Subprime Lending - SPPL

[Storm]

From Internal Press Release......

US investment bank giant is to close its UK second charge business, Southern Pacific Personal Loans (SPPL) with immediate effect.

Lehmans has been hit by the sub-prime crisis in the US. It recently announced 1,200 redundancies in the US after it closed its sub-prime brand, BNC.

Lehmans were unavailable for comment. Calls to SPPL’s sales staff were met with an unavailable dial tone.

[MelanieGiles]

Gosh that is interesting! Sign of things to come?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
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[mikebdomain]

Lehman Brothers Restructures Its Mortgage Businesses

We are proposing to consolidate LMC into the SPML and Preferred Mortgage brands. By concentrating on these two market leading brands we will be more focused and responsive to market needs.

We are proposing to withdraw from the second charge market in the near future which would mean phasing out the SPPL brand to concentrate solely on first charge mortgages. We will provide more information on this at a later date, however we require all applications on our current product range to be fully packaged and with our underwriters by 5th October 2007. We will honour the pipeline of business received on these products at that time provided it has completed by 5th December 2007 .

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[thebear29uk]

Hi

There was an interesting feature on BBC2's Working Lunch programme yesterday regarding the decision to hold the base rate.

They said that although there was no change some companies would still be putting up their rates as the cost of borrowing between banks and from the Bank of England has increased (its called LIBOR apparently).

The knock on effects were that banks would seek to encourage people to save more so that their money could be used to fund lending rather than the banks themselves borrowing. To this end NR put their deposit rate up 0.3% Also they reckoned that creditors would be much tougher on credit applications now. An interview with a spokeswoman for Experian said creditors would now be looking at factors such as: who only pays the minimum balance each month; who is always up at their limit; who regularly takes large cash advances on their cards.

Maybe one thing that will come out of all the uncertainty surrounding the money markets currently is that people won't be able to get themselves deep in debt so easily.

Regards

Dave

[mikebdomain]

At the moment there is a lot of US backed UK companies pulling out of the sub prime, second charge market due to the state of the US sub prime market.

What we have to remember is that the UK sub prime market is a lot more stable. We have seen this sort of thing before and I have no doubt we will again. Some UK lenders are in the process of securing alternative funding and changing mortgage product criteria and rates in line with market conditions.


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Specialising in adverse credit.

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Please read our Initial Disclosure Document(IDD):
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[Garcia Jones]

LIBOR = London Inter Bank Offer Rate

This is the rate that banks lend money to each other and is fixed at 11am each day.

The common periods are:-

Overnight
1 Week
1 Month
2 Months
3 Months
6 Months

Large Corporates also borrower money this week with a margin added to the rate.

Hope this helps

Gary Coker

[Storm]

In a meeting with Merrills this week they confirmed they are sat on £100 millions in loans that they can't back off to the financial markets which will see them restricting existing / new lines.

Barclays have also tightened up on there warehousing facility which debt purchasers use to buy debt so that could also be hit by market conditions.

[Garcia Jones]

Most Financial Institutions will form special purpose companies in which to house the debt before market conditions allow them to sell the debt to other Financial Institutions / Companies.

Back in the 80's most of the third world debt went off shore to Financial Instititions that had offices in tax havens like the BWI, BVI and The Channel Islands.

The sme will happen to this debt and the Financial Institutions can claim a tax write back.

Gary Coker

[Storm]

Fully aware of what SPV's are and there purposes - Merrills have hundreds of them but they still require the movement of money.

One of the primary realisation vehicles is bad debt sale but debt purchase is funded by debt ie barclays warehousing.

[ray_a]

At the moment there is a lot of US backed UK companies pulling out of the sub prime, second charge market due to the state of the US sub prime market.

What we have to remember is that the UK sub prime market is a lot more stable. We have seen this sort of thing before and I have no doubt we will again. Some UK lenders are in the process of securing alternative funding and changing mortgage product criteria and rates in line with market conditions.

I am sorry I have to disagree.

From what I have read there is expectation with the increases in interest rates the same thing will happen here,

If you think the UK is stable it should be pointed out that there are possibly 9m people who have serious debt problems.

I am afraid that we are going to see a very difficult time for the UK and other Western economies and a strong possibility of major falls in the values of Homes in the UK!

The equity releases on IVA's will no doubt cause problems but then the variations will be made to extend IVA's for another year!

Basically Mr Brown is facing a Bust economy something he use to tell us when he was a Chancellor would never happen!


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[mikebdomain]

ray

When referring to the stability of the market, I am of course, referring to the stability of UK lending to the sub prime market, the funding and risk assessment behind it. Not the state of borrower’s ability to pay it back.

Falling house prices are what the bank of England wants, hence the recent rise in the Bank of England base rate. The very fact that the Bank of England base rate stayed at 5.75% this month shows that the bank feels the previous rises have worked.

The sub-prime market, accounts for roughly 10% of all UK mortgages it has traditionally loaned money to all but the very worst credit history individuals. A report released recently by the Council of Mortgage Lenders reflected a much smaller risk to the UK mortgage market than in the US, showing that the liquidity situation in the UK is more stable for the time being. 175% lending on property just does not happen in the UK whereas it does (did) in the US.

However, after tighter policies have been implemented across lending institutions, analysts have predicted that those with a poor credit history will find it increasingly difficult now to obtain a sub-prime mortgage.

The recent UK mortgage product problems stem primarily, from the instability in the US and the withdrawing of funding by the US for UK (and in fact worldwide) sub prime lending.

I do not believe this situation (from a sub prime lending point of view) is anything different from situations the sub prime lending industry has been through before – I could be wrong – but I truly believe it will settle down over the coming weeks and months.

I do agree however that the state of debt in the UK is totally unacceptable and the recent rate rises have contributed to the sudden rush on people seeking bankruptcy and IVA’s. Something has to be done to ease the situation. Maybe a change in product criteria and sub prime lending policies will be enough to ward off future problems, although I am aware it doesn’t help those people caught in the fallout now.


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LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
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Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
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[ray_a]

Mike

I must admit there are so many differing opinions and all I can say I think the sitaution is very serious but would agree we are in a very difficult situation and no one knows which is 98% of the problem!

Let's wait and see!

Regards

[mikebdomain]

ray

I totaly agree

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LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
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