Mortgage shortfalls

[scoobydoo]

Not quite sure where to post this but have permission from the poster.

This is from a very long running complicated claim regarding charges and sale of property after possession.

On going in court now.


"Hi xxx, they cannot gain possession, then sell your house, then claim that any amount outstanding is due without going back to Court and getting a MONETARY JUDGEMENT, ie clarification that any claim made afterwards for a shortfall is justified. At this point you can contact the Land Registry and confirm that the property has been sold for its real worth via your postcode.

This provides you with the oppertunity to dispute the sale price, and therefore any alleged shortfall. They must then show that they obtained the best price possible for the property. There are lots of nods and winks, none of which can be proved. In my case it was a local builder who has links to the manager of the Estate Agent. The manager of the Estate Agent has gone underground, probably because he has upset more people than just myself. When an easy picking (like a repo) comes up, the sharks can smell blood in the water, and a quick deal is done.

It is common knowledge that repossessed properties are sold for less than they're worth, just like the assets of a business that has gone into liquidation.

This was heard in the Mercantile but has now been transferred to the County Court. The only reason it was transferred to the Mercantile initially was because Company procedure was questioned (the methods of repossession, sale etc).




Any questions I will ask the poster

I was just not sure if this was common knowledge

scooby

[argentarius]

Re: Mortgage shortfalls

I don't agree at all that

It is common knowledge that repossessed properties are sold for less than they're worth, just like the assets of a business that has gone into liquidation.

Repossessed properties sell for less than equivalent non-repossessed properties because they are less attractive. They have often been neglected by occupiers who were short of funds before the property was repossessed. They have often been intentionally damaged by misguided occupiers who knew they were going to be repossessed. They are less attractive simply because they are empty and don't look like somewhere you'd want to live.

For all of those reasons, the fair market value of a repossession can often be lower than an equivalent non-repossession.

Lenders require estate agents marketing repossessions for them to insert advertisements in the press stating that they have received an offer for the specific property, and the amount of that offer. Lenders make the estate agents provide copies of these advertisements to evidence this. Accordingly, estate agents cannot sell a repossessed property at an under-value to a related party without it being apparent to those reading the local press that this is going on.

All of that is just for background.

It doesn't negate the fact that almost all borrowers who "allow" their properties to be repossessed would get a better price for the property if they sold it themselves. But that's not because the lender is intentionally realising a larger loss than they need to.

[scoobydoo]

Re: Mortgage shortfalls

This thread is a current court case from OTR

the reason I posted the comment was regarding the money judgement - not the general comments, They were not mine.

However I agree that if a property is taken back by the BS or bank the borrower is in a lose lose situation. they have lost control of the sale . I know that the property must be marketed for a certain amount of time and have recorded valuations. then it will go for auction if not sold. During this time interest, various charges and interest on the charges will be accumulating. But the property has to be sold quickly or the increase in SP that may be achieved will be outweighed by the interest accumulating

This is unavoidable and is why I would try and advise people to avoid possession at all costs. If they can sell the house themselves or get in temporary lodgers etc - just try anything to avoid loosing control of the situation.

I agree in some long term arrears cases the property condition is a factor. However I hate to disappoint you but I know from experience that in the past there were definitely deals going on behind closed doors between BS managers and connected estate agents and also estate agents and builders. And some properties were sold below value.

Also I would add that in the past borrowers would have to be seriously in arrears before they were taken to court and were given help to avoid that stuation if at all possible.

From what I am seeing at the moment action is now taken after two/three months arrears by SOME institutions and there is absolutely no help or flexibility in decisions. I am sure this is partly because of the large MP involved and also some of the institutions that have entered the mortgage market and now want out.These houses are probably not in disrepair and I think you are doing the borrowers a dis-service by suggesting this.

I am not advocating that someone should stay in the house if long term they can not afford to do so. however a more sympathetic stance in a lot of cases would not go amiss.

By the way I was in charge of a mortgage arrears department for over 5 years

[argentarius]

Re: Mortgage shortfalls

I'm not having a go at those who end up in financial difficulties. Obviously some homeowners keep their house immaculately until the sad day when it's repossessed, which is why I used the term "often" rather than "all". But even in those favourable circumstances, the mere fact that a property is vacant makes it less attractive to some buyers and hence depresses the price.

I have personally seen repossessed properties which have been absolutely destroyed by the borrowers, with some stupid concept of "if I can't have the house, nor can anyone else". I've seen properties with the central heating system completely ripped out, with kitchens and bathrooms completely ripped out, and so on. I've also seen properties left absolutely filled with rubbish and in a disgusting state.

As you say, and I wholeheartedly agree, borrowers will always do better if they keep control of the sale of their property and do it themselves, rather than allowing the property to go into possession. But that probably involves borrowers recognising rather sooner than most do, that their situation is unlikely to improve and that repossession is the inevitable next step if they don't voluntarily sell the property.

But I also agree that some lenders have got into the mortgage market with a short-termist attitude, and that they are treating borrowers unduly harshly and pushing for repossession far sooner than traditional lenders would have done.

Obviously there can be fraud in any arena of life. I can't dispute that this will affect properties in possession to some extent. But most institutions do what they can to prevent it from occurring - I write as an ex-internal auditor for a bank. You need collusion between three parties for it to work successfully, or for the lender to not bother enforcing their procedures and collusion to occur between an estate agent and a buyer.

[scoobydoo]

Re: Mortgage shortfalls

I actually hav been loking at the old "mortgage code for a poster before the FSA took over and was acually surprised how vague it was .I think this person has definitely had their house sold below value and the court hearing for possession went ahead although he could not attend. But when you look to try and prove he has been hard done by, there do not seem to be any fixed rules to go by. For example there is a recommendation that one of the valuations should be done by a surveyor and one by an agent. In his case this did not happen - but it is only a guide so not a lot he could do. He does have evidence of other houses being sold for a lot more in his area and I do mean a lot more. Also the BS took his possessions and the court said this was wrong and he has some recourse on this - they were only entitled to the house.

I guess there must be some case law as guidance as the code seems worthless.

I hope that the poster may come to this site soon .

[EXC]

Re: Mortgage shortfalls

But even in those favourable circumstances, the mere fact that a property is vacant makes it less attractive to some buyers and hence depresses the price..

Vacant properties may be less attractive to some buyers but may equaly be more attractive to others, especially when there is no chain involved.

[scoobydoo]

Re: Mortgage shortfalls

But unfortunately unless the Estate agent spins a tale if the buyer knows it is a possession case they are also bound to offer less as they know a quick sale is desirable.

it is a lose lose situation .

In the particular case I am talking about there did not even appear to be recorded delivery letters about the possession - that seems odd to me . The arrears were caused byl oss of employment initially but new employment had been secured so the situation could maybe have been rescued - if he had had a chance to do so.