thedarkone
Registered User
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- 28
Hi
I have a NIB Tracker mortgage that has an 80% LTV covenant. I was wondering if anyone had any insight into why this covenant has not been called by NIB/Danske up until now, and (appreciating that some of the points were already discussed in this 2011 thread) whether the new property register will have any bearing on a future decision to call an LTV breach.
Possible reasons they have not done so before might be
1. Danske feel that they have been partly culpable in creating property boom and bust with mortgages such as these and therefore feel they have a moral obligation not to...cynic in me says "what, a moral bank?" However, I do know some years ago they did publicly say that they would not invoke the LTV clause, so maybe I am being unfair
2. Possible loss of deposits from a PR backlash...can't really see this as a reason
3. Cost/Benefit: Benefits are higher interest income/cashflow from lump sum downpayments versus costs: administrative nightmare, probably lots of challenges & complaints from customers at a time when they are reducing their customer facing numbers; will affect the performance of the loan book (as invariably this will put some people over the edge); could very will lead to a lot of "strategic defaults", as people seek to protect their tracker under the code of conduct under the arrears...with the admin burden that will bring.
4. Absence of specific market data, which the property register will now bring, leading to possibly targeted LTV calls.
Personally I think reason 3 is most realistic...I know, even though I am able to service my mortgage, I would make life difficult including considering calling a strategic default under the code until they worked through my case, protect my tracker and use the intervening time to consolidate a lump sum to "cure" the breach.
But that's just a punter's view. Anyone else with a little more industry insight?
I have a NIB Tracker mortgage that has an 80% LTV covenant. I was wondering if anyone had any insight into why this covenant has not been called by NIB/Danske up until now, and (appreciating that some of the points were already discussed in this 2011 thread) whether the new property register will have any bearing on a future decision to call an LTV breach.
Possible reasons they have not done so before might be
1. Danske feel that they have been partly culpable in creating property boom and bust with mortgages such as these and therefore feel they have a moral obligation not to...cynic in me says "what, a moral bank?" However, I do know some years ago they did publicly say that they would not invoke the LTV clause, so maybe I am being unfair
2. Possible loss of deposits from a PR backlash...can't really see this as a reason
3. Cost/Benefit: Benefits are higher interest income/cashflow from lump sum downpayments versus costs: administrative nightmare, probably lots of challenges & complaints from customers at a time when they are reducing their customer facing numbers; will affect the performance of the loan book (as invariably this will put some people over the edge); could very will lead to a lot of "strategic defaults", as people seek to protect their tracker under the code of conduct under the arrears...with the admin burden that will bring.
4. Absence of specific market data, which the property register will now bring, leading to possibly targeted LTV calls.
Personally I think reason 3 is most realistic...I know, even though I am able to service my mortgage, I would make life difficult including considering calling a strategic default under the code until they worked through my case, protect my tracker and use the intervening time to consolidate a lump sum to "cure" the breach.
But that's just a punter's view. Anyone else with a little more industry insight?