Banks Bailed Out BUT Investors Bankrupt How is this lawful?
Discussion
This is just one example of the absolute disgrace surrounding Banking post taxpayer bail out.
See here http://www.bbc.co.uk/news/uk-england-birmingham-13...
In this case what I find interesting is that the Bank Lloyds (Insolvent bailed out by Taxpayer) and the Developer (Insolvent in Administration), can pursue the buyers (not bankrupt (yet)) who offered deposits, )not funded by the Taxpayer) and hold the buyers to pay THE FULL ORIGINAL CONTRACT PRICE on exchanged contracts even though the properties were totally overvalued at the time of the original sale.
I think this is the tip of the Iceberg in this dreadful mess. These properties are worth a FRACTION of the original sales price and now offered by the Bank for these lower prices. But the contracted buyers are meat for the greedy bankers. And without the Taxpayer the Bank would have gone bust leaving the buyers completely clear AND ABLE TO GET THEIR MONEY BACK IN FULL
Can someone tell me how we have a situation where the Industry responsible for the mess Banking, can be insulated totally from the effects of their greed and stupidity by the unwilling and unrepresented Taxpayer who is loosing a fortune and getting nothing from this at all.
Except grief.
This cannot be right and believe me we will see more of this as the recovery(!!??!!) continues.
Dick Turpin was a Rank Amateur compared to these Bankers.
Surely there is a legal man on Pistonheads who can see a way of defending the buyers against what surely is corporate fraud.
Please note I am NOT amongst these buyers!!
See here http://www.bbc.co.uk/news/uk-england-birmingham-13...
In this case what I find interesting is that the Bank Lloyds (Insolvent bailed out by Taxpayer) and the Developer (Insolvent in Administration), can pursue the buyers (not bankrupt (yet)) who offered deposits, )not funded by the Taxpayer) and hold the buyers to pay THE FULL ORIGINAL CONTRACT PRICE on exchanged contracts even though the properties were totally overvalued at the time of the original sale.
I think this is the tip of the Iceberg in this dreadful mess. These properties are worth a FRACTION of the original sales price and now offered by the Bank for these lower prices. But the contracted buyers are meat for the greedy bankers. And without the Taxpayer the Bank would have gone bust leaving the buyers completely clear AND ABLE TO GET THEIR MONEY BACK IN FULL
Can someone tell me how we have a situation where the Industry responsible for the mess Banking, can be insulated totally from the effects of their greed and stupidity by the unwilling and unrepresented Taxpayer who is loosing a fortune and getting nothing from this at all.
Except grief.
This cannot be right and believe me we will see more of this as the recovery(!!??!!) continues.
Dick Turpin was a Rank Amateur compared to these Bankers.
Surely there is a legal man on Pistonheads who can see a way of defending the buyers against what surely is corporate fraud.
Please note I am NOT amongst these buyers!!
More of the same. Only the poor individual loses money once again.
See
http://news.bbc.co.uk/1/hi/england/7870174.stm
The Law of unintended consequences is becoming the primary law of Politics!!
See
http://news.bbc.co.uk/1/hi/england/7870174.stm
The Law of unintended consequences is becoming the primary law of Politics!!
In my view it is a fraud on the unrepresented buyers. No doubt all Taxpayers. All contributed to the bail out without which LLoyds would have gone bust.
In which case the Contracts were void deposit returned.
Instead Lloyds bailed out by taxpayer. No compensation to buyers. In same market.
You are right the contracts are binding but ONLY because the taxpayer at a huge loss bailed out the Banks.
This in my view is an unintended unfair and unlawful consequence never considered by anyone.
But it should have been.
The market has collapsed the Banks are protected the individual borrowers (in the same collapsed market) are not.
This cannot be fair or right.
In which case the Contracts were void deposit returned.
Instead Lloyds bailed out by taxpayer. No compensation to buyers. In same market.
You are right the contracts are binding but ONLY because the taxpayer at a huge loss bailed out the Banks.
This in my view is an unintended unfair and unlawful consequence never considered by anyone.
But it should have been.
The market has collapsed the Banks are protected the individual borrowers (in the same collapsed market) are not.
This cannot be fair or right.
Live by the sword, die by the sword as far as I'm concerned. If 95%+ of the people buying off-plan flats in that development were not buy to let investors I'd be amazed. They got burnt badly, but then it didn't take a genius to see that the market had overheated badly, and that 125% LTV mortgages were a bit daft.
Steffan said:
In my view it is a fraud on the unrepresented buyers. No doubt all Taxpayers. All contributed to the bail out without which LLoyds would have gone bust.
In which case the Contracts were void deposit returned..
Your understanding of business law is very poor. If you owe a company money, or have entered a contract with them, this is not voided by them going bankrupt.In which case the Contracts were void deposit returned..
Simply asserting this doesn't make it so.
As to your assertion that you contributed to the bailout, what form did this take? Was your tax rate increased? Most people making the claim that they contributed really did not. They were also strangely quiet when banks and bankers were subsidizing them so heavily in the good years.
Steffan said:
No doubt all Taxpayers.
You keep banging on about 'Taxpayers' as though it's one homogenous group of sensible people, when in fact it's made up of sensible people and the rest - let's use the terms 'greedy' or 'feckless'.I am a taxpayer. I didn't 'invest' my money in any of these too-good-to-be-true schemes, because they were erm, too-good-to-be-true. I just paid down as much as my mortgage on my home as possible.
I am paying for all these idiots through my taxes, inflation (i can't believe i just paid a quid for a carton of soya at ASDAs!), and crappy returns on my meagre savings. On top of that i didn't get a bonus for the last two years. Now where's the justice in that?
Edited by fido on Wednesday 15th June 23:11
davepoth said:
Live by the sword, die by the sword as far as I'm concerned. If 95%+ of the people buying off-plan flats in that development were not buy to let investors I'd be amazed. They got burnt badly, but then it didn't take a genius to see that the market had overheated badly, and that 125% LTV mortgages were a bit daft.
You don't understand, no-one is to be held responsible for their own decisions, it's all the banks' fault.I know, people hoped to make a quick buck, yes, and yes, they did sign the contract, but you have to see, they couldn't be expected to be bound by them.
It's the modern, leftist mantra. People are children, they don't know what theynare doing, and they must be allowed to borrow at will, and never pay it back.
davepoth said:
Live by the sword, die by the sword as far as I'm concerned. If 95%+ of the people buying off-plan flats in that development were not buy to let investors I'd be amazed. They got burnt badly, but then it didn't take a genius to see that the market had overheated badly, and that 125% LTV mortgages were a bit daft.
Lots of equally stupid developments all over the country. Did they really think that there was a market luxury apartments in Birmingham?
It's very easy to point the finger at the investor and say tough luck but theres's more to it than that. A lot of these investors are armchair ones who are trying to invest for a pension etc, they aren't seasoned investors who know the market well and they don't have access to credit lines from banks etc. They would have turned up at the launch and been sweet talked by the sales staff who may well have told them that a 90% BTL mortgage was no problem to get, so no more money after the deposit would be required etc etc. Yes they were silly for falling for it and being greedy etc, but we all make mistakes.
More than a couple of these developments are upto 3 years late on completing, and had they completed on time the investors would have had a far easier time getting a BTL mortgage or selling on the apartment if they wanted to. Can anyone have predicted a 3 year delay? Obviously the PH masses would all have been aware but again, the average person wouldn't have.
As they are 3 years late, there's been a massive devaluation, especially on 2 bed apartments, from what i've seen. So if you add the devaluation in value to the extra you need for the now 70% BTL an average investor that thought they needed a couple of grand to complete now needs 30-40k to complete, maybe more on a 2 bed. Not many people have that laying around, and I doubt any of these buyers thought that would ever need that much. Again, yes it's down to the buyers to worry about that sort of thing, but I doubt many people (other than the PH massive) saw this coming.
Yet the developer who was 3 years late bears no responsibility at all cos there was no stop date in the contract. So consumers are expected to take all responsibility for the state of economy. Maybe they deserve to, they signed forward contracts so there you go, but surely the developer (administrators) needs to bear some responsibility aswell.
Now IIRC the OFT last year decided that these off plan contracts were unfair due to the amount of changes developers could make and how the buyers had basically no rights, due to this all off plan contracts now have to have a stop date and the contract are no longer weighted to the developer. Had these measures been in place before then these cube people would have no issues now.
It will be interesting to see how specific performance court dates go, but I feel sorry for these guys and it would have been far better (IMHO) if the administrators had sold non completed apartments and compromised with the buyers on the loss made.
More than a couple of these developments are upto 3 years late on completing, and had they completed on time the investors would have had a far easier time getting a BTL mortgage or selling on the apartment if they wanted to. Can anyone have predicted a 3 year delay? Obviously the PH masses would all have been aware but again, the average person wouldn't have.
As they are 3 years late, there's been a massive devaluation, especially on 2 bed apartments, from what i've seen. So if you add the devaluation in value to the extra you need for the now 70% BTL an average investor that thought they needed a couple of grand to complete now needs 30-40k to complete, maybe more on a 2 bed. Not many people have that laying around, and I doubt any of these buyers thought that would ever need that much. Again, yes it's down to the buyers to worry about that sort of thing, but I doubt many people (other than the PH massive) saw this coming.
Yet the developer who was 3 years late bears no responsibility at all cos there was no stop date in the contract. So consumers are expected to take all responsibility for the state of economy. Maybe they deserve to, they signed forward contracts so there you go, but surely the developer (administrators) needs to bear some responsibility aswell.
Now IIRC the OFT last year decided that these off plan contracts were unfair due to the amount of changes developers could make and how the buyers had basically no rights, due to this all off plan contracts now have to have a stop date and the contract are no longer weighted to the developer. Had these measures been in place before then these cube people would have no issues now.
It will be interesting to see how specific performance court dates go, but I feel sorry for these guys and it would have been far better (IMHO) if the administrators had sold non completed apartments and compromised with the buyers on the loss made.
Any investment can result in a total loss. Leveraged investments can result in you losing more than your stake. This is not hard to understand, surely.
The 'deregulation' that allowed Building Societies to play at being investment banks was a mistake (laws had been in place since the big crash for a reason). But, having done so, we should have allowed the chips to fall. Instead Labour manipulated the situation to give them a scapegoat at the taxpayers expense.
The 'deregulation' that allowed Building Societies to play at being investment banks was a mistake (laws had been in place since the big crash for a reason). But, having done so, we should have allowed the chips to fall. Instead Labour manipulated the situation to give them a scapegoat at the taxpayers expense.
NorthernBoy said:
You're going to have to explain the fraud angle. People signed a contract, agreed to pay a sum of money, and are being held to it.
Where's the fraud?
Precisely. The investors all signed in the hope and expectation of making a profit. Now they are making a loss and want to be able to weasel out. Tough sWhere's the fraud?
t.So...
1. investors enter into a binding contract to purchase at a set price. (on the assumption that they will rake it in soon due to the bubble)
2. Banks fund the investors over lien on said assets.
In this situation the bank and its bailout is completely seperate from the bank and its investment(loan book).
The investors (loan book) are liable to repay the money borrowed less realisation value of their assets that are under lien. This is common business law. You cannot in anyway justify ignorance of law. Whether you are 85 and bedridden or 18 and a genius...it is your responsibility to get advice before you sign legal contracts.
As for the bailout...that is between UKFI and the shareholders of the business concerned. It has no link whatsoever to the bank and its loanbook or its asset liquidisation policy unless expressly agreed as a condition to the bailout.
Problem here is people dont have the knowledge required to get into business...they just jump on a bandwagon and act as 'know it all'. Guess what....this is called RISK in business. If it pays off you count your cash...if it doesnt you lose the shirt of your back.
Dont hate the playa..hate the game!
1. investors enter into a binding contract to purchase at a set price. (on the assumption that they will rake it in soon due to the bubble)
2. Banks fund the investors over lien on said assets.
In this situation the bank and its bailout is completely seperate from the bank and its investment(loan book).
The investors (loan book) are liable to repay the money borrowed less realisation value of their assets that are under lien. This is common business law. You cannot in anyway justify ignorance of law. Whether you are 85 and bedridden or 18 and a genius...it is your responsibility to get advice before you sign legal contracts.
As for the bailout...that is between UKFI and the shareholders of the business concerned. It has no link whatsoever to the bank and its loanbook or its asset liquidisation policy unless expressly agreed as a condition to the bailout.
Problem here is people dont have the knowledge required to get into business...they just jump on a bandwagon and act as 'know it all'. Guess what....this is called RISK in business. If it pays off you count your cash...if it doesnt you lose the shirt of your back.
Dont hate the playa..hate the game!
The OP is talking arse, again, as on several threads.
Who says the property was overvalued at the time of the sale? If it was 'overvalued' why did the buyers agree to buy them? Anything is worth only what someone is willing to pay for it. These people were willing to pay for it - willing to speculate on the property bubble. Property was offered at a price buyers accepted, so by definition, it was fairly valued. What's more, buying property that hasn't even been built yet adds extra risk - risk these buyers were willing to take.
Developers go bust - it happens. Especially in a property crash that inevitably follows a property bubble... and all the signs of a property bubble were there for all to see.
Why on earth should the bank take the loss? If bought a car on finance (I haven't), and the value of the car fell, do you think I could ring up the finance company to let me off some of the loan because the car is now worth less? Of course not.
Besides all that, where exactly does it say all the investors are declared bankrupt? And Why Do You Use Capital Letters Incorrectly? (If you're German, I understand why, but even then only nouns get capitalised)
Who says the property was overvalued at the time of the sale? If it was 'overvalued' why did the buyers agree to buy them? Anything is worth only what someone is willing to pay for it. These people were willing to pay for it - willing to speculate on the property bubble. Property was offered at a price buyers accepted, so by definition, it was fairly valued. What's more, buying property that hasn't even been built yet adds extra risk - risk these buyers were willing to take.
Developers go bust - it happens. Especially in a property crash that inevitably follows a property bubble... and all the signs of a property bubble were there for all to see.
Why on earth should the bank take the loss? If bought a car on finance (I haven't), and the value of the car fell, do you think I could ring up the finance company to let me off some of the loan because the car is now worth less? Of course not.
Besides all that, where exactly does it say all the investors are declared bankrupt? And Why Do You Use Capital Letters Incorrectly? (If you're German, I understand why, but even then only nouns get capitalised)
NorthernBoy said:
Steffan said:
In my view it is a fraud on the unrepresented buyers. No doubt all Taxpayers. All contributed to the bail out without which LLoyds would have gone bust.
In which case the Contracts were void deposit returned..
Your understanding of business law is very poor. If you owe a company money, or have entered a contract with them, this is not voided by them going bankrupt.In which case the Contracts were void deposit returned..
Simply asserting this doesn't make it so.
As a developer I have had people fail to complete on things like this, and I've taken quite substantial non returnable deposits off people who have actually lied about their finances to us and their solicitors.
before exchange of contracts their solicitor should have warned them about what they are doing. You would be MAD to exchange without a means to complete the deal. Interestingly alot of the smaller BTL investors like to lord it up about how much cash they have etc when in reality they don't.
Interestingly I've had this work the other way when I've sold off plan and the market has gone up a lot before they complete hence they are buying at alot less than the market price. Do I turn round and demand more money no!
Basically it's called tough. And if they feel their solicitor didn't advise them of the risks they can sue them.
before exchange of contracts their solicitor should have warned them about what they are doing. You would be MAD to exchange without a means to complete the deal. Interestingly alot of the smaller BTL investors like to lord it up about how much cash they have etc when in reality they don't.
Interestingly I've had this work the other way when I've sold off plan and the market has gone up a lot before they complete hence they are buying at alot less than the market price. Do I turn round and demand more money no!
Basically it's called tough. And if they feel their solicitor didn't advise them of the risks they can sue them.
Fish said:
As a developer I have had people fail to complete on things like this, and I've taken quite substantial non returnable deposits off people who have actually lied about their finances to us and their solicitors.
before exchange of contracts their solicitor should have warned them about what they are doing. You would be MAD to exchange without a means to complete the deal. Interestingly alot of the smaller BTL investors like to lord it up about how much cash they have etc when in reality they don't.
Interestingly I've had this work the other way when I've sold off plan and the market has gone up a lot before they complete hence they are buying at alot less than the market price. Do I turn round and demand more money no!
Basically it's called tough. And if they feel their solicitor didn't advise them of the risks they can sue them.
Interesting perspective, here's a question though. If an investor puts his 10/15% down, gets a BTL or whatever mortgage offer and then you complete your development 3 years late due to your own financial mismanagement/planning issues etc, in the meantime the mortgage offer expires and the investor struggles to get another one unless it's for a lower amount due to the state of the market then do you still think it's tough? Or would you take a view that a compromise needs to be reached?before exchange of contracts their solicitor should have warned them about what they are doing. You would be MAD to exchange without a means to complete the deal. Interestingly alot of the smaller BTL investors like to lord it up about how much cash they have etc when in reality they don't.
Interestingly I've had this work the other way when I've sold off plan and the market has gone up a lot before they complete hence they are buying at alot less than the market price. Do I turn round and demand more money no!
Basically it's called tough. And if they feel their solicitor didn't advise them of the risks they can sue them.
I'm not baiting you, but having been personally involved in this situation i'm curious to know what perspective you would have.
Steffan said:
This cannot be right and believe me we will see more of this as the recovery(!!??!!) continues.
Dick Turpin was a Rank Amateur compared to these Bankers.
Surely there is a legal man on Pistonheads who can see a way of defending the buyers against what surely is corporate fraud.
Please note I am NOT amongst these buyers!!
Absolute baloney.Dick Turpin was a Rank Amateur compared to these Bankers.
Surely there is a legal man on Pistonheads who can see a way of defending the buyers against what surely is corporate fraud.
Please note I am NOT amongst these buyers!!
How on earth is it in any way fraudulent? Never heard of caveat emptor? I know it's a hackneyed phrase these days but the message is as relevant now as ever it was.
How are the flats "3 years late"? If the contract didn't specify a completion date then how is that so? Any investor/purchaser worth his salt would have had a get out clause inserted for his own protection, but this is what you get for being a cheapskate and using a £300 conveyancer.
And let us assume the flats had in fact been built "on time" and all the sales had completed three years ago. The purchasers would now be siting on sunstantial losses and no doubt you'd be on here bleating about overvaluation again...
amirzed said:
Interesting perspective, here's a question though. If an investor puts his 10/15% down, gets a BTL or whatever mortgage offer and then you complete your development 3 years late due to your own financial mismanagement/planning issues etc, in the meantime the mortgage offer expires and the investor struggles to get another one unless it's for a lower amount due to the state of the market then do you still think it's tough? Or would you take a view that a compromise needs to be reached?
I'm not baiting you, but having been personally involved in this situation i'm curious to know what perspective you would have.
If an investor is monumentally stupid enough to buy a property with an open ended contract then who is going to have sympathy?I'm not baiting you, but having been personally involved in this situation i'm curious to know what perspective you would have.
Looking at the original linky in the OP, i was quite happy until the girl said:
bbc said:
It is an "open-ended" contract I have learnt which means they can complete at any time but, the solicitor did not say that at the time he just said 'around 2008'
seriously- is she a complete retard?she then said:
really dumb bird on the bbc said:
Ms Dwyer said she agreed to buy a studio flat for £116,500, paying an £11,600 deposit in 2006 and the seller told her it was worth £137,500
She needs to bear 98% of the responsibility here- she took a massive risk (clearly as an investment), seeemingly took no prudent steps to protect herself and is now paying the cost. How is it the banks fault?perhaps occasions like this will help people to realise the take responsibility for their own risks.
If it was the otherway round, and it was costing the bank money, would you feel sympathy? no.
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