As attention is focused on the United States we take a look at the U.K. where mortgage lenders have a crisis. Bradford & Bingley, the former building society, raised more than £4bn selling off two of its most solid mortgage books. Paragon, the specialist buy-to-let mortgage supplier, announced that it will attempt to repair its balance sheet with a £280m rights issue.
Shares in Paragon crashed 40% after it was forced to arrange a standby emergency funding package worth £280m with UBS.
Archive for the Category »Outside the U.S. «
Category: Archives, International, Outside the U.S.
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Some say the U.K. is a warning to the U.S. but the news sounds about the same. One third of all U.K. homeowners will face big increases in their house payments. A report released yesterday said approximately 5.5 million people in the U.K. would be effected. Many fell into the subprime trap because of divorce, employment issues, or other unforeseen financial issues. While the U.K. classifies adults as ‘non-standard’ the United States also faces many subprime and ALT-A problems as adjustable rate mortgages reset. The United States classifies the problem as ’subprime’ but analysts say the analogy no longer holds up to examination. Here is why:
Category: Archives, Foreclosure, International, Opinion, Outside the U.S., Root Causes
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Hefty losses at its credit card unit are of interest in this article as many said problems would spread. A few months ago we reported that people were keeping credit card accounts current while defaulting on house payments. Not any more, from what we hear from Japan’s MUFG (Mitsubishi UFJ Financial Group Inc.) While losses also came from subprime issues, credit card defaults are alarming. Part of the credit card losses came from restructuring. Analysts look for subprime contamination of other markets because many collateralized debt obligations (CDO’s) are credit card receivables.
Category: Analysis, Archives, Economic Impact, Outside the U.S.
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Barclays and HSBC are on different ends of the mortgage crisis but between them they lost $6 billion from their exposure to the U.S. housing crisis and related credit crunch. HSBC lost money because of U.S. mortgages going bad, and Barclays lost money because of collateralized debt obligations (CDO’s) based on U.S. mortgages. The process of putting together a mortgage pool begins when a home loan is originated by a bank or mortgage lender. That loan is typically sold to a Wall Street firm that pools it with thousands of others. Once a pool is packaged, it is sold to investors in different slices, based on risk. That is the CDO.
Here is an article we expected so see about two months ago. It is also published on Household – HSBC Watch. Insiders at HSBC say we should look for more changes and cutbacks from HSBC in the United States as the bank’s image has been tarnished by predatory lender Household International, and as more people learn that HSBC is the Hong Kong Shanghai Bank Corporation. Shanghai is a municipality of the People’s Republic of China that has province-level status. Heavy investment in Islamic banking doesn’t help HSBC in the U.S. either, said one analyst. Here is the article:
Category: Archives, Economic Impact, Lenders, Outside the U.S.
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