Author Topic: Banks told to help those in negative equity  (Read 2255 times)

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Philofacts

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Banks told to help those in negative equity
« on: December 16, 2011, 10:21:24 am »
The FSA is to announce new rules next week that will give banks the green light to approve loans for those trapped with negative equity, where the home is worth less than the outstanding loan on it.
By allowing loans of more than 100% of a property's value so called "mortgage prisoners" will be able to move home, by transferring their negative equity to the new home.

It is thought that this will benefit businesses struggling to recruit managers from other regions and stimulate the stagnant housing market.

When will they learn?
This is exactly how the world-wide financial crisis started in the US, allowing high loan-to-value mortgages for those who could not afford them.
The FSA is being reckless by relaxing regulations and encouraging more debt, at a time when the government had given an undertaking to tighten banking rules, re capitalise the banks and reduce debt.

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