Mortgage Company offers Cash to Borrowers to Leave
22/07/2008
Edeus, a former lender of sub-prime mortgages, is offering borrowers 8% off their outstanding balance if they settle their mortgage accounts.
The company is trialling the offer to several hundred customers and may roll out to the rest of their clients if the offer proves successful.
Like many other specialist mortgage lenders, Edeus has been hit very hard by the credit crunch and because of problems raising fresh finance is eager to remove the loans from its books. Many of the other sub-prime lenders have now either withdrawn products from the market or closed up shop.
The company admits the idea is somewhat unusual, but the resale market for wholesale packaged mortgages is all but dead. Professional investors are now only willing to pay a very distressed price to take on the debt.
Edeus is also waiving exit and redemption fees and admits that it will make a loss on the mortgages. The business will survive, according to a company spokesman, by continuing to offer advice to other companies in the lending industry.
The company is trialling the offer to several hundred customers and may roll out to the rest of their clients if the offer proves successful.
Like many other specialist mortgage lenders, Edeus has been hit very hard by the credit crunch and because of problems raising fresh finance is eager to remove the loans from its books. Many of the other sub-prime lenders have now either withdrawn products from the market or closed up shop.
The company admits the idea is somewhat unusual, but the resale market for wholesale packaged mortgages is all but dead. Professional investors are now only willing to pay a very distressed price to take on the debt.
Edeus is also waiving exit and redemption fees and admits that it will make a loss on the mortgages. The business will survive, according to a company spokesman, by continuing to offer advice to other companies in the lending industry.
