Insurance giant JLT to run mortgage indemnity scheme

Insurance group Jardine Lloyd Thompson has been appointed to manage and develop the new mortgage indemnity scheme for first-time buyers of new homes.

The group expects its work to support 100,000 new mortgages – which will also be available to some other buyers – at 95% LTV. The scheme is a joint one, between the new homes industry and the Government, and will underwrite the mortgages.

JLT has been appointed by the Home Builders Federation, and will handle the scheme through a number of its operating companies: Lloyd & Partners, JLT Specialty and JLT Insurance Management (Guernsey).

Steven Rance, Partner, JLT, said: “This risk management solution, created in response to the reduced availability of mortgage funding for home buyers with small deposits, will reduce lender risk at higher LTV ratios and so allow lenders to offer 95% LTV mortgages for new-home buyers at more competitive rates.

“The UK’s major lenders and house builders are all supporting the scheme which is being backed by the Government and is expected to launch in March. This is an extremely timely and exciting development for lenders, builders and the UK housing sector.”

Before the launch, JLT will be developing the legal framework, scheme structure, bank accounts and systems, with this initial scheme expected to run for three years.

Stewart Baseley, executive chairman of the Home Builders Federation, said: “The lack of high loan-to-value mortgages has been a major constraint on new-home sales for the last four years. The indemnity scheme should provide a significant boost to new-home sales over the next three years.

“Everyone involved in the scheme is now working very hard to ensure customers and home builders gain maximum benefit.

“HBF is therefore pleased to have appointed JLT whose experience and expertise will be crucial to the scheme’s success.”

News Source: http://www.introducertoday.co.uk/

CML hits out at move to pay mortgage support direct to borrowers

The Council of Mortgage Lenders has criticised moves to make Support for Mortgage Interest (SMI) payable direct to borrowers in financial trouble, rather than to the lenders.

The CML says it would ‘inevitably’ mean that the money was being diverted for other uses.

The CML spoke out while giving a guarded welcome to the consultation published by the Department for Work and Pensions on Support for Mortgage Interest (SMI).

The CML said it welcomed the confirmation that “the Government is committed to continue providing support for mortgage interest, to assist those owner occupiers who qualify for this help to remain in their homes and avoid repossession as far as possible”.

It said it supported the idea of an option to receive SMI for the long term in return for a charge on the property through which the State could recoup some of the costs at a later date. The body said it was right that taxpayers should not effectively help people to acquire personal assets through any long-term rises in house prices.

However, the CML hit out at the proposal to move away from the Mortgage Interest Direct scheme, under which the claimant’s SMI is paid to their mortgage lender.

The Government is proposing to pay the benefit instead to the claimant, under the new universal credit system, so that claimants take responsibility for making their mortgage payments to their lenders.

But the CML says any move away from Mortgage Interest Direct would inevitably mean that some of the funds designed to help meet mortgage costs would be diverted to other spending by some claimants.

The CML has expressed the same concern over the payment of housing benefit to tenants, rather than directly to landlords. Many landlords are said to have left the housing benefit sector as a result, complaining of arrears.

CML director general Paul Smee said: "It is good that the Government is in listening mode about Support for Mortgage Interest, as there is much that can be done to improve it.

“However, the principle of paying the benefit to claimants rather than lenders is dangerous in terms of potentially reducing its effectiveness in meeting its intended purpose.”

The CML will make a formal response to the consultation which also suggests that householders eligible for SMI could only receive the support for a set period of time, rather than for as long as they are eligible.

Welfare reform minister Lord Freud said: Lord Freud said: “The current system of SMI payments does not encourage people to get on top of their own finances. It is also not sustainable. Even with today’s low interest rates it costs government £400 million a year.

“We are committed to supporting homeowners to stay in their own homes when times are hard. But in the future this type of support must be fair and affordable so we are seeking views from experts and the wider public, including options for putting a charge on the homes of future claimants so when they sell up we can recoup some of the costs.”

News Source: http://www.introducertoday.co.uk/

Seven in ten say high street lenders make it hard for brokers

Nearly seven in ten of mortgage intermediaries (69%) believe that high street lenders are deliberately restricting business via intermediaries.

London brokers feel particularly aggrieved at 79%.

The finding came from polls of the hundreds of brokers who attended  Precise Mortgages’ roadshows which toured the country in a red Routemaster London bus.

The findings also showed that 82% of brokers believe the short-term lending market will grow, driven by continued restrictions on the availability of finance from high street banks.

The growth in the private rental sector will also continue, according to 57%, with Edinburgh brokers being most optimistic at 79%. More than half (56%) said they believe more brokers will start to operate in the sector as a result of the growth.

During the programme of roadshows, brokers were entered into a prize draw for a luxury Harrods hamper and the winners were:

•         Graham Kennedy of Graham Kennedy Mortgages
•         Lauren Flockhart of First Mortgages Ltd
•         Brian Day of Mortgage Advice Shop
•         Steve Lowe of JDS Financial Services
•         Keith Ryan of Dunstan Mortgage & Insurance Services
•         Keith Jones of Brilliant Money
•         Caroline Hughes of Caroline Hughes Mortgage Services

In addition, well over £2,000 was raised for the Broomstick Ball for Cancer Research UK.

Alan Cleary, managing director of Precise Mortgages, said: “We are going to continue to speak out on behalf of the mortgage intermediary, as there is going to be a battle with high street lenders over the next few years for market share.

“Despite the intermediary share of mortgages dropping below 50% for the first time in several years, brokers are still optimistic about the mortgage market in 2012.”

News Source: http://www.introducertoday.co.uk/

Promise launch 75% loans for credit-impaired borrowers

The availability of finance for credit impaired borrowers has increased following the launch of a new lender through broker Promise Solutions.

Secured loans for borrowers with high adverse credit which were previously only available up to 65% LTV are now available at up to 75% LTV.

Unlike with other lenders, there is no equity reduction on former council houses.

Owner occupied semi-commercial properties will also be considered, as will borrowers on benefit income or who have county court judgements against them.

Steve Walker, managing director at Promise Solutions, said: “This is an exclusive product and it is a real shot in the arm for Promise introducers, enabling them to place significantly more loans than they might through other master brokers.

“The 10% uplift in LTV is important, but the more flexible attitude towards ex-council houses, income proof and semi-commercial properties makes this product the most significant single advance in product development we have seen for many years.”

News Source: http://www.introducertoday.co.uk/

Fraud sisters jailed after £161m case

Two sisters in a £161m fraud case have been sentenced to three and a half years in jail.

The pair bought properties, sports cars and spa treatments.

Judge Niclas Parry said: “It beggars belief that incapacity benefit and working tax credits were being paid out of public funds to the same people for so long.”

He also criticised the willingness of banks to grant “huge mortgages on the flimsiest unchecked evidence”.

He added: “It’s no wonder this country is financially on its knees.”

Andrea Vaughan Owen, 42, and her sister Roberta, 37, dreamed of a lavish lifestyle funded by a VAT repayment scam.

Their dream was brought to a halt when HM Revenue & Customs launched an investigation into the employment agency the sisters claimed to be running. Inquiries led to their arrest in January 2009 and they were charged in December 2009 with nine offences including VAT and tax credits frauds.

The pair had no difficulty considering how they might spend their illicit wealth, making inquiries about buying a £320,000 Rolls Royce and various commercial properties worth in excess of £2m. They even approached Liverpool Football Club to discuss an advertising deal.

However, as their fraudulent attempts failed, maintaining this veneer of wealth based mainly on credit was increasingly difficult. As they became more desperate, their attempts at fraud became more outrageous.

Speaking after sentencing, Simon De Kayne, assistant director at HMRC, said: “Andrea and Roberta Vaughan Owen lived the type of lifestyle that most people can only dream about – a lifestyle funded by their web of deceit and fraud.

“The scale and variety of their criminal attempts was astonishing, but it wasn’t enough for them and their greed led to the £161m VAT claim, and their downfall. Our next step will be to relieve them of the profits of their crimes.”

During a three-week trial, Caernarfon Crown Court heard how mother of three Andrea Vaughan Owen and her sister Roberta set about their frauds. Between them they received £120,000 in tax credits over a five-year period, starting in 2003 when they made their first claim stating that they were employed.

Investigations later revealed that Roberta had been on incapacity benefit since 2002, supposedly unable to work, despite telling HMRC that she was self-employed. Andrea also claimed to be self-employed, working more than 30 hours per week.

Andrea also tried – and failed – to obtain two bridging loans totalling £751,000 by falsely claiming her income was £18-22k per month. Both sisters attempted insurance fraud by seeking out mortgage and motor vehicle repayments by claiming loss of earnings.

Finally, they submitted a false VAT repayment claim for £161m in December 2008, which was not paid.

Lee Karu QC, defending Andrea, said the claim was “nonsense, deluded, idiotic”.

He contended that the sisters were more like Laurel and Hardy, rather than Bonnie and Clyde crime figures.

But the judge told them: “The jury has seen you for what you are – serial fraudsters, shameless liars, manipulative and calculating. You lived a lavish, greedy lifestyle at the expense of people who face real hardship.”

Confiscation proceedings will follow.

Andrea had denied eight offences and Roberta denied five, but they were found guilty of all charges.

News Source: http://www.introducertoday.co.uk/

FSA ignores Sir Shred role in RBS collapse

The FSA is expected to publish its long-delayed report into the collapse of Royal Bank of Scotland next week.

But the report, which the FSA was initially not going to publish at all, will not focus on former chief executive Sir Fred Goodwin or ex-chairman Sir Tom McKillop.

The report, due to be published on December 12, will also not look at decisions made by them in connection with the 61bn-euros acquisition of ABN Amro.

Instead, it looks set to centre on the part played by Johnny Cameron, the head of the RBS investment banking arm at the time and the only member of the senior management team to have been censured by the FSA as a result of the bank’s collapse.

In May 2010 he was prohibited from working full time or performing any ‘significant influence function’ in a bank or insurance company.

The collapse of RBS meant that taxpayers had to rescue the bank to the tune of £45bn.

However, the report will look at the part played by the FSA as regulator and supervisor of the bank – although how critical the FSA will be of itself has yet to be seen. Publication of the report is likely to result in calls for an independent inquiry.

The report will be published one year after the FSA tried to close its original investigation into the bank’s collapse with a 12-line press release.

Following pressure, the FSA agreed to publish its report, but publication was due last March and has since been repeatedly delayed. Even now there is speculation that lawyers are taking a close interest in its contents.

News Source: http://www.introducertoday.co.uk/

House prices 'have not gone down', say stubborn consumers

Consumers have given a decisive clue as to why asking prices have been slow to register any decline – most simply do not believe that house prices will go down.

Indeed, more than one in five confidently expect them to go up.

Whilst Rightmove has finally reported a dip (of 3.1%) in asking prices within the last month, asking prices have still held up remarkably well. They are 1.2% up on a year ago, and at £232,144 are some £70,000 ahead of ‘actual’ prices reported by the Land Registry.

But while agents have been in the firing line for alleged over-pricing, a new survey –ironically by Rightmove, which frequently tears its hair out over the issue – goes some way towards solving the mystery of the reality gap.

The massive poll, of over 26,300 consumers, shows that two-thirds (63%) do not believe house prices will be lower in a year’s time than they are now. They expect them to remain the same or, according to 22%, to be higher.

Less than one-third (three in ten) expect lower prices – unchanged from a year ago.

Despite ongoing economic gloom, the optimism among consumers is almost universal. While Londoners are the most optimistic, with 29% of consumers expecting higher house prices in 12 months’ time, in Wales – the most pessimistic regions – only 35% are predicting price drops over the coming year.

A baffled-sounding Miles Shipside, director of Rightmove, said: “The public’s belief in the value of bricks and mortar seems to defy the deteriorating economic situation. This is a clear message that the majority of consumers view the property asset class to be as ‘safe as houses’ in these times of economic uncertainty.”

He added: “It should be remembered that in spite of the overall confidence expressed in this survey for property prices, transactions volumes are still well down on historic norms. Economic stability in the UK and Eurozone will be needed before many are willing or able to re-engage with the property market.”

The survey did, however, reveal some extremely localised opinions.

For example, in the North-West 26% of respondents in Preston expect prices to be higher in 12 months’ time, compared with just 14% in Lancaster only 20 miles away.

Shipside said: “Local variations highlight how patchy confidence can be, depending on an area’s housing mix and wealth demographics.

“The wealthier middle-to-upper price brackets may be feeling fairly blast-proof from any further economic eruptions, and see a less turbulent outlook.

“Meanwhile, some of the more cash-strapped terrace and semi dwellers may feel far more exposed to the negative pressures of reduced mortgage availability and job uncertainty.”

News Source: http://www.introducertoday.co.uk/

At least 5% more households are in mortgage arrears

Between 5% and 8% of households are in trouble with their mortgages – but lenders are showing them forebearance and so their woes are not showing up on official figures.

It means that official arrears figures are being ‘significantly’ masked, according to a new report from the Bank of England.

Its Financial Stability Report has released the findings of a review by the Financial Services Authority, which – at the Bank’s request – looked at the potential scale of the problem.

The Bank was increasingly concerned that the true arrears picture was being masked by lender action.

The Bank’s FSR says: “FSA estimates indicate that around 5% of these households would have been in arrears of six or more months if they had not received forbearance.

“That suggests that, in the absence of forbearance, the mortgage arrears rate might have been 0.5 percentage points higher at 1.7%, even at near-zero official interest rates.”

The report warns that “lenders who have exercised greater forbearance could be more exposed to losses in the event of a sharp deterioration in macroeconomic conditions”.

Yesterday's gloomy FSA also warned that mortgage borrowing costs are likely to climb next year.

This is due to hikes in the costs of borrowing between banks, which are uncomfortably exposed to the economic ills of countries in the Eurozone crisis.

News Source: http://www.introducertoday.co.uk/

Investors in stampede to get their money out of 'death bonds'

Guernsey-based EEA Life Settlements has suspended trading in its £608m EEA Life Settlements fund, after a run of investors tried to withdraw their assets.

The “unprecedented levels” of redemption requests, which put the fund’s solvency at risk, follows guidance from the FSA.

The suspension means that existing investors will not be able to get their money back until the board decides it is safe to resume repaying investors their money.

The FSA has said it does not believe that investors in the so-called ‘death bonds’ fund will necessarily lose all their money, but admits it may take some time for them to get it back.

Earlier this week, a consultation document from the FSA described traded life policies as “toxic products” and said they should not be marketed to retail investors.

It said it intends next year to ban the products – which the FSA document specifically referred to as US traded life policies.

With traded life policies, investors buy into a pool or fund which has bought life policies at discounted prices from people who are terminally ill and need cash now. Investors then share the payout when the policy holder finally dies.

However, the FSA warned that these ‘death bonds’ are ethically questionable, since investors are essentially betting on people’s life expectancy, and may not deliver if people outlive their prognosis.

The warnings have clearly provoked a rush from investors to get their money back before the products are banned.

A statement from the board of the EEA Life Settlements fund said: “Following a meeting on 30 November of the board of directors of EEA Life Settlements Fund PCC Limited, the board has declared an immediate suspension of the valuation of the net asset value of all classes of participating shares in each cell of the fund and of the issue, sale, purchase, redemption and conversion of shares of each such class, which the board is entitled to do in accordance with the fund’s articles of incorporation and offering memorandum.”

The statement said the fund maintains levels of liquidity which the board considers prudent for normal operational purposes, but said: “As the current liquidity levels of the fund are insufficient to satisfy such redemption requests in full and the board has determined that it is not reasonably practicable to realise or dispose of its investments to satisfy such requests, the board has decided to suspend dealings.”

It added: “The board will … resume dealings as soon as it considers it prudent to do so. Shareholders should be assured that the suspension of dealings will in no way affect the ability of the fund to pay premiums on insurance policies in the usual manner.”

After the fund’s suspension, the FSA said: “We acknowledge that the publication of our guidance consultation may have prompted a number of investors to request redemptions from funds.

“We also recognise that our decision to intervene in this market may pose difficulties for existing investors.

“However, we considered that it was necessary for us to act because of our concerns about these products being inappropriately promoted or recommended to a growing number of retail customers.”

News Source: http://www.introducertoday.co.uk/

MEP tells Brussels to back off over buy-to-let mortgages

An MEP has waded into the row over the EU regulation of buy-to-let mortgages.

Nikki Sinclaire has lambasted the proposals.

The MEP for the West Midlands said that the proposals might bring the UK buy-to-let mortgage sector into line with continental practice, but ignore the real issue.

She said: “The UK is the only European country that has a thriving buy-to-let market. In other countries, property investment is carried out by companies or trusts rather than individuals.

“If implemented, the EU regulation could inflict huge damage to the private rental sector.”
 
Around 1.4m landlords with buy-to-let loans are set to be affected by the proposed changes, which would mean that rental income cannot be taken into account when mortgage approvals are being considered. As a result, some landlords with insufficient other income or with low deposits might find they no longer qualify for a remortgage if the new rules are implemented in around two years’ time.

Sinclaire said: “It is outrageous that the EU should try to dictate to lenders and borrowers the basis on which loans should be offered.

“This unwarranted assault on the buy-to-let market will inevitably result in less affordable rental housing. It will also put the lives of 1.5m British investors and their tenants into turmoil.”

She said that a number of MEPs have claimed that their constituents do not care about the new proposals and may use this excuse to support the proposed changes.

She urged landlords and tenants to bring pressure on the MEPs. She added: “People might think this would affect just investors, but in truth this will damage the whole housing market including ordinary home owners.”

The MEP, who is a member of UKIP although not in the official group, said that if changes to the UK buy-to-let market need to be made, they should be made by “our democratically elected politicians in Westminster, not by faceless and unelected bureaucrats in Brussels”.

News Source: Introducer Today

Mutuals step up mortgage lending as banks falter

Building societies have stepped into the breach, as other lenders retrench.

Mutuals approved mortgages worth £2bn in October, up 15% on the £16.6bn they lent in October last year.

It follows a 33% annual rise, and a 22% month-on-month rise, in mortgage approvals by mutuals in September.

Gross mortgage lending by mutuals was £2.3bn in October, a 20% annual increase, and the highest level of gross lending for any month since the Building Societies Association started its current series of reports in January 2010.

Between January and the end of October this year, mutuals lent £19.1bn in mortgages, up 15% on the £16.6bn lent in the corresponding period in 2010.

Savers are also showing signs of getting back in the habit, with building society saving up by £0.4bn, giving building societies net receipts of £0.2bn in October, compared with a net withdrawal of £1.3bn in October 2010.

Adrian Coles, director-general of the BSA, said: “Building societies and other mutual lenders continue to play their part supporting home buyers.

“So far this year, mutual lenders have lent 15% more than in the same period in 2010, whereas other lenders have so far lent 1% less than last year.”

News Source: http://www.introducertoday.co.uk/

Niche's £1m hello to bridging lender

Reading-based Niche Financial Solutions has marked its appointment as a preferred partner of Omni Capital, a specialist short-term lender, with a debut deal completion valued at £1m.

The second-charge loan is secured on a prime residential property in stockbroker-belt Surrey. While superficially straightforward, the case presented a number of significant processing challenges from the outset.

Following the refusal of the existing second-charge mortgagee to extend their facility, Niche Financial and Omni Capital stepped in to assist and were ultimately successful in negotiating a complex Deed of Priority with the senior lender.

Speaking for Niche Financial, Malcolm Scanlon said: “When this deal arrived in our office, despite its complex nature we knew the case would be in safe hands with Omni Capital.

“They have a great appetite to lend, and we were able to work in tandem to ensure the case reached a quick completion.”

News Source: http://www.introducertoday.co.uk/

RICS consultation into property's knotweed nightmare

Property's nightmare plant is being put under the spotlight. The thuggish Japanese Knotweed is the stuff of horror films, as it can grow through concrete and walls to blight a property in the eyes of lenders and insurers.

Now the Royal Institution of Chartered Surveyors is consulting on a new information paper which aims to help valuers and mortgage lenders consider the implications of a Japanese Knotweed intrusion when undertaking valuations of residential property in the UK.

A number of mortgage applications have been declined where Knotweed has taken its hold on properties.

In fact, says the RICS, although the plant can be difficult to control, with correct treatment it needn’t be a life sentence for a property.

It points out that since the mid-1970s, challenges posed by building movement and asbestos have presented assessment problems that were largely resolved and assimilated into the lending process. It says there is no reason why the assessment of Japanese Knotweed cannot follow a similar route.

RICS is inviting responses from members, lenders and Japanese Knotweed treatment experts. The consultation runs until December 9.

Philip Santo, for the RICS, said: “When assessing market value, valuers must take account of a variety of factors, and the presence and effects of Japanese Knotweed is just one of the many considerations that may affect value.

“While this invasive, non-native plant can be difficult to control, it should be recognised that timely and persistent treatment programmes can minimise its impact.

“A standard risk assessment framework is being proposed to help valuers to provide more informed advice to their clients and to enable lenders to adopt more consistent and balanced policies.

“As the treatment industry develops and matures it is hoped that Japanese Knotweed will soon become just one more consideration in the complex valuation process. The RICS consultation aims to canvass opinion in order to help make this happen.”

News Source: http://www.introducertoday.co.uk/

House prices and turnover both falling, says Land Registry

House prices in England and Wales slipped below the £160,000 mark, the Land Registry has reported.

The average house price now stands at £159,999, a 0.9% monthly fall and the largest monthly drop since February 2009.

The October figure was also down 3.2% compared with October 2010.

Even in London, house prices dropped, by 1.6% in October compared with September, to stand at £340,408. London house prices are now just 0.3% higher than a year ago.

Volumes of house sales have also decreased sharply.

In May to August 2010, there was an average of 60,970 sales per month.

In the same period this year – the last period for which transaction data is available – there were 57,177 sales on average per month, a drop of 6.2%.

By contrast, the new homes website Smartnewhomes yesterday reported that asking prices of new homes have bounced up to reach £222,620.

That is 0.6% higher than in September, and an astonishing 5% higher than in October last year.

News Source: http://www.introducertoday.co.uk

Bogus PPI claims to cost banks millions more

Banks are having to put more money aside to deal with bogus PPI mis-selling claims – purely because of the extra admin involved.

They are having to spend millions dealing with ‘vexatious’ claims from customers who never even bought a policy, or from people who have never even been customers.

Nationwide last week revealed that these ‘vexatious’ claims account for around 30% of all complaints, with the vast majority being submitted by claims management companies.

Nationwide said it is partly because of these invalid claims that it has increased its PPI provision of £19m for the year ending September 2010 by a further £15m for the first half of this year. But £10m will go towards the cost of processing claims rather than customer redress.

Other banks are reporting the same problem.

Santander, which has put aside £731m, said half of the PPI claims it receives are from claims management companies, of which a third are not valid. Up to 80% of claims from claims management firms are proving to be from people who have never had a PPI policy.

Lloyds has also confirmed that a number of claims are invalid, whilst Barclays says that some 20% of the claims it has had are not from its own customers. Royal Bank of Scotland says one in five claims are not genuine.

News Source:   http://www.introducertoday.co.uk

FSA warns against sales of 'death bonds'

The FSA has issued the strongest possible warning against selling US-traded life policy investments in this country – so-called death bonds.

The regulator says it will ban their sale to UK consumers.

‘Death bonds’, says the FSA, are high risk and toxic products.

They are known as ‘death bonds’ because investors are essentially betting on the life expectancy of US American citizens.

They put their money into a pooled investment or fund which buys up US life insurance policies at a reduced value from people who are seriously ill, in order to collect the full pay-out when they die.

But many insurance policy holders may have been given the wrong prognosis, or medical advances mean they will live longer.

If they do, then the investment for someone in the UK will not function as expected. As well as being financially dodgy, many view the investments as literally sick – very morally dubious.

Margaret Cole, FSA managing director, said: “Firms should not be selling these high-risk products to retail investors, and so our guidance reminds firms of the importance of assessing whether a product is suitable for a customer and whether promotional material makes risk warnings clear enough.

“Products such as TLPIs are not a simple problem for the FSA to address as many of them are based outside of the UK, and so are outside the FSA’s jurisdiction. There are also considerations under EU law that will affect what we can do.

“However, the FSA is engaging in discussions in Europe around the MiFID review, AIFM Directive and with other European supervisors to find a solution to give greater consumer protection against these products.

“For now, we want to make our message about these products clear – they are completely unsuitable for most UK retail investors.”

News Source: http://www.introducertoday.co.uk/