraft charges on all of its current accounts, except its student account, in line with its Reward Current Account, which was launched in February.

Consumers need to switch and ditch those banks that are devious in their business methods. See our article on this below.

You have until 6th December 2009 to do this so act now and go to a bank that offers a better deal. You have been warned.

Bank accounts to be made clearer and easier to switch

Bank charges latest news

Read more: Halifax grabs that little bit extra! 300% in some cases.

 

The City watchdog, the Financial Services Authority (FSA), has announced proposals to reform the way mortgages are offered to borrowers.

The review’s key features in the proposal are to:

  • Make lenders ultimately responsible for assessing a borrower’s ability to pay and to carry out affordability test for all mortgages;
  • Ban ‘self-cert’ mortgages by requiring verification of the borrower’s income;
  • Ban sale of products which could put borrowers at risk
  • Ban arrears charges when the borrower is already repaying these and ensure firms do not profit from those in arrears;
  • Make all mortgage advisers personally accountable to the FSA.
  • Bring ‘Buy-to-let’ and secured lending under the FSA regulation.

Following the new proposals the courts may take a different view on repossession orders as the lender may be made more accountable for not ensuring that the loan was affordable. This hopefully should be to the borrower’s advantage.

Lenders, consumer groups and the industry have until 30 January 2010 to respond following which the FSA expects to publish its findings in March 2010 with implementation soon after. So none of this is law yet, it is what it is, a proposal and it is up for discussion.

The full proposals can be found under mortgage market review discussion paper.

The measures proposed by the FSA are, in my view, long overdue and although they may be uncomfortable for some they are necessary in order to haul us back to sensible levels of manageable borrowing, otherwise we would just be on countdown for the next property crash. Although this new proposed regulation is welcomed it will come at a price as any higher costs for the lender will be passed on to the borrower.

Read more: Mortgage crackdown by City watchdog to hit thousands

 

Government cannot reclaim on overpaid benefits - new Appeal Court ruling

The Appeal Court ruled on the 14th October 2009, that Secretary of State for Work and Pensions cannot recover overpayments of social security benefits through the courts where the claimant is not at fault.

The case was brought by Child Poverty Action Group, CPAG, after government wrote to over 65,000 claimants telling them it could take them to court at common law if they did not pay back overpayments.

The benefits include many of those that cost the taxpayer the most, including income support, incapacity benefit, housing benefit, pension credit and the state pension.

The court’s decision means the government cannot write these letters to claimants in future.

The basically means the incompetence of the bureaucrats at the Department of Work and Pensions the tax payer will pick up the bill for which auditors are claiming to be as much as £900million in overpayments last year alone.

This ruling has affected the poorest people in our society and they do not have the means to repay the sums back. Had the DWP won the case all they would have done would stop the current benefits to those that had been overpaid until they had recovered the amounts, this would have caused considerable hardship and misery.

Important point to note, this ruling does NOT affect 'over payment of tax credits'. There is a separate campaign on this which you can find out more at the CPAG Amnesty for tax credits overpayments.

Read more: Government cannot reclaim overpaid benefits & Post strike - how to avoid those late payment charges

 

Shared Appreciation Mortgages Schemes (SAMs) 

On 5 October 2009 the High Court granted a Group Litigation Order to UK home owners who are suing BOS and Barclays over “unfair” Shared Appreciation Mortgages (SAMs). This is an important victory for homeowners who will now sue the Banks on a group, rather than an individual, basis. 

These schemes, which were only sold between 1997 and 1998 before being withdrawn from the market, enabled borrowers to take out loans secured against their homes, at a zero or a reduced fixed rate of interest. 

The problem came on repayment of these loans as borrowers had to pay an additional charge which in most cases worked out at or close to 75% of the increase in the value of the property during the lifetime of the loan (the appreciation). 

The steep rise in house prices in the ten years between 1997 and 2007 has meant that with zero interest SAMs the lender’s share of the appreciation is now an average of 4.4 times the amount borrowed, equivalent to an average interest rate of 35 - 40% per annum on a simple interest basis. With fixed interest SAMs, the average interest rate is even greater at 42 - 52% per annum on a simple interest basis. 

For some house owners that borrowed £25,000 they now have to pay a total of £175,000 on redemption. If another owner borrowed £75,000 at a fixed rate of interest, they now have to pay a total of £225,000 on redemption as well as about £50,000 in interest payments over the term of the loan - in all a staggering £275,000 or thereabouts.

Many of these mortgages were taken up by older people, who now find themselves trapped in properties which are no longer suitable for them, as they cannot afford to sell up and buy a suitable smaller property. 

It is estimated that a total of 12,000 SAMs were sold in the UK, of which around 7,000 may still be unredeemed.  

Hilary Messer of RWP solicitors, who is the lead solicitors in these cases, spoke with DebtWizard and is desperately trying to locate other home owners that are part of this scheme because time limits could statute bar some claims.  

If you have a shared appreciation mortgage and believe you have a potential claim then register on  the group action website or call them on 0845 003 9355. If just one family is missed then the repercussions could be very costly.

Consumers need to act now to avoid late payment charges and damage to their credit files

With the postal strike gathering momentum and forecasting all out on 22nd October 2009, consumers need to act now many consumers are getting their credit and store card statements delayed. There is also a delay in sending payments such as cheques, which can lead to a late payment charge. Check below to see if you could be affected by any of the following; 

Read more: Urgent - time running out on Shared Appreciation Mortgages Schemes (SAMs) &

 

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