Lender Encouraging Bad Credit Loan Customers To Leave
It was not all that long ago when banks and building societies were doing everything within their power to try and retain their homeowner loan customers and stop them from switching their loans to another provider.
This was often done through new incentives being offered to borrowers who had come to the end of their current loan deal, or in many cases imposing heavy penalties and charges for anyone wanting to switch their loan provider, making it almost impossible to leave their existing provider until these had expired. It is therefore an interesting sign of the times that one lender is now offering incentives to its homeowner loan customers to try and get them to move their loan elsewhere.
GMAC-RFC a specialist loan company who has concentrated its business in the past on non conforming areas such as self certification and bad credit loans at reasonably high loan to value levels, is now offering to reduce the balance of borrowers loans if they consider remortgaging their home with a new provider.
Due to the recent fall in house prices, many borrowers with the company now have a high loan to value ratio on their property, which will not allow them to obtain a new loan elsewhere and the company is attempting to bring this ratio down to around the 80 per cent mark in order to allow customers to move. The scheme is to be run as a pilot and will only apply to those borrowers who will have a realistic chance of being able to get a remortgage loan.
This is a sure sign that GMAC-RFC needs to reduce the level of risk on its homeowner loan book and also free up some funding for future requirements. Jeff Knight of GMAC-RFC said “If we can reduce the mortgage balance in a way that reflects the down turn in the property market, this will help borrowers to move their mortgage to another lender and also it helps us with our long term funding.”
