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Thursday, August 28, 2008

Banquo's Ghost

Much like Banquo's ghost, Northern Rock continues to haunt the government.

Northern Rock, having sold excessively expensive and outsized mortgages to those who could least afford to manage them, is now attempting to repossess the homes of those who have failed to keep up with the payments on these most unsuitable of products.

Research published by Standard & Poor shows that Northern Rock has been responsible for one in 13 repossessions in the UK in the second quarter of this year, as its customers are getting into trouble much faster than other borrowers.

Standard & Poor's research shows that a monthly average of 353 of "The Wreck's" best borrowers faced repossession in the second quarter, up from 134 in the previous three months.

S&P also noted an increase in Northern Rock borrowers falling more than 90 days behind on their repayments.

This of course indicates that the loan book may not be as healthy as the government would have had us believe when it made the taxpayer responsible for bailing out this failed firm.

Lib Dem Treasury spokesman Vince Cable accused Northern Rock of being very aggressive in dealing with repossessions, after granting mortgages worth more than the value of properties.

He is quoted in The Journal:

"Northern Rock have been particularly ruthless in repossessions because they have got a lot of 125% Together mortgages which were completely mad at the time and even madder now."

The man who oversaw Northern Rock's grab for customers, and pushed for an aggressive lending policy that has failed the company and its customers, has done rather well for himself though.

Adam Applegarth, ex CEO, was allowed to leave with over £1M in bonuses and pension top-ups and is currently still receiving over £60K per month.

Nice work if you can get it!

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