Cloud over Rock’s ability to repay BoE loan

Cloud over Rock’s ability to repay BoE loan

Clouds hang over Northern Rock’s ability to repay the £23bn of taxpayers' money it ows the Bank of England

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

Rock FD survives board clear out

Read
story in The Guardian

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