In all £53bn worth of Northern Rock’s mortgages – more than 70% of its mortgage portfolio – is owned by a Jersey-based trust company, which leaves a huge hole in the pool of assets available to provide collateral for its creditors, including the Bank of England, The Guardian reports after an examination of Northern Rock's books.
The same investigation reveals the troubled bank is extremely vulnerable a slump in the property market and calls into question government claims that taxpayers' money is safe.
Among the findings are mortgage loans of more than 90% of the purchase price of a house over three years have soared to £16bn - up from £2.7bn; loans have exceeded the value of the property on nearly 2,500 mortgages, valued at £263m, up from £13m on 158 properties three years ago; 10,000 Northern Rock customers are a month or more in arrears on their mortgages, on loans worth nearly £1.2bn compared with 2003, when only 2,500 were in the same difficulties, involving mortgages worth £168.8m.
In 2003 Northern Rock repossessed 80 properties. Last year more than 1,000 properties were repossessed. By the end of September, 912 properties had already been repossessed.
Further reading:
Northern Rock sale faces Treasury veto
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