sharing mortgage fall-out

james armstrong james36armstrong at
Fri Jan 7 18:27:44 GMT 2011

 To The Editor, F T .                                                      
9th January 2011


Sharing the burden when mortgages breakdown.


“Banks’ senior bond holders should share the burden  of future losses in order to spare tax-payers..”
is the novel idea  advanced by the
European Commission.

(“Brussels to
target bondholders” Jan 9th )


Why do we wait so long before  establishing a balance  between 
multi-£billion corporations and 
vulnerable individuals?

 Mortgage lenders  should share the burden  of  losses
when houses are repossessed-  as they are
in tens of thousands each year. 

Mortgage lenders are capitalized in £billions. Individuals
who fall behind on repayments are 
invariably already under severe financial stress and often have lost
their employment.

Under the present arrangements just when they are most
vulnerable, distressed families   are hit
with  the further hammer blow of eviction.

Not only do they lose ownership of their greatest asset but
are then evicted, their family life is jeopardized, contacts with  wider family, friends and neighbours are
further strained or broken and often their childrens’ schooling is interrupted
when they are forced to move house and find other accommodation.

It would be difficult to devise a more socially inept,
inequitable  and damaging arrangement –
multiple madness or worse  - corporate
predation on individuals’` vulnerability. 

A condition of corporations being granted the  privilege of offering mortgages to persons aspiring
to be owner occupiers, should be that in the event of independently assessed genuine
inability to  keep up repayments, the
lender and the  borrower should share the
misfortune of the breakdown:  ownership
should pass to the lender and the ex-owner retain occupancy  now as a protected tenant.  

In many instances this would be beneficial to the lenders since
repossessed property  is now often sold off
at below market price.   


James Armstrong                                                                  9 January 2011



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