15:13 PM, 13th June 2011, About 10 years ago 1
Buy to let specialist Mortgage Express expects to write-off another £80 million to loan fraudsters and slack business practices this year.
The former buy to let lender shut up shop for new business during the credit crunch and has already put aside around £200 million to pay for suspected fraud and negligence.
The firm, part-owned by Bradford and Bingley, was taken in to public ownership in 2008, and has experienced a long and lingering demise as a specialist landlord lender.
Despite this, the firm has reported a £85.8 million profit, mostly attributed to a reduction in arrears due to low interest rates.
Arrears and repossessions fall
The number of properties repossessed decreased from 452 to 252 in 2010 – representing 0.37% of 68,108 properties on the lender’s books.
Fewer customers are struggling with loan repayments. The number in arrears has declined from 7,862 in 2009 to 5,334 in 2010.
UK Asset Revolution, the government’s toxic loan holding company is managing Bradford and Bingley and Mortgage Express. The directors explained arrears were reduced due to a combination of low interest rates and ‘effective asset management’.
Bradford and Bingley also returned a profit of £200 million compared to losses of £166.5 million in 2009.
Unfair loan terms
Many mortgage experts believe any major interest rate increase could trigger a massive pile-up of arrears for Mortgage Express. Loan arrears are declining across the board due to the extended 0.5% bank rate, but borrowers are feeling the financial strain from inflation.
Lawyers are rumoured to be looking at Mortgage Express buy to let loan terms that may contain an unfair clause which lets the lender call in portfolio loans on the sale of a single property.
UK Asset revolution also manages the bad loan book of the former Northern Rock Bank that was also nationalised during the credit crisis.
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