Should missed mortgage payments be a criminal offence?

by Mark Alexander

6 years ago

Should missed mortgage payments be a criminal offence?

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Should missed mortgage payments be a criminal offence?

The Banker is back, this time he’s trying to upset by hoisting us by our own petard – he’s asking the question “should missed mortgage payments be a criminal offence.”

Is his last anonymous correspondence with Property118 readers The Banker caught our attention with the title “The Property Boom of 2012” and then went on to tell us all why we are doomed. His message this time around is no more friendly either. However, I’ve published his ramblings yet again as some might feel there are some pertinent homes truths in his arrogant musings! We can also say pretty much whatever we like to an anonymous banker as he can’t possibly take legal action for defamation as he is anonymous LOL.

The Bankers says:-

“The naivety of some landlords astounds me, I read your comments for amusement, sometimes the comments posted on your Property118 website are so childish they ought to be published as a comic.

Why on earth should missed rent payment be a criminal offence?

Why should landlords be able to bypass the court systems to repossess somebody’s home just because they have missed a few rent payments?

These are YOUR readers desires – not mine!

I intend to demonstrate to you how pathetic your arguments and justification are by presenting the flip side of the argument.

For all you landlords borrowing money, stretching your finances too far and crying out for the rules to be changed just think about this ….

Who is taking the the lions share of the risk?

YES! It’s the bank isn’t it?

And yet you landlords get to keep any rental profits and you also get to keep 100% of the capital appreciation.

I’d say that’s unfair, and there’s enough there to convince me that providing mortgages to landlords is a terrible investment.

However, if you want your rules to be put in place, consider what mine would be.

  1. If you miss a months mortgage payment I warn you. fair enough, you may have changed banks or something, fair enough, catch up or else Imight want to charge you for further correspondence. I certainly think I deserve the right to do so.
  2. Miss a second months payment and I immediately want possession of the property and the right to instruct an LPA receiver to collect the rent without having to go through the Courts. I will then decide whether I sell the property to recover my losses and I think as I put up the lions share of the money I should be able to do this however I may choose, completely free of any interference from regulators or the Court system.
  3. If there is a shortfall I want a change in the law so that I can have you immediately arrested for breach of our agreement. Squatters now get a fine of up to £5,000 and 6 months in prison so I reckon that if that’s fair to them then it should be fair for me to prosecute you on the same basis.
If you don’t have the capital adeqecy to run your business that’s tough, you shouldn’t be in business. If you don’t pay your mortgages on time that should be a criminal offence.

That’s what landlords seem to be saying would be a fair set of rules for tenants to play by so I think banks should also be allowed to play by those rules.

touché

And for any of you who have missed two or more mortgage payments, “Go To Jail, DO NOT pass Go and DO NOT collect £200

The Banker”

PS – my proposed rules are for landlords only – not for homeowners

PPS – As I said in my last article, I’ll be there ready to buy your properties for 50% of what you think they are worth, just you wait and see HAHAHA

Comments

Annette Stone

6 years ago

Glad this guy is not my banker. I think the banks protect themselves very well by taking "product fees" of up to £1,999 and/or 3% of the mortgage up front. There is also the question of banks who do repossess properties selling them at lower than market valuations (sometimes to other clients of their banks who get in quickly or are on the books as buying this stuff) which has also been called into question on many occasions. I had this happen to a friend some 19 years ago but the bank picked the wrong one as I agreed to fight the case on behalf of my friend (really a friend, not me) and eventually the bank gave up and wiped what they considered to be the balance of the loan still owing because they sold the property at way less than market value.
The best advice I could give to someone starting out is go slowly; buy something, let it out, save the rent as far as possible and when you have a good deposit buy the next one and keep doing the same thing. You have to be very disciplined and not grab everything in sight but in the long run this enables you to build a portfolio with a good equity base. Never spread yourself too thinly; don't keep everything with the same bank and try and keep at least one property unencumbered in case you need to raise funds urgently.

6 years ago

I agree with the banker, anyone who misses their rent or residential mortgage payments should be arrested and criminalised.
That means millions of teachers and policeman out of a job, you aren't allowed to have a crimianl record.
the banks would be sitting on vauless property and councils would face housing millions of homeless people.
I don't think the -anker has thought things through.
All we as LL are asking is to be able to repossess our properties when the tenant refuses to pay rent.
A tenant can just go to another tenancy.
a homeowner cannot just up sticks without any sanction.
Tenants and residential occupiers are 2 different beasts.
All a residentila occupier needs is about 6 months of saving to pay the mortgage and then the social step in and pay mortgage interest on a loan up to £100000.
If the occupier cannot sustain this then the lender repossesses.
don't see what the problem is.
A tenant not paying though could force a LL to be bankrupted and made homeless.
VERY FEW businesses in the UK have sufficient capital adequacy.
This is why perfectly viable businesses are going to the wall as the banks won't lend.
The -anker is in the extreme minority having sufficient capital adequacy.
The vast majority of capitalism in the UK is run on a hand to mouth existence.
Very few businesses have cash piles to contribute to CA.
This is why they use banks.
To condemn anyone in business who does not have sufficient CA is just being naive about the way a modern economy runs.
LL in particular run their businesses with little CA.
It takes years for it to build up.
If LL did not risk ther would be no rental property and then where would all the tenants live.
Not even the -anker with his massive capital adequacy could replace all those LL and provide the rental accommodation.
There is certainly no way that these tenants could afford or wish to buy property as the banks ain't lending.
The -anker is dreaming if he thinks prices will crash.
They won't, govt will maintain the low interest rates for decades. and only once wages can afford a property price of 2007 will prices then start increasing.
It will need wages to double to achieve thiss.
In about 30 years time this may have happened.
I hope the -anker has his CA in a high interest account as he won't be able to use it on property at prices he thinks it will fall to!!

6 years ago

Read the PS - I'm not saying it should apply to homeowner mortgages, just landlords like you. No laws on capital adequecy, just make it a criminal offence to miss two or more payments on a B2L mortgage. After you've had it repossed and you've done your 6 months of time, then you can go and rent a property to live in. If you want it to be a criminal offence for tenants to miss their rent payments and you also think it's fair that you should be able to reposess without a court order then my suggestions should look equally fair to you. As you often say at the end of your post ......... chances of it happening zero.

Recardo Knights

6 years ago

Is this man sane? Who is taking the lions share of the risk? It's the bank, wow get a life. I buy a house for £100,000 ( I wish) pay all the fees (arrangment £2000 or more, plus slicitors etc) My deposit could be £25k or more plus expenses, then get reposesed because of a moron tenant
The bank sell the property for more than £75k, I lost my money and the moron tenant will be evicted. I lost, credit rating thrashed and the non paying tenant now moves on to blead another LL.
I was a train driver in the 80's, the union wanted to go on strike and I did not want to be a scab. I notified the bank that I will have to fall behind on the mortgage payments for a while. I was told if my payments were not up to date in 3 months they would reposes my house.
Pressured i sold in 2 months and moved into a wreck of a house because the banks wanted their mony NOW. I want my money from a tenant now so I can pay the mortgage and upkeep for their comfort as the council cannot house them.

6 years ago

this is obviously aimed at me and my proposal to make theft of accommodation as illegal as theft of a car, so I think it's for me to answer.

hi mr. banker,
first of all I don't think you are a banker. you may well work for a bank but you probably rent your accommodation.
the reasons why I think this to be the case is down to your crude explanation of the " risk "

let me expand;

1, landlords have to put up a deposit. average 20% of the value of the property. CALLED L.T.V.
if the property price goes up...that's good for the LL but if the value goes down it is the LL that looses not the bank. please note = property prices have fallen by around 30% since 2008

2, let us assume a LL goes bankrupt, for whatever reason;; the process the bank undertakes goes like this; they hold the deeds to the property so it becomes theirs, it is their duty to sell the property [ because they are not in the rental business ] so they sell to anyone with the cash, normally at auction, with a target price equal to the total outstanding debt. if the sale equals the debt then everyone can relax...even the ex-LL is in the clear. but should there be a shortfall then the ex-LL still has that debt to clear. he/she then has to either take out a loan with THAT bank at a very high interest rate [ as the now ex-LL is now considered to be a high risk ] to pay off the outstanding balance or the bank then takes over the LLs home and other assets and sells them, the car, the furniture and the grandmother to pay off the outstanding shortfall.

3, the base rate is 0.5% and banks sell money at whatever rate they can get.
LLs pay presently on offer 4.5% above that, come rain or shine, with tenant or no tenant.

4, when a bank has problems the TAXPAYER bail the bank out. [ just a bit of history there any real banker would have noticed ]

SO... WHAT RISK DO BANKS TAKE ????????

however, I must admit there could be credence in this bankers argument.

we, as LLs, take deposits and negotiate that deposit for lack of rent.
banks take deposits and also use this same deposit for lack of payment of the loan.

the problem only occurs when the shortfall becomes greater than the deposit.
so as LLs we would be forced to talk to the bank before we got to that point.
as tenants should talk to their LLs for the very same reasons.

Don Holmes

6 years ago

What a load of "tosh" a banker talking about a level playing field, what a contradiction, They are accuse and in some cases proven to have driven the economy by there stupidity and greed to no, not to, but collapse, Barclay's accepts a multi million pound fine for manipulation of the interest rate, all the others sheepishly keep quiet, City Bank accept a multi million pound fine for monie laundering for Iran, HSBC for the same and now Barclay s accused of misappropriation of the SME funds, not to mention of course the couple of billion they have put aside for the over selling products compensation? What else is there about to come to the surface, yes you got it interest only mortgages, Give us all a break these guys should not be allowed to collect and look after monie they should be in jail. At least "Dick Turpin" wore a mask!!!!!

JohnCaversham

6 years ago

What a knob this man is!
A. For a start the bank isn't taking the risk the LL is hence the requirement for 25% or greater deposit at inception..No need to explain that to the majority here but Mr thicky AB hasn't grasped that concept..B. The Mort Co are making good profits otherwise they wouldn't bother... C. Due process already exists for Mort Co's to take back and repossess property when there are arrears, and due to the large deposits required at inception (see point A) the Mort Co's are rarely out of pocket otherwise see point B

Best regards John

Devon Landlord

6 years ago

The Banker has a number of relevant points. If the tables were turned that is what the landlord community would face. This might not be such a bad thing as it would remove the speculative landlords from the game and ensure that those in it had a secure base and a professional attitude. The difference is however this. The Banker, if he were a true banker would realise that there is a significant difference between the Institution and the individual. We take the financial hit and it is far more immediate for us. The Institution is able to off-set its liabilities in a far broader context. But does he not have a point. If the rules did apply to us as he would seem to suggest we want applied to our tenants, it must give us greater leverage to have intentional non payment of rent to be treated as a criminal offence. A come is a commercial proposition between me and a tenant. It should be treated as such and the consequences take for an abuse of the privilidge.
So Mr *anker, what do you have to say to that?

Mark Alexander

6 years ago

Whilst I generally agree with the most of the other comments I too can see that The Banker does have some valid points. I'm glad you've said so first as i thought I'd get lambasted for agreeing with anything he said. I think his arrogance is intended to provoke a reaction and in a way I find him quite funny. From a personal perspective I can't see that it will ever be made a criminal offence to miss a rent payment or a mortgage payment as that's just taking matters to the extreme. I think he makes some fair points regarding liquidity, or capital adequacy as he puts it. I suspect many of the problems that earn small landlords a bad reputation come as a result of them not having the money to fix things when they go wrong. If I was renting a property and my landlord couldn't afford to fix a broken boiler I think I'd probably get upset pretty quickly too. It's probably unprofessional of me to say this but I don't want The Banker to think he's right about everything - I still think he's an arrogant tosser!

6 years ago

I am not a banker, I am a trader. The Banker is a name that Mark Alexander decided to call me, I think we all know what he was getting at and I'm happy to play his silly games.

@Mark Alexander - call me what you like, by your own admission it's "unprofessional". Sticks and stones ...........

@Cosmo - not aimed at you old chap but if the cap fits ...........

@Paul Barrett - I've read your story on many forums. You've made your bed ............ I pity your tenants.

@Devon Landlord - at last, a landlord who can see reason, in a blurry sort of way

@Recardo @Don @John - my point is not who takes risk, it is that landlords and tenants should be equally accountable for making payments on time.

To all - If landlords want missed rent to be criminal then they must accept that missed mortgage payments should carry the same penalities. Yes I agree that landlords take a risk and it's a good point that Mark made in that tenants take a risk to if they are unlucky enough to set up home in a rented property where a landlord is strapped for cash.

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