Property Trader masterminded £3m mortgage fraud
Discussion
I'm not saying it was all the banks' fault. But it was THEY who established the looser lending criteria. It was THEY who decided that it was OK to lend OTHER PEOPLES' MONEY (it's never their's - don't forget) to those who should never had been lent anything.
The POWER to lend was entirely with the banks.
They chose to exercise that power in a reckless manner.
They justified their recklessness by using mathematical modelling that they didn't really understand and didn't really know whether it actually worked.
The POWER to lend was entirely with the banks.
They chose to exercise that power in a reckless manner.
They justified their recklessness by using mathematical modelling that they didn't really understand and didn't really know whether it actually worked.
Eric Mc said:
In the 2000s banking stopped being a profession and became a barrow boy market
So the rules of the game were changed and the players decide that they would continue to play the same way as they did before the rules were changed...BTW I do agree that many of the mistakes that the banks made were down to them thinking that they were brighter than they actually were. In addition to this I'm fairly certain that there were people who could see exactly what was likely to happen and just made sure that they had either stopped playing the game or were standing next to a chair when the music died...
toohuge said:
There is also a lack of incentive for the mortgage providers to perform their due diligence.
If you look at this from a big picture point of view:
The mortgage company lends money against an asset, usually under their agreed value.
The mortgage company may receive 20% cash as a deposit against said asset.
The mortgage company receives the monthly payments to service their debt, plus interest, so money all round.
If the owners fail to service the loan, the mortgage company takes ownership of their asset at a discounted rate and makes a tidy profit on the other end when selling at market value.
The problem here is not isolated to the buyers that fudged their income, rather a system of greedy individuals that all participated in this to allow this to happen.
I remember reading about immigrant workers from Mexico/SA in the US - gardeners, cleaners etc - having 3,4-5 houses each! Buy one, remortgage buy another, rinse repeat! MadnessIf you look at this from a big picture point of view:
The mortgage company lends money against an asset, usually under their agreed value.
The mortgage company may receive 20% cash as a deposit against said asset.
The mortgage company receives the monthly payments to service their debt, plus interest, so money all round.
If the owners fail to service the loan, the mortgage company takes ownership of their asset at a discounted rate and makes a tidy profit on the other end when selling at market value.
The problem here is not isolated to the buyers that fudged their income, rather a system of greedy individuals that all participated in this to allow this to happen.
Otispunkmeyer said:
I remember reading about immigrant workers from Mexico/SA in the US - gardeners, cleaners etc - having 3,4-5 houses each! Buy one, remortgage buy another, rinse repeat! Madness
Back in 2005 etc. during the boom, you could obtain mortgages without a credit check! All you needed was a down payment, that was it. Madness as you say. Some did very well, although most got greedy, which is always the case. Rude-boy said:
So the rules of the game were changed and the players decide that they would continue to play the same way as they did before the rules were changed...
BTW I do agree that many of the mistakes that the banks made were down to them thinking that they were brighter than they actually were. In addition to this I'm fairly certain that there were people who could see exactly what was likely to happen and just made sure that they had either stopped playing the game or were standing next to a chair when the music died...
Absolutely. They were passing around a set of live grenades with the pins pulled out and it was a matter of luck as to who was holding the grenade when it went off.BTW I do agree that many of the mistakes that the banks made were down to them thinking that they were brighter than they actually were. In addition to this I'm fairly certain that there were people who could see exactly what was likely to happen and just made sure that they had either stopped playing the game or were standing next to a chair when the music died...
Rude-boy said:
So the rules of the game were changed and the players decide that they would continue to play the same way as they did before the rules were changed...
BTW I do agree that many of the mistakes that the banks made were down to them thinking that they were brighter than they actually were. In addition to this I'm fairly certain that there were people who could see exactly what was likely to happen and just made sure that they had either stopped playing the game or were standing next to a chair when the music died...
The big short tells exactly the story you mentioned. Those who called the implosion and were r ridiculed for it made absurd amounts of money betting it would all end in tears. It's a good read.BTW I do agree that many of the mistakes that the banks made were down to them thinking that they were brighter than they actually were. In addition to this I'm fairly certain that there were people who could see exactly what was likely to happen and just made sure that they had either stopped playing the game or were standing next to a chair when the music died...
escargot said:
LucreLout said:
Colt make handguns. Pfizer make drugs. It's your responsibility if you decide to down a bottle of pills or shoot someone. Why does anyone think it is different for lenders?
how is that in any way a relevant comparison?Eric Mc said:
Absolutely. They were passing around a set of live grenades with the pins pulled out and it was a matter of luck as to who was holding the grenade when it went off.
excellent description of the repackaging and selling on of high risk loans ... perhaps like buying a gift box of several dozen discounted grenades ... not knowing if your grenades had all the pins in 
Ok so we've had crazy lending by the banks, and crazy borrowing by the borrowers. Resulting in crazy house prices (after all, you give the borrowers three times as much money to spend they don't end up in houses three times as nice. They end up in the same houses but paying three times as much).
Then it all implodes. Banks on their knees, big bail outs, end of 'lie to buy' self cert, interest only, etc. So the crazy lending is removed.
So how come house prices are now higher than the peak, and rising?
Where is the money coming from now the dodgy lending that spiraled the prices in the first place has gone?
Then it all implodes. Banks on their knees, big bail outs, end of 'lie to buy' self cert, interest only, etc. So the crazy lending is removed.
So how come house prices are now higher than the peak, and rising?
Where is the money coming from now the dodgy lending that spiraled the prices in the first place has gone?
I get the gist of what you say and agree that reportable arrears were very low during the boom which gave lenders an appetite for riskier and more profitable lending but have corrected your statements as below:
toohuge said:
There is also a lack of incentive for the mortgage providers to perform their due diligence.
If you look at this from a big picture point of view:
The mortgage company lends money against an asset, usually under their agreed value. Agree
The mortgage company may receive 20% cash as a deposit against said asset. No, the deposit is paid to the vendor.
The mortgage company receives the monthly payments to service their debt, plus interest, so money all round. Agree
If the owners fail to service the loan, the mortgage company takes ownership of their asset at a discounted rate and makes a tidy profit on the other end when selling at market value. No, any surplus is returned to the borrower.
The problem here is not isolated to the buyers that fudged their income, rather a system of greedy individuals that all participated in this to allow this to happen.
If you look at this from a big picture point of view:
The mortgage company lends money against an asset, usually under their agreed value. Agree
The mortgage company may receive 20% cash as a deposit against said asset. No, the deposit is paid to the vendor.
The mortgage company receives the monthly payments to service their debt, plus interest, so money all round. Agree
If the owners fail to service the loan, the mortgage company takes ownership of their asset at a discounted rate and makes a tidy profit on the other end when selling at market value. No, any surplus is returned to the borrower.
The problem here is not isolated to the buyers that fudged their income, rather a system of greedy individuals that all participated in this to allow this to happen.
Ari said:
Ok so we've had crazy lending by the banks, and crazy borrowing by the borrowers. Resulting in crazy house prices (after all, you give the borrowers three times as much money to spend they don't end up in houses three times as nice. They end up in the same houses but paying three times as much).
Then it all implodes. Banks on their knees, big bail outs, end of 'lie to buy' self cert, interest only, etc. So the crazy lending is removed.
So how come house prices are now higher than the peak, and rising?
Where is the money coming from now the dodgy lending that spiraled the prices in the first place has gone?
It's a question I've been asking myself. Everything locally seems to be selling fast (which makes me [i[very[/i] nervous) and prices are strong.Then it all implodes. Banks on their knees, big bail outs, end of 'lie to buy' self cert, interest only, etc. So the crazy lending is removed.
So how come house prices are now higher than the peak, and rising?
Where is the money coming from now the dodgy lending that spiraled the prices in the first place has gone?
Slightly O/T, but a guy I know in my village - undoubtedly a PHer, judging by his fine fleet of motors - had been renting a place since the crunch because he felt prices were due a major correction. I see his place has recently come up to let, so I'm very keen to speak to him and find out whether he's renting something bigger/nicer, or has finally given up on any rationality in the housing market.
Otispunkmeyer said:
Not sure. Foreign investment from the wealthy within faltering EU economies? Institutional investment in by to let property? IMO too many rely on it for their income and lively hood so I'm not surprised the values are still rising. They don't want the bubble to die. Ever.
I could believe it at the top end of the London property market, but Mrs. Miggins 2 up 2 down in Gillingham and a million other places like it?Digga said:
It's a question I've been asking myself. Everything locally seems to be selling fast (which makes me [i[very[/i] nervous) and prices are strong.
Slightly O/T, but a guy I know in my village - undoubtedly a PHer, judging by his fine fleet of motors - had been renting a place since the crunch because he felt prices were due a major correction. I see his place has recently come up to let, so I'm very keen to speak to him and find out whether he's renting something bigger/nicer, or has finally given up on any rationality in the housing market.
It would be interesting to know.Slightly O/T, but a guy I know in my village - undoubtedly a PHer, judging by his fine fleet of motors - had been renting a place since the crunch because he felt prices were due a major correction. I see his place has recently come up to let, so I'm very keen to speak to him and find out whether he's renting something bigger/nicer, or has finally given up on any rationality in the housing market.
I get that the property market is 90% driven by sentiment - house prices only go up, if you don't buy this year it'll be £10,000 dearer next year, supply and demand, they're not building any more land, yada yada yada. But the money has to come from somewhere and the mega boom was driven (or at least funded) by the sort of crazy lending described in this thread. Which has stopped.
And indeed, not only has it stopped, but far stricter lending criteria has recently been put in place.
Makes no sense.
Rovinghawk said:
I do. However, there's enough fault for both sides to have a share, not just one.
So how many borrowers did my taxes have to bail out?Fault is passing, the long term effects of this has been that my life style has taken a hit due to the banks collapsing. Had they exercised due diligence I would be richer than I am at the moment.
From what I can understand of this matter is that those who had control of the money are the ones whom I nationalised at vast expense.
Apportioning blame is a pointless procedure. If a gas fitter causes the house next door to burn down, taking mine with it, by deliberately ignoring proper procedures, not even through ineptitude, then the fact that my neighbour fell for the advertising is of little consequence. The fitter is the professional. I'd be a bit miffed if, due to the fact that he wasn't insured I had to pay for my own repairs.
And that's what we had with the banks.
I paid them to get out of the mire that they created themselves.
They got all the benefits of a capitalistic society and then, when their risk taking caught them out, they went socialist.
With my money.
They offered free money. No wonder the public took them up on it.
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