Why I Blame Northern Rock

I find it hard to have sympathy for people who borrowed 125%. Anyone with any degree of common sense would know that borrowing at this level when interest rates are low and house prices are high is a very high risk strategy. The fact that the bank was stupid enough to lend is neither here nor there...ultimately the decision to borrow is the borrowers.

I know someone who borrowed 125% on a 200k house. He spent the excess on trinkets such as a motorhome, a motorbike, a big tv etc. The house is now worth 160k, interest has gone up, he is broke and having to sell it all off at a fraction of what it cost him. I did warn him at the time and he wouldn't listen. There's plenty of people like this.

It's hard to be sympathetic. People are responsible for their own actions.

IMV anybody who borrowed 125% deserves everthing they will not get because they just gambled on house prices and future earnings growth. Also IMV I think that, too late in the day, there should be a legal limit of 90% of valuation on mortgages and a BAN on silly self-certified mortgages.
If you can't afford a property with those restrictions then TOUGH and just RENT.

This is not on ,Northern Rock should remember it is the tax payer that has bailed them out .
The whole idea behind the goverment saving Northern Rock was to stop house owners losing there homes .

You have got to ask yourslef what would have happened if Northern Rock where not bailed out ,would there be somone telling them there employees that they will be losing there homes .As a state owned bank i think that all these people who took out these 125% mortgages with Northern Rock should have there whole mortgage looked at again and be put on a better rate so that they get to keep there homes and not pay some over the top amount in interest ,times are hard so its going to need hard action to get things sorted ,the interest rate needs to come way down

At this time Northern Rock have a pure cheek to say to anyone that they are behind in mortgage payments etc as its only down to us tax payers thet they even still exsist .

Personnaly i think that Northern rock should have been left to fold as its there own fault for the iresponsible lending in the 1st place ,even if they do reposses these homes they will never get there money back ,they would be better to let people pay what they can afford and still keep there homes rather than take there homes from them and lose thousands of pounds

The goverment need to ensure that no homes will be reposessed in this current climate unless its in extreme circumstances

I run a business but i can see the goverment coming to bail me out if i get into trouble ,same should have applied to Northern Rock but as this has not happend they need to enusre that all there customers keep there homes and accept lower mortgage payments ,after all some money coming in each month is better than none at all ,and they cant keep going back to Gordon Brown like a spoiled teenager asking there parents for money for a night out coz they have spent there cash on other things

The Goverment need to get a grip of all these Banks and tell them to help out ,do they really need to be clawing in over double the amount of money that you bowrred in the 1st place ,no its just greed interest rates that involve such vast sums of cash should be reduced or we are never going to get the housing market back on its feet

"The lonely hearts ad could have read: Irresponsible bank, backed by irresponsible Government, seeks irresponsible borrowers for credit-fuelled boom and debt-fuelled bust."

Just who were these irresponsible borrowers?

Married, cohabiting or separating couples?

Why won't Northern Rock reveal the facts in their trading statements?

The major banks who have recently been part-nationalised have, as a condition of being rescued by public money, been put on best behaviour in various respects, including making available mortgages as seonsible LTVs and rates. It seems inconsistent (on the Govt's part) and hence unfair that wholly-nationalised NR is seemingly allowed to behave more selfishly than the part-nationalised banks. HMT should look at NR's remit and get it into line with what they're saying to RBS, HBOS and the rest of its recent batch of takeover targets.
That said, anyone who makes a major financial decision such as a house purchase on the basis that the current ecomonic trend (of whatever kind) will continue indefinitely has it coming. Those who can't afford to buy should rent, not dive in on a "sh1t or bust" basis. Renting is good enough for most of yer contintentals, so why not here?

sick of all, do you feel as though you have a valid complaint or is it that you are looking for an angle?

I have a complaint in at the moment against a mortgage adviser who recommended this product to my father. It wasn't the product itself that raised the complaint but more so the foundations of the advice given - providing inaccurate illustrations, not knowing their client etc.

Ultimately, I would agree with the article that there has to be shared responsibility and blame. Ultimately, there are more people out there in a similar position - those with the alliance and leicester, coventry, mortgage express for example as all these lenders had similar products.

It has become clear that the FSA were scared to step in to try and do anything that would look like it was restricting capitalism.

Ultimately, the government should look at the issues surrounding what options are open to people on these mortgages.

I can't see why something along the lines of offering those people on those 100%+ deals can opt to have the government pay off their unsecured debt for a return of a % increase in their income tax. A charge placed on the deeds to state that if the home is sold, the unsecured debt has to bought back from the government or if the mortgage goes into default, then repossession takes place.

If the deal is priced correctly, only those who are the worst off will apply. I.E it becomes the last resort to stop repossession. We as a tax payer lose out if debts are being constantly written off due to repossessions in the current climate surely?

"Northern Rock has a lot to answer for" ...so what of the FOOL? Until it 'fell down', the Fool spent many years singing the praises of the Rock, telling how it was the most efficiently and well managed of the mortgage banks in the UK ...only to turn on their once Golden Child almost WWE style with hope readers would forget this past affinity.

"According to debt charity Credit Action, Northern Rock is twice as likely as other lenders to repossess a home if borrowers fall behind with their mortgage payments." - That should read that "The Government is twice as likely as other lenders to repossess" ;)

"Shame on Northern Rock" - Tosh!

"Its Standard Variable Rate or SVR is now 2.84% above Base Rate. This is the highest SVR of any of the big lenders" - Good for the long-term benefit of our economy, plus pain's a valuable teacher, more it hurts now, less likely fools will be to repeat the lesson later

"So what? Don’t feel much sympathy for these borrowers?" - Nope, not at all

"Put yourself in their shoes." - I refused to ...and still am paying for it :(

"Imagine you’re in debt up to your eyeballs but you’re managing to meet your monthly payments. Then suddenly, your rate increases dramatically." - So, your point is what? That it is OK for house buyers to have criticised share buyers ...such as those who kept the Rock able to fund their excesses as 'gamblers' ...but that it is not OK to have no sympathy for folks who gambled on housing market? All prices can go up as well as down and it is the responsibility of the borrower to determine what level of risk is acceptable to them and to plan accordingly. If you invest in shares, you invest knowing that your returns could be -100% of your stake upwards. If you invest in property, you do so knowing that the value and cost of maintaining that property can equally vary dramatically.

"But the Government's regulators stood by and did nothing" - true ...and product of the people and apathy "voted" in this government so that they could keep on acting irresponsibly ...nobody put a gun to their heads after all.

The Government prevented the Rock going under in one fell swoop, which would have seen all of these borrowers in much worse predicaments than they now face. If these same borrowers decided at this time, that it was now OK to do nothing and have no contingency ...whose fault is this? People have seen how well the government's handled other situations ...like the railways for example. Why would this be any different?

The government may have failed people ...but first and foremost they failed themselves. The nation has failed and as has become part of today's culture, there is still no concept of accountability or ability to say sorry and admit that people were wrong. Following precedent, next course of action will see somebody find somebody else to sue, to try and extricate themselves from their responsibility and drag things out for longer!

In the meantime, sieze the properties, let the owners take the loss of their own equity stakes and then become renters to the state (I mean bank) owned properties.

Cap LTV at 90%, limit the debt lenders can take on to offer mortgages in the first place to ensure at least 50% is covered by savings deposits and stop people gambling on houses so that us non-Gambling tax payers can have some hope of saving for our own futures rather than paying for the selfish and whimsical indulgences of others!

Maybe the government will also finally realise that; savings, house, education and pension are now mutually exclusive, if not in entirity but not far off!

The aggressive approach of getting rid of the bad debts quickly surely has to be counter productive, although I can see the reasoning behind what you are saying and why.

When you repossess a home, additional costs and interest get added to the debt and this means that the lender has a larger debt and no one paying anything.

Northern Rock to my knowledge never purchased insurance policies to protect them against the debt not being covered in case of repossession.

If they did have this insurance in place then maybe it wasn't an explicit charge as some lenders made in form of Mortgage Indemnity Guarantee charges (or more recently known by Higher Lending Charges).

In either case, the debtor now still owes this money, whether it be the insurer or the lender. Upto this point, you can see why repossession seems an OK route but if the debtor can avoid acknowledging the debt within so many years (6 I think), the debt cannot be chased or recovered. This means the debt is effectively a write off.

Who loses out then if the debt cannot be recovered. If no insurance is in place to repay NR then the taxpayer does surely.

As a taxpayer, I would therefore maybe accept that the government write the unsecured debt off and put an increase on the debtors tax code to ensure that they pay some of this debt back. It may not fully pay it back but its better than the alternative.

Just to add to this discussion I had a NR mortgage 45% ltv that came to the end of its fixed term in september .I thought I had nothing to do but move to another provider. I had never defaulted, never been late with payment yes I had credit cards but again I always paid more than the minimum and indeed sometimes paid them of completely.So far I have had no luck in securing another mortgage so I am stuck at the grosssly inflated rate that they are charging. So it is not only the high ltv customers that have a problem it is the ordinary ones who thought they were being careful with their finances

Hi

the reality is that shareholder democracy is a joke as the representatives for the big institutions seem to hold sway they have access to better information than individual investors and if the shit starts to hit the fan they can get out relatively quickly.

The easing of credit restrictions since the late 70s , easier bankruptcy laws, and massive changes in social attiudes to debt and everybody to grab what they can in the property market (but if there are losses somebody else can pay these ) etc have allowed higher notional economic growth but cauused massive social, environmental and now economic dislocation. Of course we have a government that believed in some free market utopia mixed up with a massive right wing authoritarian state: foxhunting bans, smoking bans, refuse snoopers, war on terror (and Iraq) , war on drugs....

And of course the bankers......

We took out a together mortgage in 2006. At the time Northern Rock were practically throwing money at us and offering us 125% of the property value. Luckily we saw sense but still needed a 100% mortgage.

Now we are approaching rapidly our switch over to Northern Rocks SVR and things are going to be tough to say the least as their SVR is just to force you to move elsewhere, something we can not do as we are unable to find a mortgage anywhere else.

I also asked Northern Rock months ago if they would be waiving their early repayment charges to enable us to switch to someone else whilst other mortgages were available to us, I was told this was not possible even though by Northern Rocks own admission they would not be able to offer us a new deal when the time came.

All I see if the government giving these banks billions of pounds but nothing is changing for the guy on the street or the person just trying to afford their own home.

We took out a together mortgage with NR in 2001.
The house was a traditional 3 bed detached, that needed quite a lot of modernisation - just what we were looking for at the time.

The house price was the princely sum of 44K and we took an additional 10K on top to fund the necessary works.

The price seems very modest by todays (or last years at least) values.

Almost as soon as the work had been completed, it had doubled in value. So now the LTV ratio was about 65%.

At the time we needed to act fast, and the together mortgage gave us that opportunity as first time buyers.
The fundamental message here is that not all 125% mortgages are bad. We saw a good opportunity, took it and reaped the rewards for our actions, whilst understanding the risks too.

The house was sold in March of this year for a little over 125K.

I don't know if some may call me mad, bad or otherwise. But to me, it all worked out well as it was very well targetted for our needs and we didn't use the money on other items - we used it to directly affect the value of our home.

Lets see if Northern Rock drop their SVR after todays 1.5% base rate cut. I doubt they will, they are quickly becoming an unethical lender.

My husband and I took out a NR Together mortgage in 2006. We borrowed what we needed for a modest 3 bed house and took extra to pay debts we already had to make things affordable month to month.  Fortunately, we did not borrow more than we can afford (although we were offered upto 60K more!) and our property is now worth just about more than we are mortgaged for.  However, we do not have enough LTV to be offered a remortgage.  Luckily we can afford to pay NR SVR and can stay in our home but feel it is unfair that we are now left with no choices! We may have been foolish to take this product but is it fair that all the banks who offered 100% mortgages (or similar) can now leave people in our situation without a competitive option?