Having come across similar problems with UK banks and lenders, it doesn’t surprise me that there are strange things afoot behind their decisions to lend or not. I enjoyed your pages and would like to add some information that may be of interest…

A few years ago I (like many others) got into some serious financial problems. I could go into the details if it helps, but to cut a long story short, I consulted an Insolvency practitioner who explained some things:

Banks are unlikely to throw good money after bad if you seriously default on loan payments. They will put a lot of pressure on (debt collectors etc.) and even threaten court action, but what they really want is for you to agree to pay the debt for the rest of you life. They will get court orders to reposes, but if you are in a negative equity situation after the sale, this is when you really start to feel the pressure.

Apparently most large loans are covered internally within banks by insurances. When a borrower defaults, the insurances are cashed, thus covering the loan. This is possible because most banks view loans as ‘low risk’ investments.

Bearing this in mind it is therefore obvious that settlement a settlement can be made. It is possible to re-negotiate the debt to around 8% of the outstanding value! This should be good news for everyone who has ever borrowed honestly, and tried their very best in difficult circumstances to keep the lender happy, and inspite of that has got caught with apparently no way out.