A British subprime mess

What will happen is that the subprimers who are usually second ranked will take possession and the principal lenders will put their hands up and say "nothing to do with me"! Yesterday was window dressing and gave Brown something to say after an embarrassing Queen's speech. It has nothing to do with the market.

Strange isn't it Robert, when the Northern Rock first blew up everyone was telling us what a great mortgage book it had and it was only brought down by you.

The Together mortgages are really living up to their name. At 125% of original value they must now be at somewhere like 100% overvalued. Someone is going to loose big time; now let me guess who it might be....

Sub-prime lending does not explain the mess that RBS and HBOS are in.

This is simply a smoke screen for the real reason why they have had to be bailed out by the taxpayer.

But Gordon Brown doesn't believe that we have subprime in the UK:

https://blogs.ft.com/westminster/2008/10/gordon-brown-believes-there-are-no-sub-prime-loans-in-the-uk/

This must be the same Michael Coogan I saw interviewed on Working Lunch.

He seemed utterly confused as to what was going on himself as were those trying to interview him.

As far as the new interest rollover scheme he had no idea what was happening on that and nobody else does either.

Did Gordon really tell anyone about this before yesterday's debate in Parliament?

Or was it another desperate move to spin himself out of the mire,

Whatever there are a lot of people waiting for the details. Someone is going to have to spell them out and fast.

What is the CML doing being unhappy with you? You are a journalist? (Excellent one)

What is the government doing telling the Banks to lend money without regard to commercial sense?

Why is the Bank of England doing lowering interest rates encouraging borrowing when it is borrowing that got us here?

It seems that in the face of reality all these agencies are waving their arms.

Remember the Singapore Grand Prix when after his pit stop the Ferrari mechanic released Felipe Massa whilst the fuel hose was still attached. As the car leapt forward the mechanic stuck his foot out as if to restrain it.

Yes, that is a good idea. Use your foot to stop an 800 horse power Ferrari.

'Grumpy' the cheek of it!

I'd be interested to hear anything Mr Coogan had to say prior to the S*** hitting the fan in late 2007. I'm guessing he's another well paid guy that benefitted hugely and holds absolutely no responsibility for the mess we are in!

Maybe the Council of Mortgage Lenders should have been a little more wary of the 'too good to be true' boom they had over the past 10 years

Personally I'm not going to pay a lot of attention to what he has to say!

What planet are these people on? They think that blaming the messenger for talking Britain down will stop this crisis and we can then happily go on spending as we all have done and live happily ever after. I seem to recall the Tories circa 1997 kept blaming their woes on the media -

Sorry, to wake you up, but this is nonsense. We are paying the very painful, and, in economic terms, possibly fatal price for years of financial incompetence. The Government, BoE and others are incapable of accepting that we cannot stop the tide. Indeed, doesn't anybody ask why if cutting interest is what is necessary, then why have all the previous cuts here, in America and Europe failed to stop the decline, but if anything have correlated with steeper falls in economic performance?

The time for action was 30 years ago, when we opened the doors to this disaster with deregulation and globalisation and the ridiculous notion that growth could be continuous and exponential even without producing anything of substance.

We are now seeing the total collapse of this flawed philosophy. The BoE would be better advised to RAISE interest rates considerably to at least protect those with savings, and encourage others to do the same and deal with the consequences of the fall out. As it is, they will destroy us all - and sooner rather than later with an imminent run on the pound.

It seems to agree with a certain minister's prediction that only 9,000 would benefit from yesterday anouncements (which they then tried to disclaim later) so we could still easily end up with 65,000 repos which is probably with in the margin of error of the estimate...

Is it sub prime lenders or second charge lenders (loans secured against property as advertised on daytime TV...) that are going for repossessions or has the CML left them out of the figures so there are more horrors to come?

There generally seems to have been very little discussion of interest only mortgages. Does anyone know whether interest only mortgage reposessions are running higher higher than repayment mortgage ones?

Yesterday, I discovered the very human cost of these serious policy errors by the 'great and good' e.g. politicians, especially those in Government, their regulator, the FSA, and the bankers themselves.

I got a call from a very good mortgage broker - who I have worked on some deals with before - he has just gone bankrupt.

He told me that his business had dropped off by 98% over the past year, the FSA was on his back more-and-more, and he was on all sorts of pills, drugs ,whatever from the doctor.

I must admit it shook me up a bit, this chap was extremely good at what he did ... but now he is, through absolutely no fault of his own, in a poor situation.

If there is a backlash by the proles, then as far as I can see, the so-called 'great and good' fully deserve whatever is coming their way.

Most of the SUB PRIME brigade are NOT

CML members.

Many of these SUB PRIME LENDERS lend at

20% plus.

I cant name them due to the DELETION

POLICY.

Many of these outfits send in the bully

boys to collect arrears.

THE BIG PROBLEM IS THE MAIN BANKS LEND

TO THESE OPERATORS.

Robert, they are all running for cover - the government and associated departments, and all their quangos... they are just doing it in a variety of different ways.

Unfortunately, one way or another, we are all caught in the headlights and when the impact comes....its going to be painful and messy.

Ouch time......

Help yourselves and stop worrying about the minutiae of saving a few pence here and there on tax saving pension deal etc etc etc

You are wasting your time listening to these financial advisers and following the path of saving pence here and there.

IT’S costing you thousands.

If you invested in the stock market then you will now know that losses of up to 70% are not uncommon. So there’s no safety there.

Property may have fallen 30% but it’s a necessity you can’t sleep in a share or a bond!

Get back to basics.

Pay of any loans you may have especially Credit cards the number of fools who are paying 18% on credit cards and worrying about losing 1-2 % on saving is a joke.

LEAVING money in the BANK is a mugs game.

AS is listening to advisers about a tax saving here or there it’ll only cost you.

RENTABLE LAND, BRICKS AND MARTAR is the only way to go.

NOW MORE THAN EVER!

Robert

I watched that guy on News Channel also, what he seemed annoyed at was that CML had told government (in confidence haha!) about their projections for 75,000 repossessions then (who would guess it!) it's leaked by Treasury to BBC five minutes later when our esteemed leader comes up with a rescue plan for those 75,000 people.

As I read it in the interview that was where he was coming from.

GW

#3 HBOS *WAS* one of the sub-prime lenders !!

RBS got hit when it allowed hubris to over-rule facts. It got into a tussle for ABN AMRO that cost it dearly and put it deep in the doo-doo.

Although HBOS may not be a sub prime lender, dont underestimate how many dodgy mortgages went through their subsidiary BM Solutions. When i was a broker several years ago, the unbelievable speed at which they could produce a mortgage offer (24-48 hours) was astounding and they were the lender of choice for self cert and BTL punters.

Oh yeah, and the second choice for someone who wasnt exactly 'mainstream' was Mortgage Express (B and B).

Northern Crock's Together mortgages.. presciently named, since now both provider and borrowers are now all Together in the brown/Brown stuff!

The masterplan from Brown is Just another Headline Grabber from his 'spin' machine. The devil is always in the detail and Brown fails to say how much interest can be deferred. This 'initiative' will quickly be forgotten by the government as it has already served its purpose in promoting their 'regime'. Repossessions will hit 75,000 in 2009 and at a guess 125,000 in 2010.

This comment was removed because the moderators found it broke the house rules. Explain.

The rich mans wealth is in the city
they mourn what their projections did not earn
they can bribe no one
because they don't want their money
because money get funny
Though I trod through this valley
I will fear no evil
'Cause I know
Jah guide, Jah guide, Jah guide

Why is it that modern grandees have this desparate need to be well thought about? Clearly they lack the confidence to follow a properly adult life of responsibility.

The smelly, sticky stuff is in the fan and we are all going to get our portion regardless. I saw my savings lost yet more value today and for what?

Rather than the intelligent media being the problem, it is the deniers who represent the real obstacle to recovery. But then they have two strong motives to deny their culpability: their own fat pay packet and the universal contempt for their foolishness that will echo down through history from now on.

Whether it is members of this government or parties involved in the finance game - I decline to call it an industry - they are all refusing to face up to the dire realities.

They seem to think that just this little tweek here, that shabby ruse there, all backed up by loads of taxpayer funds will solve all our problems.

No it won't: we are stuffed and they did it. I look forward to the eventual retribution.

Keep up the good work.

Lets say that there will be 75,000 homes repossessed next year, and come to that for the suceeding two years. That would be 215,000 homes. How many homes are there in the UK? well the BBC in depth reoporting suggests 25M, of which 70% ore owner occupied or circa 17.5M.

So if the repossessions were as high as suggested for 3 years, it would still only affect 1.23% of homeowners. So lets get this into perspective eh. While its will be close to the end of the world for those unlucky enough ( or is that feckless enough for some?) to be directly affected, the message the Government is sending out here is that people can enter into huge financial committments and expect to be rescued by the government (or in reality taxpayer).

The government is fighting fires at the moment but it would perhaps be sensible to consider what controls need to be put in place so that when things become more stable (note I don't use the word normal) we don't end up repeating this scenario in the future. If that means some people never buy a house then so be it - it not in the human rights act yet, is it?

I FORGOT TO ADD

APOLOGIES

TO

ALEXANDERCURZON

FOR COPYING

HIS STYLE

Michael Coogan is hardly worth listening to. The fact that he is angry, sad, happy, jovial or in the unlikely event reflective will change nothing.

I remember listening to him talking up the housing market as late as this summer. His predictions on house prices have been wrong forever.

He is largely irrelvent. Its every man for himself now.

One could be forgiven for thinking, given the number of charity shops, pound shops and branches of Primark that the whole economy is subprime !

Subprime lenders usually sold their products to mainstream lenders. On the CML's own website you can download tables which show some of our most recognisable high street names in banking ran specialist lending subsidiaries, often with rather nondescript names. When the market for mortgage loans failed last year, this type of company ended up with unsold inventory that is now accumulating losses. In a falling property market, the faster they can liquidate it, the better their position will be.

These are the cold hard business facts. You can see how they could use a little spin.

#11 alexandercurzon

"Many of these SUB PRIME LENDERS lend at
20% plus. I cant name them due to the DELETION POLICY. Many of these outfits send in the bully boys to collect arrears. THE BIG PROBLEM IS THE MAIN BANKS LEND
TO THESE OPERATORS."

Obviously you can't name them here but ...

"If RBS/NATWEST want to bring good news
the best thing they can do is NOT supply
sub prime lenders with facilities. I am aware of one SUB PRIME Lender that has a near
ONE BILLION FACILITY with RBS/NATWEST."
(alexandercurzon 1/12/2008 08:54)

"I know of one account a mere 900 million facility to a bunch of gangsters dressed in suits. NATURALLY WE NO LONGER BANK WITH RBS/NAT WEST"
(alexandercurzon 28/11/2008 10:43)

... obviously you named them to RBS/NATWEST when you moved your account. Naturally, you explained this as one of the reasons for moving your account

or maybe you went to the police?

"Debt Collection is very nasty. Anyone subject to the type of behaviour you describe MUST complain to the Police and insist they take action. The problem is that the poorest members of our Society are least able to deal with this type of harassment & bully boy tactics."
(alexandercurzon 11/11/2008 12:20)

Admirable sentiments but do you practice what you preach?

A few months ago there was a line of argument in these blogs that went 'it is not the multiple of income that matters it is the affordability' - where are these people now?

The plain unalloyed fact is that many borrowers took leave of their senses and believed their own falsehoods. They lent sums of money on grossly overvalued properties to borrower who did not have a hope in hell of ever paying it back. Whilst the roundabout kept tuning nobody noticed or cared. People like me who have been raising concerns about this problem for a decade or more were just ignored.

All I can say is: 'some chicken and some roost'. (to misquote Churchill) These 'unwise bankers' have destroyed our Nation. The lust for easy money by inflating asset prices that they drove forward has fundamentally damaged the whole country. I am still of the opinion that the heads of the regulatory bodies should all go - and without a fat pension. They were asleep; they were told in detail how to remedy the situation a decade ago and they ignore the advice.

House prices need to fall to 3 times or less of earnings everywhere in the country and then we can start to recover. We will recover by encouraging saving, by offering sensible positive interest rates and only then will the Nation start to rebuild. All this nonsense of a rapid recovery would be nice, but history tells us is highly improbable.

The depression will probably not turn in the 3rd quarter of 2009 as predicted, more like 2012 to 2015. Even the government has acknowledged this by offering a 2 year payment holiday to all mortgage holders who can arrange their affairs so that it appears that they have suffered a large fall in income - and what of the end of 2 years in 2011 when the slump will still be hurting. Unemployment will still be very high; will the government possibly be able to abandon those that it has been supporting?

Assets need deflating by 50 or 60 percent from where they are today. Buy to(i)lets are probably overvalued even more and need to fall by 70 percent. Borrowers and savers will suffer very badly, and all this is due to the policy of inappropriately low interest rates for the last decade or more. The Bank of England is intellectually bankrupt! Its head and senior management and the MPC must all go and go NOW.

It made sense for lenders to provide mortgages in the boom times at inflated interest rates where, if the sub prime lendee defaulted, the rise in property prices would more than cover the liability.

Similarly, as Robert says, it now makes financial sense to repossess.

It's not the fault of the "greedy lenders" but those who allowed the situation to occur.

Interest rates must never be allowed to fall above inflation otherwise you create boom and bust

It creates a guaranteed win for the lender if this rule does not apply.

Assume inflation 10%, interest rates 5%.

If you borrow $100 and buy 100 jars of coffee at the beginnng of the year, you will be able to sell them at the end of the year for $110. Pay back the loan with $105 and you have made $5.

Hedge funds, buy to let, are simply exploiting this principle.

It is not the wolf's fault the sheep got eaten, but the shepherd who left the gate open.

post23 somali pirate

Have you been on the High Seas????

############################

Mr C of the CML

Might just ,i say, just challenged his

members

lending policies,which have been crazy.

One of his members was lending at 7 X

income:CRAZY OR WHAT???

Robert,
Are buy-to-let casualties classed as repossessions or business failures?
They are credit failures just like repossessions, but may end up with bankruptcy.
I think that 75000 repos next year is hopeful thinking.
We may end up with over a million credit failures over the next few years.
Perhaps its time for the gov to take over all failing mortgages, and rent these properties back to the tenants at fair rates.
The losses from this would be tiny compared to repo fire-sales, and the public could end up owning a million rental homes....a good investment instead of huge losses for no return.

even though mortgage lenders may be victims in the sub-prime they still charge customers big time.

e.g. during 6 years mortgage borrower pays 86 grand
capital is reduced by 20 grand
(unrealisable equity is 30 grand)

POST 27 bluepigblackcats


Yes i do and yes i have

#33 alexandercurzon

... glad to hear it

(keep up the poetry)

If homes are our biggest investments, then by factoring in current market conditions, and calculating future income projections and subtracting living expenses minus additional rises in costs.. we are stuffed

Mr. Peston, some of the bloggers and I (thank you papanca!) would like to know what your interpretation of the current economic crisis would be in terms of the criticisms of fractional reserve banking systems that have been levelled by protest pieces such as 'Zeitgeist: Addendum' and 'Money As Debt' (both a google hit away), given that the BoE and the Treasury function in much the same capactity as the Federal Reserve of the U.S.

Obviously, these are very subjective and un-peer reviewed articles but their importance cannot be discarded on such grounds. After all, Michel Foucault played hard and fast with the 'facts' while his ideas surpassed the evidence they were based upon.

Surely this entire system needs to be considered, rather than the undesirable effects of its operation dealt with as we continue to turn a blind, public eye.

This comment was removed because the moderators found it broke the house rules. Explain.

Sorry, in #29 what I mean to say was that

Interest rates should never be allowed to fall below inflation.

Sometimes these flipper fingers have a mind of their own!

This comment was removed because the moderators found it broke the house rules. Explain.

Gosh, but Gordon said the problem came from the USA? So how come we have sub-prime?
Iteresting also that the failed boss of HBOS is now assisting/advising Gordon!
More spin, no content and the trick is just that a trick. Some white rabbit. It does not matter what the leader of the CML thinks, the market is the market.
The media was not to blame, the media were not out there valuing houses, estate agents were, and valuers. No on had the bottle to tell the public that it was not worth it, we were all told that you might miss the boat, so, hurry, hurry, buy now.

Its like sweeping water uphill isn't it. It will still find its way to the bottom of the hill, maybe taking just a bit longer. This idea of giving a 2 year window to those who have overstretched themselves - well house prices will still move to their true level, might just take a bit longer to get there.

Its being touted as helping the middle classes. Well I'm middle class and its definitely not helping me. I have spent the last 4 years paying down my mortgage to a negligible amount with the intention of starting again with a big mortgage and moving to a big house in 2009. Its in my interests for people who have overstretched to downsize, and I can buy their houses off them. This 2 year window means it will take longer for property prices to find their true level and there will be fewer motivated sellers when I want to move next year.

It also sends completely the wrong message to people considering taking a new mortgage. The message should be - be cautious in how much you borrow, don't assume you'll always get overtime or be in a job and take insurance to protect yourself. The message now is borrow up to the eyeballs and rely on an incompetent Government to bail you out as they don't have the appetite to do the right things for the long term.

Yet again Gordon Brown is well intentioned but totally misguided and incompetent.

This comment was removed because the moderators found it broke the house rules. Explain.

Bobby, I no longer read the body of you blogs - just the headline.

As usual, the headline tells me that you still cant get enough of the debacle within the financial markets.

Cup half empty doesnt even come close.

Also, do you have any political agenda within your blogs?

I would also suggest that you are creating, and living within, your own Robert Peston Inc. bubble - in a similar fashion to the one the banks, etc., created - and you have been making a living off.

I'm looking forward to your bubble bursting one day. I think i'll then start my own blog on how R. Peston Inc. got it so spectacularly wrong.

I cant see it, but it would be nice to think you will be as gushing about any successful news within the industry if, and when, comes along? I doubt it. Wheres the fun in that.

I cant possibly know, however, I get the impression you must have created more enemies than friends over the last few months.

Vampire's it's good to see you suffer
Vampire's only like to see blood running
Vampire. Your wicked bloody meditations

The Banks are slowly but surely overtaking this obnoxious nuLabour government in the publics unpopularity stakes.

Since being bailed out by taxpayers money, what have the Banks done except exploit the changing bank rates to the detriment of the Saver and the Lender.

Why is LIBOR still locked up ?

The great Brown plan will add 2 extra years debt to a house mortgage which is already dropping in value. Does he honestly think any lender who has not been semi nationalised is going to risk losing any more money on bad debts. This is another cosmetic ineffective measure aimed at conning the great unwashed into thinking that Brown is doing his utmost to " helppeople ", when in fact he's hoping it will get the opinion polls into a favourable position for a May/June election after a nice giveaway in the April budget.

One year ago we were not subprime. We had invested in Buy to Lets because of the problems with Equitable Life. We had more than a third equity in our 7 buy to lets and our home had more than that.
In November 2008 we made ourselves bankrupt because of the credit crunch (our creditors would have done it to us in 2009).
I just wish our Government would make decisions early enough (or not at all). Business can cope with most things but not so many external changes. We were just about to retire and so now will be on benefits instead of a reasonable amount of income. I have heard it is the same for other accountants, solicitors and barristers. I think that it is a lot worse out there than the Govt. realises. Just let it all come to an end.

Other than a Mortgage for those buying a house by far the most personal debt is on Credit Cards, with repayment at minimum levels each month. As the interest rates on these are14% and all numbers North, how is the reduction of the Bank Rate to 2% going to boost the economy?

Perhaps Mr Peston could enlighten me?

There are probably no measures that will save the foolhardy, so - so what. The mortgage relief measures are likely to help some who are vulnerable through no fault of theirs, that is the point. As far as I am concerned if your buddy at the CML is grumpy - well tough luck he still is in a job, unlike a great many people. I mean really doesnt he understand that the definition of employment is that there is a problem to deal with. No problem means no employment, you dont employ somebody unless you have a problem. Next time you meet him just point it out. Tell him to be grateful there is a problem.

Sorry my error @ 45

should read, 'Saver and Borrower'.

You can not polish a turd.

Names deleted to protect the guilty

1. X 'NG family law solicitors' complaint with LCS
2. Y 'DP family law' complaint with OLSO
3. Z 'KPMX LLP' complaint with IPA
4. @ 'Hastings CSA' several complaints with Chief Exec, ICE, Parliamentary Ombudsman and 2 Tribunal Appeals

Would anyone who gets a two year stay of execution please make a post.

37 theresonly1soupey

The collective noun probably should be latrine.

The CML issue resonates with the scandal of mis-selling endowment policies. Under FSA regulations a lender has to satisfy certain very specific criteria before it can lend money to someone requesting a mortgage.

It is clear, the level of repossessions shows it, that the FSA regulations were not properly followed in that large amounts of money were lent to people where there was a significant risk of non-repayment. It was, by any standards, negligent and it should lead to court actions against the CML members.

I would be very happy to take the lead in initiating such a class action aganist CML members and perhaps those who read this blog could help me in getting some momentum by emailing through this site.

Does it matter what sort of lender you have borrowed from if you lose your job and cannot get another one, or another one paying enough.

Of course non on the prime lenders will have this problem will they Mr Coogan.

Post 47 Babaramayoh

I really feel for you and fully understand what you've gone through.

I am facing a similar situation facing the loss of everything I've worked for in the last 15 years of self-employment.

I am tired of perpetually robbing peter to pay paul and everyday when I wake up I have to decide whether to try to go on or just fold the lot and file for bankruptcy.

My company has experienced a 90% drop in income over the last 12 months due to the credit crunch but I am re-building it everyday. But the issue is whether I can re-build it fast enough to satisfy the creditors fast enough.

There are many companies in this country hanging on the edge of a financial cliff by their fingernails.

Anything the Gov't can do to stretch out the recession has to be welcome as it will lessen the number of unemployed, the loss of companies, homes and the basic destruction of peoples lives.

Never again must we elect a Gov't that arrogantly states that it can end the economic cycle and abolish boom and bust. Crash Gordon has been one of the mian architects of a mega boom and now a mega bust except that he personally won't be paying the price..............it is decent people like me and post 47 who will.

If he had one once of honour he would resign for such a major failure of policy.

Brown has diminished this country economically and Blair diminshed this country's stature through the dodgy dossier Iraq War.

Both will end up multi-millionaires.

What fools the British Electorate have been

P.S. I never voted for is phoney double act at any time! Put your hands up and bow your head down in disgrace if you did..........

Have to say - I said all this yesterday in response to your blog. It is the law of unintended consequences.

41 Jiltedjohn

Think you are missing the point old buddy. At the moment to all intent and purposes the 'market' is repo. That is not a free market. If the intervention, if it works, does anything it simply will stop more repo, that is all, that is the point of it. As such it may help the market stablise because it would help confidence which is missing. It will not actually change the subsequent free market level because that is based on the debt held by the critical mass of householders who will not voluntarily sell unless it is in their interest. 1 in 3 house have no mortgage and 1 in ten are vulnerable. The market is set by the debt levels of the remainder, that is why the market rebounds to a particular level promptly. There is a balance between the level of existing debt tied up in a typical house and affordability, ie what an investor do based on the profit motive, ie uplift. Anything that stabilises the market gets you to the point you and others can move sooner, not later. This is nothing new - it occurred in Aberdeen when the oil industry pulled the plug and retrenched in the 1980's and the local market collapsed. If you think the house price level is going to fall so a huge sector is in negative equity I am afraid it will not happen. Your best bet is to borrow heavily against your house and buy another property at auction cash and then sell both to maximise. however you have to sell the second house withing 6 months to avoid capital gains and obviously you have to time the uplift correctly or possibly end up having a divorce even if only with your bank manager. 2% of housing stock turnover is normal, 4% of stock turnover is a boom, 1% is a bust.

If Gordon Browns proposal for a two year deferment were being offered by a high street lender then there would be an outcry.

Buy now, pay no interest for a couple of years, simply roll it up and then pay more on your new, higher debt.

Forget a remortgage for at least eight years, no one will touch you, we will charge our standard rate in the meantime, plus maybe a bit more - to be confirmed.

Forget capital repayment

It does not matter if you are not working, in fact we will only offer these terms to those already in financial difficulties.

Please note, the asset on which this borrowing is secured is likely to be worth 20% less than now.

It does not take a brain scientist to realise this is a liberty - I pity anyone who is stupid enough to take up the "deal"

Did the NR not offer a "payment holiday" at one point - advertised with the usual young couple painting each other and their home.


cheers

Comment 8, hiya, you will be aware that America started the trend for massive rate cuts, (0.75%, the largest reduction for 26 years I believe) back in January.

The rationale was the stock market falls due to the Societe Generale offloading of stock (on a Wall Street holiday), due to fraud - Je-rome Kerviel.

Rome is the clue, I believe the "State" "owned" about everything then too.

It's a New World

cheers

#41

Never mind the middle classes not being helped - No-one will get any help from Gordon's new Ocean Finance style approach until the Banks sign-up to it. Despite Lord Mandelson's squeaking they have not done so, and they appear to be pulling away by the hour.

So, I hope we see corrections in all tomorrow's papers and new headlines saying "Government fails to deliver promise of help for troubled borrowers". Any chance do you think, or will Mandy have got to the editors first, with a new distraction story?

Now then, by the time someone with a mortgage is facing repossesion, they have normally run-up every avenue of available funding - overdraft, loans, credit cards. Then they lose their job and the Government says don't worry, we'll cover for you. Sadly, that's with the mortgage company. The rest of the creditors still want their dosh and they'll go for repo whether the government - or indeed the mortgage company - like it or not.

Although probably less value in monetry terms than the US, I think the UK sub-prime market will cause as much havoc here as it has done in the states.

It's just taking longer to work its way through the UK systems. Once it does though that'll only be the start of the real problems facing us in the coming years.

How much lower can interest rates go? If we keep reducing month on month the market is not having time to adjust to these redudtions, and the BoE is surely reducing its options in the future, potentially leaving itself with no possibility of reducing and therefore having no chance of 'making a difference'
The other thing is that the mortgage market is no longer a competitive market, some players passing on the whole reduction others not. Change to the ones charging less? not a hope, their rates for new customers sting. A market then that can not do what economic activity requires of a market.
Does this massive cash injection into the banking sector look such a good idea now? where next?

I agree with 13, Property is still the safest place for your hard earned. Inflation proof, deflation proof (depending on when you bought in) and most importantly, you CAN earn an income from property - ALL things that cannot be done via the stock market or pension's.


Buy a bargain, you won't regret it imo ( although I would wait until round about April before getting in)

As if I know anything :) Seems reasonable though!

N0 28 "House prices need to fall to 3 times or less of earnings everywhere in the country and then we can start to recover. "

The most sensible comment on this blog for a while.

The only way lenders are going to start serious mortgage lending again is on sensible income multipliers - I worked for B&B in the 1980s when it was a proper Building Society as a mortgage adviser, back then mortgage funds were limited, 3x income was max we could approve. far more sensible than recent ridiculous income multipliers. House prices need to drop quickly to 3x average income or less, so thats 50% or so down from where we are now, only then will mortgage lending restart in any serious way.

Michael Coogan, (CML)

If you live in a glasshouse
Don't throw stones
And if you can't take blows brother
Don't throw blows

Harm no man
Let no man harm you
Do unto others
As they would do to you

P.S. Thank you for the basket to carry my water

I have a together mortgage from Northern Rock and it helped me buy my property. My mortgage balance is less than three and a half times my salary and the property (even after the fall in prices) is worth more than the outstanding balance.

I am not a reckless waster. I have a good job and work hard and get irritated when posters seem to point the finger at people who borrowed the whole value of their property as the ones who have caused all this trouble. Northern Rock helped me at a time when I needed to move.

The fact that Northern Rock themselves were borrowing beyond their means is something none of us including the Government could do anything about.

22 wrote

'So if the repossessions were as high as suggested for 3 years, it would still only affect 1.23% of homeowners. '

at an average of 4 skulls a house I'd say 1.23% of 25million homes (307,500 houses empty) * (4 skulls) = 1million 230 thousand people = 1,230,000

Are you seriously suggesting this is not a problem? No wonder this country in such a toilet!

It is the first time that I see British subprime seriously mentioned. Can anyone predict when the default on UK subprime mortgages will kick off a fresh round of bad-debt write-offs around the globe?

A very credible and competent-sounding commentator on the radio the other day explained the UK Government-Bank relationship.

He said the bailouts were made because the banks are on the point of collapse (broke).

He said the talk of pressure to make the banks lend again is pure spin - to fool the taxpayer into believing something positive, to his/her benefit was to be achieved.

As we now see, there is no sign of any worthwhile benefit flowing through to borrowers.

The banks are still open, and that's about it!

59,

I posted exactly the same last night, a terrible deal - absolutely shocking!

Financial and political opinions which cannot be easily and timely made accountable should be given only very little, if any, weight in our decision making. There are lies, repetitive spins and economy with the truth.

Gurus are nothing more than good talkers with polished manners.

The basic reason we are all in this mess is through poor governance of the regulatory system which was flawed in it's inception.

Bluff and Bluster Boom and Buster Brown is wholly to blame.

Bring back Ken Clarke. If he had been at the helm for the last 11 years we would be no where near the parlous state we are in now.

The sub-prime thing was driven by a number of influences not least of which was deregulation of the market. The main problem however was the people in charge of lending (be that HBOS, RBS or Bish Bosh loans) do not, did not and probably never will understand that the capacity for a market to rise is finite. The 125% mortgage was viewed as safe as the forecast was for prices to rise sufficiently (and remain stable) that within a couple of years the extravagence would be covered. The lenders stretched the utility curb by creating 40 year mortgages and interest only mortgages, maxed out for loan multiples (forgotting people still want holidays, cars, food, nights out, etc, etc). Ultimately something can only be stretched so far before it bursts! The government of course are now looking at creating a 'relative' feel good factor for us hard pressed folk so they can capture enough of the vote come the election. I think the expression in Iceland is Kreppaonomics for the situation we have here. https://www.economist.com/finance/displaystory.cfm?story_id=12382011&fsrc=rss. The only reason the UK has not gone bust is our government have a Black Amex card where as Iceland clearly only had a Gold one.

I'm fed up with the whole bunch! I saved while I worked, I put money aside to pay for retirement, I worked 8 a.m. to 7 p.m. plus ninety minutes travel each way. And for what?

To give my money away to Gordon Brown's no hopers, who've spent too much money buying thing they can't afford.

When I was their age, people who overspent went to the wall, and so they should today. Gordon Brown is merely putting off their "evil day".

If they can't afford it today, how do you expect them to be able to pay tomorrow, Gordon, after a couple of years recession and lower salaries (for those who can find work).

The only people who are being punished are those who have saved for a rainy day. And now they have that rainy day they find that Gordon Brown has sold them umbrellas with moth holes in them!

MORE LIES FROM MORTGAGE LENDERS

Housing Minister Margaret Becket said on the BBC Radio Four programme this morning (December 4th) that it cost mortgage lenders £35 000 every time they were ‘forced’ to repossess a house when homeowners fell into arrears with their mortgage.

Now I’m sure Margaret Becket hasn’t intentionally constructed a lie or simply invented this figure herself. But it is most definitely a lie and it is a completely fictitious figure too. So where did this piece of fiction come from ?

Could it be from the Council of Mortgage Lenders ?

The truth is most repossessions cost the lenders absolutely nothing. But they cost the persecuted homeowner plenty because it is the homeowner that is made to pay any extra costs incurred by the lender.

Not only does the repossessed homeowner have to pay all the real costs, but lenders invent utterly fictitious ‘costs’ which they add to the final bill to the homeowner. This is all extra profit opportunity for the lender.

This is why the banks were so keen to develop their laughingly labeled ‘subprime’ mortgages. They allow the banks to contrive to make more and more borrowers desperate for a mortgage as the banks falsely label them ‘too risky’ for ordinary, standard mortgages.

This contortion of thinking then allows the banks an excuse to tie these borrowers up by forcing them to accept weasel mortgage contracts worthy only of Shylock the evil money lender. The contracts are specifically designed to fleece the borrower at every turn and push him further into debt as his home is stolen bit by bit by the system the banks have deliberately designed to do exactly that.

You see, the banks have all got together to form a sort of cartel or effectively a monopoly where they all follow the same procedures to milk as much money as possible from their customers and in particular to catastrophically penalise the most disadvantaged and poorer people.

I personally know of a case where a homeowner has been systematically milked of about half a million pounds of the value of his house as he was repossessed four times in rapid succession. Mortgage lenders literally forced him to remortgage again and again by using their artfully constructed lending system to get their hands on nearly all the equity by means of falsely claimed ‘expenses’ and ludicrously named ‘early redemption penalties’ Oh, and rapaciously higher interest charges on the completely false premise of ‘higher risk’.

So where, precisely, does this claim of each repossession costing the mortgage lender £35 000 come from ?

I suspect it is a figure mostly comprising the imaginary losses dreamed up by lenders of the loss of profit they would have obtained if the mortgage had continued.

In other words they have lost absolutely nothing at all except their greedy little dream on some further profit in the future which their twisted minds makes them think they can describe as a real loss now.

It is a lie. It is the same as you or I saying we have ‘lost’ a million pounds because we failed to earn more money than we have. It is a fiction. Just like a lot of what the banks get up to. They are so used to habitual lying they no longer have any understanding of the truth - just like most other career criminals.

Peston, my dear chap, you're the only reason left why I think I could stretch to a license fee.

Keep nailing these great and well guessed truths to the web. We're loving it.

This ain't subliminal
Feel tha crtitical mass approach horizon
Tha pulse of tha condemned
Sound off America's demise
Tha anti-myth rhythm rock shocker
Yes I spit fire
Hope lies in tha smoldering rubble of empires
Back through tha shanties and tha cities remains
Tha same bodies buried hungry
But with different last names
These vultures rob everyone
Leave nothing but chains
Pick a point here at home
And tha picture's tha same
There's a field full of slaves
Some corn and some debit
There's a ditch full of bodies
Tha check for tha rent
There's a tap, tha phone, tha silence of stone
Tha numb black screen
That be feelin' like home
And tha riot be tha rhyme of tha unheard

Calm like a bomb

There's a mass without roofs
A prison to fill
A country's soul that reads post no bills
A strike and a line of cops outside of tha mill
There's a right to obey
And a right to kill

Doh - why does borrowing more than 100% of the value of a property increase the chance of default - surely if the borrowing was affordable then why would such borrowers be more likely to default - for all I know NR had tighter income etc criteria for such loans than their standard mortgages.

My guess however is that those wanting such a large facility (what was in effect a mortgage plus an unsecured loan) were probably those consolidating other debts - ie living outside their means. Compare this to those who save for a deposit and thus demonstrate they are willing to make the sacrifice in consumption to put money aside. I.e. there was some sort of negative self selection for this type of product but this does not imply that there is an a priori reason that such loans will be more likely to default.

However such lenders are more likely to be repossessed because after special introductory rates expire the lenders become trapped - in NRs case on particularly unattractive interest rates. And not only are such lenders more likely to default they are clearly more likely to be repossessed quickly - for a lender if a borrower still has some equity in the property there is less urgency to repossess - for these over 100% mortgages in a falling market any delay in repossession is costing the lender money - as I commented on the mortgage support thread last night which Mr Peston seems to have picked up on today.

XCAnderson talks about an imminent run on the pound - it's down 10% in the last few weeks and is even lower compared to last year. Time had it that Harold Wilson was chastised for his pound in the pocket speech when the pound was devalued in one go. Now we have GB allowing
( encouraging? ) a 20% fall by stealth. Of course it helps exporters but ultimately the fall in sterling will have much broader negative effects. Lower interest rates are not the answer. Lower taxes are.

#28 and 66

If you think house prices are going to fall to 3x average earnings, then you must be counting on hope over experience.

Average house price in the UK is 160k. I challenge anyone to attempt to go out, buy some land, take it through the tortuous and expensive planning process, pay all the expensive tradesmen 150 quid per day and buy all the expensive materials and finally part with 5% of the final figure to cover legals and sales costs, not to mention bank interest for the duration....and then attempt to return a profit of any discription.

Trust me, it cannot be done. This is why no new houses are being built, or will be built in the near future. Unless and until land prices fall (which they will not due to lack of supply through the planning system), wage levels drop by 50% (no sign so far) and material costs come down (a price increase is due in the new year), your utopia of 3x average wages will never be realised.

In the unlikely event that the above did occur, average wages would come down by a concomitant amount, which would mean the multiple could never be reached.

As I've said before on this blog, there's no such thing as affordable housing and never will be - live with it.

Then of course there's the soon to be introduced aspiration for zero-carbon housing.....add another 20% to the build cost chaps!!

I still think the game at the moment is trying to get people to see what an overvalued world they have been living in. I've thought we've had the "knows the price of everything and value of nothing" mentality for well over 10 years.

I thought that would be the first delusion to go when the bubble burst, but I'm shocked by how many are still deluded.

I suppose, like so many things human, it will take time. So anything that slows the descent to the abyss has to be good. Rationality has to take a back seat while we all sort our heads out and readjust our values. Just perhaps...

In terms of rebalancing world power, I can't help thinking about recent work in evolution where the effects of a very few violent environmental changes are seen as more important than much longer terms of gradual change. Perhaps we are about to see the equivalent of dinosaur doomsday?

Post 82 houseflogger

You obviously do not know what you are talking about but your Brown like bluff and bluster makes you sound like you do!

I am a residential land trader by profession. Building land values and now down from peak 2007 at least 40% and in some cases 70% and landowners are agreeing to sell at this level. Building costs including labour and materials are tumbling due to the scarcity of building contracts.

The "unlikely event" you refer to is actually todays reality.

A traditional 3 bed townhouse can be built including all costs including land in average areas for around £80K. Banks will only finance this if there is a 20% profit so the average values of new build townhouses could get down to £100,000 and unless major action is taken that will be a very "likely event"!

Now what would the impact of new build prices at those levels have on the housing market? The same as repos been sold off at knock-down prices!

All this equals depression.

Anyone wishing for drastic cuts rather than a normal correction in house prices is acting like a turkey voting for Christmas...which is quite apt right now!

@ #36 SheffieldStudent

"Surely this entire system [fractional reserve banking] needs to be considered, rather than the undesirable effects of its operation dealt with as we continue to turn a blind, public eye."

You're right. Unfortunately, few people are willing (or perhaps able) to think outside that box. And if you keep bringing the question up, someone will doubtless explain (more or less condescendingly) why any alternative to a monetary system based on frb can be dismissed with a wave of the hand, or in 25 words or less.

I wish I new enough to explain how such an alternative system might work, but I'm still very much in the learning stage. But here's what I do believe:

The world's economy is based on an assumption that exponential growth in wealth (read: consumption and waste IMO) is possible. This hypothetical growth is financed by an exponential increase in debt, facilitated by fractional reserve banking. It also helps that we treat our natural resources as income rather than capital.

Since infinite exponential growth of anything (outside pure mathematics) is impossible, the economy undergoes cycles of boom and bust. During the boom years many people may "prosper", but it seems in the bust years more people suffer.

99.9% of discussion in the media (including these blogs), in the chambers of government, and in the board rooms of banks and corporations is devoted to debating how the operation of our existing economic/monetary system can be "corrected". Endless recriminations against those we believe are to blame (or have been the greediest); endless proposals of how the parameters of the system should be tweaked to bring about a return of the boom years; and endless recommendations as to what "they" should do.

I also wish Robert Peston would consider giving us his thoughts on alternatives to fractional reserve banking and an economy based on sustainability, not exponential growth. But the people with whom he consorts, the movers and shakers in government and finance have long ago dismissed the alternatives (if they ever considered them). Of course,you may have noticed that they are not among those worst affected by the bust part of the cycle! Why should they (or RP) consider alternatives?

In addition to the (rather politicized) web resources you mentioned, anyone who feels they need to know more about how our economic system works should check out this web site:

https://www.chrismartenson.com/crashcourse

It was previously recommended by another person on these blogs. I found it very informative, and it's helped me better understand some of the discussions here.

Well said MUDSHIRES (77). These organisations are very skilled at twisting the truth to suit their purpose.

Have you noticed how brilliantly the Banks have got Angela Knight to speak for them? She never answers a question straight, makes out the fault lies with everyone except the banks and hardly gets challenged by the interviewer?

You can't help admire her talent even if you disagree with her. I'm amazed the Tories haven't signed her up for a future cabinet post.

82. At 10:42pm on 04 Dec 2008, houseflogger wrote:

""#28 and 66

If you think house prices are going to fall to 3x average earnings, then you must be counting on hope over experience. ""

Maybe the hope should be that the average price of a house for a first time buyer would be 3.5x or 4x their salary. You can scale upwards from there.

3x salary is a bit hopeful - that would see the AVERAGE price of a house at ~75,000. By that point an awful lot of privately owned houses would be in negative equity. Most houses bought after 1995, I'd guess.

""Average house price in the UK is 160k. I challenge anyone to attempt to go out, buy some land, take it through the tortuous and expensive planning process, pay all the expensive tradesmen 150 quid per day and buy all the expensive materials and finally part with 5% of the final figure to cover legals and sales costs, not to mention bank interest for the duration....and then attempt to return a profit of any discription. ""

As not every housebuilder has gone bankrupt I'd assume some of them are still scraping by. It's not all relentlesly negative. Just really, really bad.

Coogan and his ilk need to be investigated. Him and his pals were responsible for the bad practices - just look into how they define a first time buyer. I guess they'll not be investigated because Brown was complicit in the conditions that Coogan and co were defending until recently. They're all in it together and will fall together.

#84

Perhaps I should move up north - 80k wouldn't buy the plot around here!

#87

In my last planning application, it cost 4k just to cover the potential presence of a single roosting bat...and an 18 month appeal process (and three sets of consultant drainage engineers) to disprove the spurious contention that the backing up of the storm drains had anything to do with global warming.....typical costs associated with the vagaries of the planning process.

These costs are not going to go away anytime soon and if anything will be increased by the relentless addition of more government legislation and red tape. All of this adds to the cost, so in short, houses are not going to get cheaper anytime soon.

For info, the above costs would account for about 10% of your aspiration for a 70k house - before a spade went into the ground.

Don't know if you good folks in the UK are familiar with the American TV personality Jerry Springer, who stages daily outrages that end with the participants cursing and throwing furniture at one another.

He ends each show by calmly asking: 'Now, what have learned here today?', and proceeds to share platitudes.

Just now, on both sides of the Atlantic, it's beginning to look like a Springer episode.

So, what have we learned?

Really, not much, just that our grandparents were right:

Money doesn't grow on trees.

Debt in general is undesirable, and best paid off quickly.

There is no free lunch.

Beware the guy in the $3000 suits who has a deal you just can't afford to pass up.

Governments can't create jobs or economies, but they certainly can destroy them.

And, one modern proverb to add:

'If he sports an MBA, run the other way'...

#82
You are absolutely correct and all the wishful thinkers out there really need to wake up to the unpalatable facts that people have always and always will try to buy property at the cheapest available price. Prices are where they are due to fundamentals of land, labour and materials.
95% of the property market is driven by the desire to own a home.
Property in the UK will be the best long term investment as it always has been.

Agree 100% with houseflogger. The £80k figure mentioned by NorthernThatcherite (plus another 20% profit, taking it to £100k), mysteriously "lost" the cost of land itself, not to mention the cost of the planning process, architect's fees etc any building firm needs to go through to build the house in the first place.

Leave aside the fact that an £80k property would look like a shed, not a proper family home - and that if you depress workers' wages who build them, among others, they wouldn't then make even the kind of X3 earnings multiples referred to earlier.

At the end of the day, there is a need for at least 150k homes a year (the Govt says 200k+, but what do they know), whether for rent or sale, to take into account the fact that people leave home, get divorced, have babies and so on. Yet they aren't being built and never will at this rate.

Some people seem to pontificate about the market as if it really will follow some orderly progress, where prices will fall to a "sane" level where people can afford to buy on a 3X multiple and have saved up at least 10% of the asking price.

At which point they will all form a nice orderly queue outside their local building society, policed by a friendy bobby, and be handed a cheap mortgage for the nice 3-bedroom semi they always wanted.

It won't work like that. My big worry is that all this talk of "sensible" prices, of "necessary" 40% market falls etc. etc. from people on here will evaporate the moment it becomes apparent in 3-4 years that there is a massive housing shortage because no-one built anything in all that time.

Then prices will rocket again - and the second people in the queue will be today's doom mongers, beaten to it by speculators who, as always, had the readies they needed while the rest of us were unable to get a mortgage regardless of status or income.

We should stop taking about the need for price falls as if this is an orderly market we are talking about. It's actually a very brutal market, whether prices fall or rise. And there will be many losers whichever way it pans out.

House prices are NOT falling as quickly as is being portrayed by the statistics. The only people who are selling are DISTRESSED SELLERS and virtually no-one is buying. The number of transactions is very small, there is no competition between buyers (as some potential buyers wait to see the market bottom and the vast majority couldn't get a loan anyway because of the huge deposit required). This all leads to a huge market price drop. If credit were available at reasonable rates, the buyers would mop up the distressed sales fairly quickly (over 2-3 years). Most potential sellers will simply sit on their hands and wait until the prices recover sufficiently. So, sales volumes will be pathetically small for some time and because of this paucity of sales, a few distressed sales will make the price rate drop appear horrendous - its the way of statistics to accentuate a disaster in this way.


Gordoom is facing in two directions!!

To the public he is portraying himself as being tough on the banking crisis tough on the causes of the banking crisis. pre-Election largesse is evident)

When talking privately to the bankers he says build up your capital reserves, pay back your expensive loans from HMG and take the flack I give you through the media.... don't worry, its only for public consumption, we don't really mean it.

If he were serious, Gordoom could either stick a super-director on the board of the banks HMG now control, or simply pass a new law requiring banks to maintain a specific proximity to the BOE base rate. Its so simple, but they won't do it because Nu-labs require jobs in the finance sector when they get thrown out at the next election.

Come to think of it, the best possible fillip for sterling the housing crisis and jobs would be if Broon announced a snap general election!

I remember new build semis for sale for £100k at the turn of the decade. Some things have changed since then, but someone tell me what lasting change has happened during that time. It was not long ago.

The credit tap has been turned off, land banks are being written down, builders, tradesmen are easy to come by again, the crash in building materials looks set to be epic. Plots - have a drive around, pick a vacated one and I bet someone will be happy to accept an offer. We are a crowded island, so they say. How much more crowded, when all is said and done? The housing stock we have could return to a £75k average and make new builds uneconomical. Mortgages back to 3x income and no residential construction industry. Is that so implausible? Come on, we all remember it, it was practically yesterday, not some bygone era.

The market price is that at which transactions take place. If transactions fall back under £100k, sunk costs are someone else's problem. Negative equity for millions, why not, if repossessions are the market then negative equity is whatever bankruptcy auctions say it is.

75,000 repossessions and subprime are a joke anyway. Entire developments stand empty a few minutes' drive from BBC offices in the regions, if they cared to send an intern to take a few photos. It might make a nice photo essay.

#40, you forgot "Global recession" and "Interest rates were 15% under the Tories"...

Brown seems to have a peculiar love of failed bankers - Derek Wanless ( was known in the market as Clueless ) and Martin Taylor ( indirectly an old boss of mine ). Maybe Fred Goodwin should give GB a shout, I hear he has some time on his hands....

#77 sounds like your friend should stop buying property as he/she seems incapable of keeping up with payments. Maybe some primary school lessons might help with that reading issue when someone puts a piece of paper in front of him/her.

Of course, he/she should be happy that someone is willing to lend to someone that is clearly so incapable of running a basic household budget.

Poor Gordon cannot make up his mind wether the public gignats wish to be lead by DonQuixoteys , Sancho Pansys ,windmills in drag ,carrots or turniptops ,so our public cervante numberr one is combining them all into one and one for all.


Whilst the public are still trying to understand the nature of the civil union between LAAAbour and Naaautearn wok [caught with its pans down yet still wanting a bonus] vis a vis the finaaancing of city centre "baaachelor boy"flaaats ,they are unlikely to view it as a healthy one that will produce the patter of little taxipayerrs feet at any time between now and infinity or beyond

If only Sheikspear were alive today ,he could then access material for his greatest works

The laming of the shrewdest

King liar

Love labour lost

Rich erred the third

Macbet[what is this numbskull i see before me]

Homeowe and dulyate


For pure entertainment value it has been worth every scent of 100 TRILLION dollars [excLUding VAT]that it will finaly cost, including free bubbly lehmonade for the soda mites and their sodukomite experts and silly digits

And Great Gordon is plannig a seaquell with

New MPROVED Credit Crunch 11 [SNAP CRACKLE AND BOOOOOOOOM]

Whichever labour quango ends up running the nationalAAAyesed hole , will end up also being referred to as "the creature from the bottomless pit "

Dear Nick

This is a right mess a real real mess, if it were not for the fact that the General Public Now a days can see right through the serious events that are now on us the finanaciers would have dragged us into war, as they do, to make money,
These Bankers and Money men are dispicable social terrorists holding the world to ransom.

96 When interest rates were 15% under the Tories houses cost less than a quarter of what they cost a year ago ,equaling 3 3/4%comparatively,

The massive subsequent inward flow of ever cheaper Chinese imports not hamstrung by beligerant unions and poor management ,destroyed British manufacturing and allowed Great Gordarren Brown to pretend his policies controlled inflation whilst removing housing from the inflation statistics with the slight of his hand .

Labour squandered the interest rate supressed Tory inherritance and turned homeowening negative equity PRoxymorons into serfs by allowing loony loans to bid up normal prices ,thus putting homes beyond the reach of working couples but not the ponzi bandit Labour /bank buy to letter dalliance now going down the pan , which replaced due diligence.

Put that in your pipe dream and smoke it !