My Bradford and Bingley mortgage

I have had a Bradford and Bingley mortgage since 1983. And I am getting slightly angry about my current image.

Am I a buy-to-let borrower, who has self-certified wildly inflated assets and an improbable salary, and is just about to walk away from my buy-to-let property rather than keep up the mortgage payments I could never have afforded anyway? Not I’m not. I was an old fashioned B and B saver, who bought her first flat in London 25 years ago, traded up in Cambridge when she met her husband and then again 15 years ago.

I went through all the old fashioned questions they used to put to you about your assets, and I didn’t fib. After all they got in touch with your employer, so how could you tell a whopper?

When demutualization came in 2000 we voted against it, in what was a hard-fought battle with the carpet baggers who wanted to turn the B and B into a bank. We weren’t great economic geniuses, but it didn’t take much common sense to see that the interests of most savers and investors were better off with a mutual. How could they not have been?  Though Mr Brown was hardly in evidence then, when we needed him. He was all in favour of the demutualisation, wasn’t he?

So why did we stay with the B and B after that?

Simple. Because the staff were wonderful and  they had always been nice to us, at the counter.

I’m not quite sure how the B and B did it. But unlike the Halifax, which put up security grilles and taught their staff to growl at all-comers, the B and B taught their staff to be nice to you – across a counter where there was no wire fence separating the cashier from the customer.

For a time, when we were extending our house, we went into the local branch a lot withdrawing money to pay the builders. They ended up inviting us to their Christmas party.

Only a few months ago, on some earlier bit of bad news,  I was in there – rather guiltily -- withdrawing some of my paltry savings in a fit of anxiety. I witnessed exactly the kind of service that had kept me loyal.

An elderly lady (by which I mean a good bit older than me) had come in to withdrew all of her cash. It became obvious from the conversation that she had more than one option. She had planned an instant withdrawal, which would clearly have lost her a lot of money. The other option, which she had not considered, was some kind of transfer, which would have freed her from the B and B, but kept her accumulated interest. The cashier, no doubt risking her job (I imagine they are forbidden from giving this kind of advice) was not trying to persuade her to keep her money in the B and B, but to consider better ways of leaving…. She was kind and patient in the face of near hysteria; and eventually the old lady left, to ring up her financial advisor and get some help.

It was just like the old mutual B and B,  which we should never have lost.

Meanwhile, if anyone would like to give me some suggestions about my mortgage I now have with the government (or is it Northern Rock?), about one fifth the value of my house, with 10 years to run, I’d be very grateful.

Comments

[Greg Kochanski]

Geez! Everyone reads morals into the economy. An economy is a complicated nonlinear bunch of feedback loops. Everything affects everything else, minutes, days, and years later.

Such systems are often chaotic. They don't usually provide simple, predictable behaviour that we yearn for. That's life, or perhaps mathematics.

Since both socialist and capitalist economies are complicated, nonlinear dynamical systems (as is anything in between), you reall have to expect all economies to have hiccups.

After all, whatever would make anyone think that the collective results of six billion people pushing in different directions would be simple? Wishful thinking, I guess.

[Ken]

Mary, we are clearly going to get a series of rate cuts. You should watch the rate charged to you by B&B, to make sure that you are not paying too high a rate relative to the offers available elsewhere.

[Richard Baron]

Yes Mary, you are potentially helping the taxpayer. Borrowers like you are as safe as houses. The Crown can borrow at a very low rate (because it is seen as even safer) and lend on to you at a higher rate, turning a profit. You should be able to write to the new management of B&B and negotiate a lower interest rate, threatening to take your business elsewhere if they do not agree. (Ask elsewhere before you bother to do this, of course.) If you do not do that, your low risk will carry on being pooled with the higher risk of other borrowers, leading to an interest rate which is reasonable for the entire pool but too high for some of the individuals in it and too low for others. Would that Aristotle had discussed this phenomenon when he considered distributive justice in the Nicomachean Ethics!

But it might not be the taxpayer who benefits from your generosity in paying an interest rate that is too high given your low risk. Something will, at some stage, be offered to B&B shareholders. One influence on the amount they are offered will presumably be the profit which the business has made, and some of that profit will have been made out of you.

Whether the profit in question should be the actual profit, which will reflect the Crown's good credit rating, or the profit which would have been made given the rate at which B&B could have borrowed if it had not been nationalised, will be a question for the lawyers. I hope that they will recognise the need for philosophical advice on this point, and will agree to share their fees equitably with the philosophers who get to advise them.

[Frank M.]

In 1996 the B&B refused to give me a mortgage because I was not a British but a Dutch citizen, they were incredibly xenophobic and unintelligent and I'm glad they're gone.

[Mary]

Thanks to you all for this.. and especially to John Scott, who articulated clearly and knowledgeably the kind of instincts I was beginning to have.
To Ken Robertson -- I would just say that my 'take' must be a bit different. As I am paying interest on my mortgage to the government (with little risk that I shall default), I am actually helping the taxpayer, not being a beneficiary of him/her.. Surely?

[The Trainer]

I'm an ex-resident of Bingley. I remember the Dalek City with much affection. I sold my shares and closed my savings account about the time Christopher Rodrigues left. At the time B&B were skirting the edges of the FTSE 100. Shame.

[Paul Potts]

Mr Brown, the current British Prime Minister, it seems, blames the Americans for the Bradford & Bingley collapse. I suppose he's right. I mean, if you have a President that bad, you're gonna have trouble sooner or later. Like Mr Blair's identificaton with all that. Presumably it's the Chinese who will have to decide whether to continue propping up the Dollar. Socialism may be the only way to rescue Capitalism.

Paulo

[Lord Truth]

I had a 25 year mortgage with B and B .Three months before it ended in 2000 there was a fire at their safe deposit and my and twenty thousand otherhouse deeds (about a neat 5 by 7 foot bookcase full) were destroyed in a fire. Although the deeds were legally'reconstituted'B and B offered little explanation or consolation for something that must have caused great concern to many people.
I've sometimes wondered who in the 'Dirty tricks Dept' at M.I.5 engineered that.....

The present financial crisis must put a doubt and a question in the minds of millions.
Why?..Why exactly do we need private banks at all? Why cant we simply go to the Post Office,fill in a form ,provide accreditation and hand it in.Everything can easily be checked.Mortgages could be even more finely tuned to ones needs than they are now.'Risky mortgages could even be provided -with high interest rates -and carefully monitored.And the whole process -to avoid bureaurocratic delys or worry ,could be tracked as if following a parcel, Why is this such an enormously highly paid business?.
A banking friend tells me -he would never trust the government-how stupid people are...of course in Argentina it might be different.

[Xjy]

Sorry about this, but...

PS Marx is *fun* to read. Not only is his style brilliant and supremely intelligent and concise in a Tacitean sort of way, but he *loves* quoting Latin and Greek. His initial studies were absolutely steeped in the classics both literary and not, and the best commentaries and "companions" available at the time - like Mommsen. One of his favourite pursuits was reciting Aeschylus alound while walking around Hampstead Heath with his family of a Sunday.

And his concentration and speed were phenomenal - he could write long and deep works faster than I can read them! :-)

(verb sat sap - The leech adhered to his tongue - literally: the sucker sat on the part of speech...)

[Xjy]

The thing about mortgages is that the banks have you by the short and curlies for ever. I laboriously worked out the best annuity deal once upon a time - same principle as mortgages but individually agreed between borrower and lender. No way they'd accept it - too low a profit for them (just work out the compound interest over all those years!) cos of too short a term. In other words too much emphasis on the borrowers part on the capital and not enough flesh gouged out for the lender in the longterm interest.

But of course, you're in a fairly strong position compared to many many others and maybe you could use this to force a bank that's up against the wall (mother-fucker!!) to do such a deal with you. This is something even bourgeois economists can help you with, even though the poor sods are totally incapable of comprehending these constant dramatic crises, regular as the bring-out-yer-dead bell during a plague. Marx gives a very clear explanation of these overproduction crises, their inevitability under capitalism, the role of credit in the collapse of the bubble (reduction of fictitious to real capital), and the conceptual straitjacket (the mind-forged manacles) that have blinded them, blind them now, and will blind them for ever and ever - amen.

[Ken]

This is in addition to the intelligent comments made by John Scott.

I assume you are not on the high SVR rate and that you have some form of tracker mortgage. There is no need to panic and shift. The mortgage contract remains the same.

However, if the contract is subject to renewal or the bank has room to muck around with the interest rate and if as is expected, the government is keen on reducing the balance of mortgages on its books, they may well only offer high interest rate mortgages and you will need to look elsewhere. So do keep an eye on the interest rate they are charging and compare with others.

You are an attractive potential mortgage customer (low loan to equity value, stable income). You should be able to find a good deal.

Bear in mind any potential points at which you might want to raise or lower your mortgage (retirement, gifts to children etc), when looking at potential deals. All these points should be covered by a competent mortgage adviser, but it is worth bearing in mind. If you do think you need to find a new deal a decent financial advisor/mortgage broker should be able to give you more detailed advice.

Mortgage deals now seem to come with substantially higher up front fees and also early redemption clauses, which may have a significant impact on the effective interest rate paid - especially with a relatively short term.

[Nicholas Wibberley]

You are not alone. Do nothing. Wait for the dust to settle.

[Xjy]

@RB: My impression was that it wasn't just Hadrian who annulled debts, but practically everyone from the founding of the city. Throughout Livy there's a regular tolling of two bells - the agrarian laws (land reform) and the problem of usury and the Roman Fleets (debtors' prisons). From Camillus in the mid-300s BCE this abolition of debt was a sure way of winning popularity, as was divvying up not always public land to war veterans by their commanders - except that of course it pissed off landowners turfed off their source of income (not always small fry, either), and the patricians who made a mint out of extortionate credit management.

Ding-dong bell...

So my modest suggestion earlier in this thread has a long classical tradition to recommend it. As has nationalization of the land. In Sweden this was a regular swings and roundabouts thing for centuries after the solid establishment of centralized royal power by Gustav Vasa. Land was "reduced" to the Crown to bolster central state coffers, then divvied out again as fiefs to rich fat cats to buy their support in various wars etc. Then "reduced" again, etc.

Since few individual small freehold farmers would suffer from land nationalization today, and a whole nation of ordinary wage-earners would benefit in ways no-one ever discusses in public discourse, that's a no-brainer too.

And maybe these irresponsible fat cat debtors could be thrown into a modern-day Fleet open to public gaze as an object lesson of greed and squalor, (the backside of financial Dorian Grays exposed to permanent public view, so to speak) and kept there like latter-day Nebuchadnezzars until they pay off their debts of millions or get their buddies (now on ordinary working incomes) to do it for them. Otherwise it's licence plates and flour sacks for them! Let's see now, one billion dollars paid back at a rate of 6 dollars a day, and accumulating interest at a rate of say 15% a year.. long live our new Methuselahs!!

[Richard Baron]

Hadrian made himself popular by remitting debts to the state in 118. If any modern ruler concerned at the opinion polls tried to buy some votes by remitting Bradford & Bingley mortgage debts, you could rejoice, Mary, and we non-B&B-ers could gnash our teeth.

[John Scott]

1) You own your house. All that B&B ever had was the right to claim a debt due from you.

2) The only special thing about a mortgage is that in the event of default, the lender (B&B here) has a few extra options in terms of remedies (namely repossession).

3) Your debt will be transferred from B&B to elsewhere.

4) The debt is still governed by the same contract and rules that you took out with B&B. Your payment period is unchanged. If the mortgage is a fixed rate, it remains a fixed rate. If it is variable, but with limits on how far it can vary from the base rate, it remains that way. If it is fully flexible, it remains fully flexible.

5) Your rights and obligations are the same as they were before any of this happened, it is just the person to whom you make repayments who may change. So any rights to repay early (perhaps subject to penalties/charges) remain. That enables you to change providers. You can borrow from a new mortgage provider to pay off the debt to the old (ex-B&B).

(All the above is subject to no strange legislation being passed - if it is we are all in terra (and terror) incognita)

6) The tricky issue is what a government-owned bank will do. My guess is that the interest rate will go up (subject to the terms of the contract) - the government will want to try and push people on variable rate mortgages to jump ship voluntarily by finding a cheaper deal - that relieves the government of the risk at no cost. However - they will also be wary of raising the rate too much, as that would be politically unpopular. Until you know that - if you are happy with your current arrangements there is no need to do anything.

With only a fifth of the equity outstanding (even given the level of Cambridge house prices), remortgaging should be easy. It will require lots of shopping around.

If you consider remortgaging, it is worth checking your credit reference. Presumably it should be fine (no outstanding parking fees/similar?), although living abroad for a period can sometimes complicate matters. The important point is usually not to check you are solvent, but to check the information on the report is accurate. Incorrect information can adversely affect your credit rating, making mortgages more expensive.

It may even be a good idea to see about finding a professional, independent, mortgage adviser - they can probably do the work more easily, and with less stress. Mortgages are now harder to find (or at least good deals). Some banks are levying higher up-front charges, but perhaps lower interest rates, others higher-interest rates and so on and so forth. A professional would help working out what is going to be best for you (you need to consider variables such as the potential for early repayments - might that make a higher-interest rate actually better value than a low one with up-front charge). Ask around and try to find a personal recommendation, much better than relying on anything else, especially when you are overseas.

[Jane]

Mary, I totally agree about how nice the staff are at B&B branches. As you say, both intelligent and civilised.

I really don't think you have a thing to worry about as it is you who owe them, not they who hold your money. Furthermore, your side of things, mortgages,have indeed been taken over by the British government.

On the other hand, savers like me, (and I've been saving with the B&B for over 20 years, not unlike your own timespan in fact) are in a somewhat more precarious position.

The government has "sold" our savings deposits to Santander, a Spanish bank which has already taken over the Alliance and Leicester, and before that, the Abbey National. Over extended?

On top of that, it is unclear whether, now that the ultimate owner is foreign, we will be subject to delays in obtaining FSA compensation should Santander go bust.

Finally, on the subject of Santander going bust, this is what I read two hours ago in my professional association's magazine for September on the subject of the Spanish economy: it is a 'complete horror story'.....Property prices have slid between 7% and 20% since peak, falls of up to 30% are not out of the question and there are 1.5 million unsold homes in Spain.....
There's more, but I won't bore you. Suffice it to say, I do not think you need to worry too much.

But like you, I feel sorry for the staff at our local branch. One was in tears last week, when I was withdrawing some of my savings along with some other worried-looking people.

[Xjy]

Simple. Agitate for a socialist society. The first measure will be to nationalize the land without compensation - bang go the landlords and their huge tax on the rest of us. The next step, the nationalization of all big productive plants and financial institutions, without compensation.

How to keep the small fry (professionals, small businesses etc) on board? Easy. Cancel their debts. They're all in it up to their ears.

Basically, end of story.

In Cuba after 1959 they froze the professional pay levels even though these were vastly in excess of ordinary wages. Worked for a lot of people, too.

If you don't... well either you go bust this time, or next, or next, or next, or next.

It never stops and it never will under this system. Lurching from one crisis to the next, like a demented tyrannosaurus rex with Alzheimers - no brain and no memory.

So, good luck with the system! :-)

Oh, you could always try gold, innit? :-)

[David]

And, of course, had the B&B remained a Mutual it wouldn't have had a share price which couldn't then have collapsed to leave it in the perilous situation it found itself in over the weekend.

[Paul Murray]

Has anyone gone back to those carpetbaggers like Stephen Major to ask them if everything has gone according to plan in their brave new world of demutualization? I'm sure they'll tell you how it's all someone else's fault. That they are blameless victims of the complete collapse of every single demutualized society. Funny how the societies that retained mutual status are all doing just fine.

[cbooker]

Probably the best advice I can give (short of repaying the mortgage in full right away) is to stop by Brad DeLong's office in the Economics Department at Berkeley. He has written extensively about the financial crisis on his Blog "Grasping Reality with Both Hands" and, given his strong familiarity with classical writings, would be an extremely interesting interlocutor. The two of you might even find a way to have a joint seminar.

[C Powell]

I second your thoughts about the branch staff, who are some of the nicest and most efficient I've encountered. I've had savings with them for a while and still have them and while they're protected I know the staff will feel nervous about their future. A great pity that they - and we - have been let down by their bosses.

[TeePee]

Mary,
I worked for a once-traditional Yorkshire-based Bank for many years, but first the Australians then some rather different types (London based, on behalf of the aussies who'd messed it up big-style) took over its running and then won as they focused on mortgages at ever increasing multiples of income, and LTVs.....all of which they called wealth management!
Its now a different story, with the bankers running round trying to protect their lending book, and specialists reduced to chasing deposits to shore the place up!
Those that run it, and got it into this state, continue in situ, on massive salaries and bonuses, and one cannot assume that any will lose their shirts.
My suggestion to you, if possible, is to ask a kindly, rich, relative to loan you the money to pay off your mortgage, then you can stick two fingers up to the system...like I have. Providing you can assure said relative that you have a steady income and are as close to being recession-proof as it gets, that relative is probably putting their money into a much more secure place than any bank!
However, if you stick with a bank, the million-dollar question is, whats the actual value of your house?
Because if you think the LTV is 20%, a bank will probably have a very different view today.

[Steve Peacehaven]

The 25 year experiment has plainly failed. Now having aquired many properties at a knock down price, why not replace the Council housing stock. There are many sectors of our society that require subsidised accommodation, Police, Firemen, Nurses, Teachers. The government should take advantage of this windfall and while they are at it, curb the excesses of irresponsible banking practices.

[Old Bill]

Well said Prof. That's two of us, and it appears that we too are about to be told to take our sole mortgage on our sole home elsewhere. 3 years to run, over 80% equity even at the most pessimistic view of the property value, approximately 9k ahead of our mortgage payment schedule due to trying to get the outstanding amount down. The latter action due to one other shambles in the financial world i.e. endowments. One could say that if we cannot get another mortgage then the industry is well and truly stuffed, but what exorbitant rates and fees will have to be paid because of the short term nature of the loan?

OK my wife and I could probably scramble together sufficient cash assets to pay the damn thing off altogether, but at what damage to savings?

Having also fought and voted against the demutualisation for what have turned out to be valid reasons, the grand demutualisation experiment is over, dead and buried and the masters of the universe cannot walk on water. Let's get back to good honest value added business and not this crazy world driven by a load of overpaid bookies runners, and yes I do understand derivatives before anyone accuses.

How many other good honest borrowers and investors like us are on the books? As far as I am concerned all the buy to let loans are simple business loans and should be treated as such, and not saved or subsidised by private families nor the tax payer.

[victor compton]

Madame, You are the victim of con game run by the International Banking Cartel. Here is how it works in America, and remember that it was working like this in England and Europe for the last few hundred years. A few "big rich" families began and control the European Central Bank, the IMF etc., and directly control the creation and distribution of the Euro and the Pound. The crisis is deliberate and is another of their Dark Harvests. They can stop it all tomorrow if they wish. Here is how the scam works.
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All the reports on the crisis and bailout seem faulty. I have been researching the Fed, and the history of Banking on the internet for a couple of years now. My conclusion : Banking is the Biggest Fraud In The History Of the World. Here is a very brief synopsis, with source IP addresses.

The Fed is a Private Bank, owned by a few rich European and American Banking families such as the Rothschilds, the Warburgs, the Schiffs, the Rockefellers, the Harrimans, the Morgans etc. They have had Americans by the financial throat since 1913, when they last wiggled their way back into monetary control, by bribing members of the Senate to re-create the Federal Reserve Bank and give them control of money creation in the USA. They have controlled Europe since the formation of Banks, 2 and 3 hundred years ago. They deliberately cause boom and bust cycles and profit from them using an old criminal practice from the early gold traders and money lenders called "fractional reserve banking." which they have paid legislators to legalize here in America. It has been used in Europe since the creation of The Bank of England, Bank de France, etc. Simply stated 90% of the money they create is false and has nothing of real value behind it. The technique is explained at the IP address below.

source:
http://www.themoneymasters.com/faqs.htm
(How The Fed Creates Money)

. These "big rich" Banks have been kicked out of America 5 times in the past by courageous Presidents. Kennedy was quietly destroying them with his Executive Order 11110, ordering the Treasury to again begin printing silver certificate dollars, when he was assassinated. They currently control the creation of money in 107 different countries. Their goal, for the last 400 years has been to control the entire planet eventually in a feudal system where only members of their families and class, would be able to own property. They are VERY closely associated with European Royalty. In the 1920's their American Lieutenants set about buying up all the most influential newspapers, through surrogates. These included both the NY Times and the Washington Post, hence their lackluster reporting against the Banking Cartels, The Federal Reserve, etc. More surrogate buyers then slowly but surely acquired control of the television networks and even the great Film Studios. Americans have been manipulated into Vietnam, the Cold War, Iraq 1 and 2, etc. by these puppet news sources.
from "The Money Masters" film on Google on the Internet.

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At the Bilderberg Conference on June 6 to 9 of 1991, in Baden-Baden, Germany, David Rockefeller (a Rothschild associate) made the following statement,

"We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost 40 years. It would have been impossible for us to develop our plan for the world, if we had been subjected to the lights of publicity during those years.

But the world is now more sophisticated and prepared to march towards a world government. The super-national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."

source: "The History of the House of Rothschild by Andrew Hitchcock"
(warning : quite biased against Jews, but a wonderful and very accurate time line history) Its on the Internet.
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How the Federal Reserve (and the European National Banks, the IMF, and the European Central Banks) exist as business entities.

Q: Who owns the stock of the Federal Reserve Banks?

A: The dynastic families of the ruling World Order, internationalists who are loyal to no race, religion, or nation. They are families such as the Rothschilds, the Warburgs, the Schiffs, the Rockefellers, the Harrimans, the Morgans and others known as the elite, or "the big rich"

Q: Can I buy this stock?

A: No. The Federal Reserve Act stipulates that the stock of the Federal Reserve Banks cannot be bought or sold on any stock exchange. It is passed on by inheritance as the fortune of the "big rich". Almost half of the owners of Federal Reserve Bank stock are not Americans.

Q: Is the Internal Revenue Service a governmental agency?

A: Although listed as part of the Treasury Department, the IRS is actually a private collection agency for the Federal Reserve System. All personal income taxes collected by the IRS are required by law to be deposited in the nearest Federal Reserve Bank, under Sec. 15 of the Federal Reserve Act, "The moneys held in the general fund of the Treasury may be ....deposited in Federal reserve banks, which banks, when required by the Secretary of the Treasury, shall act as fiscal agents of the United States."

source : SECRETS OF THE FEDERAL RESERVE:
http://www.apfn.org/apfn/reserve.htm

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So, this crisis and demand in America and other countries for an immediate Bailout is the open effort of these very wealthy few,to steal by fear and panic, from all the citizens of Earth, their real and valueable assets, to replace "lost" dollars, pounds, Euros, etc. which were only private printed paper currency, backed by nothing of value on the part of these "big rich" families.
..........................................................................
and as for advice Madame, if you have credit unions in England, join one and move your debt to them instead. Banks HATE them as they are not for profit and are owned by the depositors, not investors. And they use only full reserve lending, so they never fail. If no credit unions exist in England, perhaps it is time to create them. The important thing is to transfer your debt beyond the reach of the "big rich" Banking Cartel Families. If sufficient numbers of depositors did this, the Cartel's revenues drop to zero. England itself, having now nationalized a bank or two, CAN take away the power to create money from The Bank of England, (still controlled by the "big rich"), and give it to the Northern Rock. Your national debt would be paid off in 3 or four years and there would be a surplus of money available to create needed jobs in all the social services, education, medicine, etc. The City of London will fight such a proposal tooth and nail, but it is the way of the future. Why is this? Because the average citizen now has access to the Con being used against them. Secrecy is the only protection these liars, cheats, and thieves have, which allows the Con to continue. As an ancient Chinese emperor once sadly remarked, "When the People know too much, they become "difficult" to control.

And, whatever you Brits do, DON'T join the Euro. The moment you do, you lose the option of kicking these "big rich" Bankers out of England FOREVER, for the only way to get out of the Euro, and regain control of a country's currency, is for that country to withdraw from the very corrupt European Union.