Tuesday, 8 July 2008

Storing trouble for later, another sign of the times?

In my experience of mortgage possession cases the mortgage company have always been pretty quick in applying for a warrant for possession and getting the former owner out pretty quick in order to sell the property.

However I had an interesting case recently where the mortgage company (one of the biggest subprime lenders) had informed the former owner that they wouldn't actually be applying for a warrant for at least 6 months knowing full well that the former owner couldn't pay a penny towards the mortgage.

As the property had no equity (an increasingly common phenomena it seems) it perhaps wasn't surprising in the current market as one can only presume the subprime lender would be hoping that the housing market turns around. It also made making a 'homeless approach' based on not reasonable to continue to occupy a little trickier than usual.

One wonders (for I have no clue at all) how this particular mortgage and presumably many others appear on the balance sheets of the mortgage companies involved (as one thinks they might be rather optimistic in their forecasts in order to show smaller future losses) and just what happens if the market doesn't turn around.

It should be said that the last paragraph was mainly the result of a chat with my brother in the pub so is probably not based on any actual real knowledge of subprime balance sheets at all.

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