A million fucking mortgage lenders out there, and I end up with the one that lands into financial difficulties; what are the chances?
For those who have been living under a rock for the past few days, please allow me to give you a quick update. Northern Rock declared that they have been going through severe financial difficulties. Northern Rock’s shares, which had lost 32% on Friday, fell from 438 pence to 282.75 pence. Consequently Northern Rock savers have been rushing to branches to withdrawal all their savings…etc Blah blah blah! To cut it short, none of that really concerns me because I don’t have a bank account with Northern Rock.
However, I do have a Mortgage with Northern Rock, so i’ve been keeping my ears to the ground. I’ve been listening to the news as much as I can all day. The media seems to be focusing discussion on the Northern Rock “savers” and how they have been panicking all day. However, since then it’s been confirmed that savers are guaranteed that they won’t lose any of their savings.
the Chancellor has made it clear that all existing deposits in Northern Rock are fully backed by The Bank of England and are totally secure during the current instability in the financial markets.
That’s GREAT! But what about the people that have mortgages with Northern Rock? Throw us a freakin’ bone here!
Is it me, or is there barely anyone talking about that issue? Are we safe? Are we in risk? If so, what kind of risk? No one seems to be saying shit about us Mortgage folks. Ok, if the media wants to discuss the whole issue with the “savers”, that’ fine, but at least give us mortgage folks 10 seconds of your airtime just to confirm whether we’re in danger or not. Maybe I’ve missed the reports where they mention the mortgage holders. But hey, I’ve listened to the news 5 times today, and I didn’t hear anything about the Mortgage holders.
Should I be inclined to believe that because the media isn’t covering the Northern Rock mortgage side of things that the mortgage holders are safe? Because you know, they’re more likely to give more publicity to the negative, as opposed to the positive.
Due to the severe lack of publicity regarding Northern Rock mortgage holders, I decided to find as much as I could online.
I found an article on the BBC news website, What if Northern
Crock Rock goes Bust that mentioned mortgage holders:
Contrary to some comment, they have the least to worry about. If a mortgage lender goes bust, no one will come round trying to repossess borrowers’ homes to get the money back.
In reality all that would happen is that the administrator would send borrowers a letter, telling them to keep on paying their monthly repayments. In the meantime the mortgage, along with all the others, would, in all probability, be sold off to another mortgage company who borrowers would then pay for the remaining life of their loan. Alternatively another bank might buy up the insolvent bank – lock, stock and barrel.
The mortgage business is, in normal times, both steady and profitable, and there would be no shortage of buyers for the Northern Rock’s loan book.
Hmmm…it clearly implies that mortgage holders should breath easy because we have little to worry about. Am I convinced? Not in the slightest. Am I still a little worried? Fuck yeah (I’m a cynic when it comes to money). I’m still not sure how much danger mortgage holders are in. All i’ve seen on the news today is a thousand people queue up outside branches trying to withdrawal their savings, with a financial correspondent mention how people are panicking. THAT IS NO GOOD TO ME! Please, cover more ground and mention other aspects that Northern Rock deal with, FOR EXAMPLE MORTGAGES. MY GOD!
I also found this discussion on “yahoo answers”. Someone in the same situation as me asks how the financial difficulties will affect her, as a Northern Rock mortgage holder. There’s a few answers from random people, all saying that mortgage holders have nothing to worry about. I’m still not convinced, because a) I’m not sure where they got their sources from b) I doubt any of the contributors are actually anything more than the average Joe passing their opinions (which is cool and encouraging, just not helpful enough).
MSN news also reported:
If you are one of the 800,000 people who own a mortgage with Northern Rock, you won’t see any immediate changes. After all, you owe Northern Rock money, they don’t owe it to you!
If any bank goes bust, the streams of income from the mortgages are valuable and will be sold on to a buyer. All that would change is the address to which you would send future payments.
From the limited information I have come in contact with, it all seems safe for mortgage holders. It does make sense that the mortgage holders are in a strong position, because as mentioned in the MSN extract, we do owe them money!! However, terms like, “you won’t see any immediate changes” worry me a little. Regardless of all the positive news for mortgage holders, a part of me will be worrying until it’s absolutely confirmed that there is nothing to worry about for Mortgage holders. I wonder how many people will remortgage at the given opportunity…
If this all blows up in my face, this could be the most unsuccessful property investment project…EVER! Now that would be kind of funny. Maybe. Not.
And just for light humour, this disclaimer is on the Northern Rock homepage:
These have been troubled times but Northern Rock will prevail. We will not let you down
I found that to be quite entertaining. It sounds like a line from the Movie Gladiator. I just hope they keep their word.
If anyone else has any additional information, please let me know. If I hear anything else, I’ll be sure to post it.
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.