It should be made illegal for banks to persue the owners for a remaining mortgage balance after a re-possed property has been sold at auction for a below market price. The bank negotiated an interest rate commensurate with the risk at the start of the contract. So how can they then be justified in persuing customers for the balance of the mortgage.

In the current circumstances the law allows them to record the debt still owed after repossession as part of their assets and they can therefore re-posess properties without loosing a penny.

If this was made illegal, then they would have every incentive to negotiate a temporary affordable rental with the tenant. Title of the house could pass to the bank during this time and the tenant given a right of residence, until they could re-mortgage or sell the property at it's market value.

I believe that this would result in less impact on society such as emergency accommodation from councils, less social security benefits which we all pay for etc.

Tenants would be grateful for support and probably loyal customers of the bank in the future.

 

Whilst I have no sympathy for the big banks what you suggest is unworkable.

The mortgage rate is generally determined by market forces and has little to do with the risk of the loan. The buyer is the one who has to responsible in ensuring they are not overstretching themself and that they can afford the mortgage, even if rates increase.

if your proposal was put in place it would cost the rest of us a fortune. We would end up paying for the shortfall because irresponsible borrowers will have massive debts written off.

Lets face it, on your last point, there is no such thing as loyalty anymore. You go where it pays you to go.

Absolutely right.

It might also make people think twice about borrowing too much money in the first place

 

John

Very true John. We've seen people wanting to keep up with the Jones's. They wanted the big house, the big cars, and whatever took their fancy, all on credit.

Sensible people didn't go beyond their capability and bought something they could easily afford, not perhaps what they dreamt of, but feasible. Now the people that wanted to show off are suffering. They do not have my sympathy.

Unfortunately Gordon Brown failed to regulate the banks and allowed this fantasy boom f house prices.    Just look at what your house value is now work out the building cost.   Is your land really worth that much?

 No!   After the boom we are now all bust.

hi gb plc party

I agree with you about renting the property; especially now that approx 60.000 properties per month are getting repossed.  They're not selling at the moment.

Yes we will find out the penny millionnaires now; the brag a lots; they'l come down to earth like a ton o' bricks. Any one can get credit its paying it back.