A while ago we published a blog about how we are helping companies and landlords to get commercial and residential loans written down and refinanced. We have been working closely with a team of corporate disposal and specialist financial restructure experts and have learned a lot. Today I am going to expand a little further about how NRAM works and why you personally can’t negotiate your mortgage debt.
Many of the cases we are seeing where businesses and landlord portfolios are being repossessed are NRAM or NAMA related. NRAM, ( Northern Rock Asset Management) for those who don’t know, is the government agency which was set up to deal with all the bad debts from banks that were bailed out, such as Northern Rock, RBS etc. ( Northern Rock is now being bought out and re-branded Virgin Money.)
However, it’s not just businesses that are in trouble, it is also ordinary folk who got caught up in the mortgage madness of the last few years.
What Happens To NRAM Mortgage Debt?
Not a lot of people know this, but, not so long ago there was a government directive sent down to these banks which stated that they had to get the bad debts off their books- no matter what the cost to the individual or business. A typical scenario that we see repeatedly, is that the bank will try to force you into a position where you will default on your loan, at which point they start repossession proceedings. They do this by ignoring your letters, forcing you to refinance onto higher rates, insisting on you changing to a more expensive repayment mortgage and a myriad of other underhand methods.
Of course some of you will also remember that there is a government charter around the premise of “Treating Customers Fairly.” So, they have to be seen to be doing that, even when they clearly are not. Your mortgage debt is “passed” to NRAM-(particularly commercial debt) and that is a KEY word, debts are not sold they are given to the government offshore company who are then allowed to sell them for anything over 10p in the pound. This 10p goes back to government coffers as payment for the bailouts and anything over that is profit for the company. This is why they particularly like large debts. It’s also why you don’t matter to them.
The Honest Truth Of Why You Can’t Negotiate With NRAM
The main reason that you cannot negotiate your mortgage debt is that they simply don’t care about you, your stress, your debts or your business. Their only objective is to remove the loan and re-balance their books. They will string you along by playing lip service to helping you. If you are a consumer and these tactics are being used, it is imperative that you do not default, always pay something, because courts take a dim view of their behavior and will be on your side.
As a business, the rules are slightly different, many of the tactics used are illegal and have to be chased legally at the highest level, which incurs legal costs. You cannot fight them on your own. Banks employ the best lawyers, you have to fight them with similar tactics. It is not just NRAM banks who behave in this manner, most other banks with high proportions of bad debt and shareholders are playing a similar game, and the vast majority can be stopped on commercial or portfolio landlord cases.
Business owners or portfolio landlords who are on the verge of bankruptcy or even those who have had LPA receivers appointed can still be helped, even when you feel all is lost. It’s worth noting that NAMA- the Irish version of NRAM- has similar tactics, and loans passed to NAMA can often be restructured.
If you feel a bit like a rabbit caught in the headlights not knowing what way to turn to get out of loan problems, we CAN help. Read more here: finance restructure page, or watch our short video here:
**UPDATE AUGUST 2012** Since the Libor scandal which Barclays put their hands up to, it is becoming even more difficult to negotiate with NRAM banks. This is particularly true of personal mortgages as they have no incentive to keep your debt on their books. Commercial banking providers remain much easier to do write down business with.
**UPDATE 2013* You may want to read our blog: Warning! Why Banks, & Balances & Basel iii Add Up to Repossessions for further information about the rise repossessions.
**UPDATE NOVEMBER 25th 2013**
In the news today RBS has been referred to the financial regulator the FCA & PRA for seizing assets from businesses to benefit its own property empire. A report by Lawrence Tomlinson claims that RBS put viable businesses into default ( and subsequently repossession LPA receivers) in order to make more profit for themselves.
Don’t let the government con you into believing this is all in the past, it is not. It still goes on even with the new management at RBS and other banks.