American mortgage market and English Building society?

Question

On the BBC news today and American who had not been able to pay his mortgage was interviewed. He was sitting in the house which he can't afford to pay for. Why hasn't his home been repossessed? In the UK if you can't pay your mortgage your home is repossessed and sold to repay the loan.
The house is security for the loan.
If this had happened there would be no crisis in the money markets, and our building society deposits would be safe in the UK.
Americans... Is this an isolated case, or do you have different rules in America to the UK?

Nick C. In that case surely this is just a short term cash flow problem. Once the properties are repossessed and sold, the money will be available.
People with deposits in the Northern Rock should now rest easy, but this problem is not limited to banks. All financial institutions are suffering from the lack of money on the money market. Building societies and banks alike. That is why the treasury has come in with this guarantee for the Northern Rock. They don't want the panic to spread to other banks and building societies.

Larry - I wasn't asking for someone to post an advert. I think you'll find that it isn't allowed on yahoo answers!

Answer 1

Yes, they reposses houses if you can't pay your mortgage. The laws are not different. There is however a tiime frame that you must be out. They don't just show up one morning and say, "ok, you have to be out by noon"

Edit: Well once the house has been repossesed, I'm afraid the previous owner doesn't see any of that money, and the bank doesn't make that much profit on the sale, as they are sold in auction, usually. The problem is with the housing market, is that alot of lenders were giving mortgages to sub-prime borrowers, borrowers with bad credit, or borrowing beyond their means. So, the defaults due to bad economy and or interest rate hikes, ballooned, causing a flood of housing onto the market, with less demand, the house prices drop. So now some people have negitive equity in their property. Another issue, why I think the worst is yet to come, is that there is still about a billion dollars in interest locked mortgages on the market, When those contracts end and they the interest rates jump up I think we will see alot more defaults. Unfortunatly, this ripples through the financial world, because all banks and building societies borrow from each other, and defer mortgages to each other. So all financial institutions feel the crunch. So they stop lending money to preserve their own assets. That is why NR had to go to the BoE. But more than just NR have had to secure loans to protect themselves. But in Europe most went to the ECB, because the interest rates are so high with the BoE. One of the ironies of the NR situation is they didn't hardly invest in the sub-prime mortgage market, only about 1% of there mortgages are in the US sub-prime market. But they are suffering because of everyones elses investment in it. Another thing that may become a problem in the future is the sub-prime mortgage market here in the UK, no-one has spoke of that but it exists, and any downturn in the buying power of the UK economy and jobless rates could prove catostrophic for the UK housing market.

Answer 2

Just as in the UK, in the USA the mortgage provider has to go through a legal process which takes several months. The person (or people) owing the money must be given every opportunity to get their financial affairs in order.

EDIT: "Mr Larry Thompson" is reported for advertising!

Answer 3

Building society deposits ARE safe in the UK. How many more times? The Northern Rock is NOT a building society, it's a bank.

Answer 4

Seems obvious to me that as his house hasn't been repossessed then they must have different laws.