View more on these topics

Unregulated buyers snap up mortgages for quick repos

Former Edeus chief executive Michael Bolton has hit out at unregulated entities such as hedge funds for “making a very fast buck” from buying distressed mortgage books and repossessing as soon as they can.

He says firms can buy a distressed asset at 50p in the £1, look to repossess as soon as possible and then sell at auction at around 30-40 per cent less than market value. He says firms are making huge margins, even in the falling market.

Last month, Money Marketing revealed that the FSA was relying on the originating lender and the third-party administrator to oversee the regulatory demands if an unregulated body such as a hedge fund buys it.

But Bolton says: “The buyer is unregulated and in no position to be able to agree to any loan modifications with the borrower. More to the point, they do not want to because the buyer wants the borrower out as soon as possible.

“If the borrower is unlucky to have his loan traded to an unauthorised investor, he will not be given a choice of a modified mortgage arrangement. This falls outside FSA action as it is not technically breaching any rules under Mcob.”

Bolton believes that there could be as much as £30bn in mortgage assets for sale to unregulated entities.

Recommended

Perspective buys sixth adviser firm

IFA consolidation vehicle Perspective Financial Group has acquired its sixth firm, Rutherford Wilkinson, which has 16 advisers and 150m of funds under advice. It will continue to trade under its current name with the existing management structure.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com