Bottom of chain has mortgage pulled AFTER exchange

vexta

Hello,
I hope someone may be able to offer us some friendly advice as we are pulling our hair out...
Sorry if this is a little long winded.

After a long seven months of getting together a chain of seven parties our vendors had their mortgage pulled. They could only continue to sell by moving out and renting and make themselves top of chain though they couldn't justify the £6000 loss they'd incur on fees, rental deposit, etc. We are so absolutely desperate for this lovely house that we managed to stump up £4000 of what was needed (payable on completion) They agreed and moved out.
After all this the woman at the bottom of chain (our buyer's buyer) was getting jumpy about her mortgage offer running out so pushed for a quick exchange. Everyone happy now with this so set a date of July 13th (yesterday) for completion and exchanged 2 weeks ago, huge sigh of relief...

We'd just payed our non-refundable £1000 removal costs on Friday afternoon when we suddenly heard that the woman at the bottom, a first-time buyer, has had her mortgage pulled for allegedly not informing her lender of an earlier bankruptcy 5 years ago, though she insists she did tell them. Her solicitor reckoned it was salvagable as it was being decided Monday morning (yesterday) by a senior underwriter and they had evidence of letting them know about the bankruptcy.

After the most excrutiating 3 days of limbo her lender says it's no go...
So she's now gone off to find another lender!

We are still in shock, we should be in our new house now, we've lost our removals fee and we're worried our vendor's solicitor will issue a notice to complete as they are now paying rent and mortgage!!
Our poor 79 year old buyer already has her whole house in boxes!

Thank you if you read through this. We are desparate for any advice or thoughts from anyone who may know of this situation or been through this themselves.

martindow

This is incredibly rare apparently but there is another thread on this subject here

http://forums.moneysavingexpert.com/showthread.html?t=1806123

which you might like to read.

Good luck in sorting it out.

vexta

Hi Martin

Thanks, I have been reading that post, though the main difference in our case is that the three buyers in our chain (us, our buyer, and buyer's buyer) are all still desperate to buy their repective houses and none of us are keen to go after the woman at the bottom of the chain for compensation as then the whole chain may well collapse as she would've lost her deposit. She's renting and doesn't have a house to sell on.

Welshwoofs

Blimey - what on earth is happening these days?

I totally empathise Vexta, we're in a similar situation - except in our case, the vendor has pulled out after exchange of contracts and on my end, I'm not in a chain.

Basically if the woman at the bottom of your chain can't get a mortgage and she's exchanged contracts she's breached her contract with her vendors and is now due to pay their costs plus a percentage penalty (which will be stated in the contract, but can be between 4-10% of sale price) to the vendor she's let down. If her vendors don't move into their property they, in turn, will owe costs/penalty for breach of contract to their vendors which they'd then have to try and recoup from their buyer as it's her at fault.

I'd guess there are several scenarios on this - the chain could all agree to set completion date back in order to allow the vendors at the bottom to find another buyer (whilst they're reclaiming costs/penalty charges from the first one). However I'd guess your vendor may not go for that if they're currently carrying the cost of a mortgage + rental. If the rest of the chain is happy to come to an amicable solution, but your vendors are getting itchy feet because of their outgoings, perhaps look into some sort of agreement to share their rental costs so the chain doesn't irrevably break down into a huge ball of litigation?

You need to do what we did - get advice from a contract lawyer, quick! Whichever way you cut it, this may get very expensive and it may be a long time before you see your costs recouped unfortunately!

JayZed

Oh gosh, Vextra, what an awful situation. My sympathies. As Welshwoofs says, you need to get proper legal advice on this.

I suppose the best-case scenario is that the buyer at the bottom of the chain finds another mortgage quickly and you can all set another completion date soon. Her previous bankruptcy is probably going to create a problem, though.

The less appealing scenario is that despite everyone's best intentions you all end up in a chain of litigation, each seeking to recover costs and deposits from the next person down the chain. I'm sure that's something that everyone will want to avoid, and if common sense prevails everyone should give it a bit of time to see if things can be sorted out. However, it may end up being unavoidable if the buyer at the bottom of the chain can't get a mortgage and/or a new buyer can't be found very quickly.

Welshwoofs

JayZed wrote: »

be sorted out. However, it may end up being unavoidable if the buyer at the bottom of the chain can't get a mortgage and/or a new buyer can't be found very quickly.

Or indeed if the guy at the top can't hold out paying both a mortgage and rent any longer and seeks to recoup from the OP.

It's one for everyone to tred very carefully on! Personally I'd seek some legal advice before coming to any arrangements with either your buyer or seller.

picardygirl

This is a crazy situation !

Do solicitors not check that a valid mortgage offer is still ok prior to exchanging contracts, or do they just take it that mortgage offer is valid for x amount of days and thats it!

If that is the case, exchange of contracts doesnt really mean a great deal anymore, crazy! When we moved 3 years ago, we were in a chain of 7 (us being in the middle) the bottom of the chain couldnt wait anymore, the top of the chain werent ready to move out (doing up another property), so we (the whole chain) exchanged on the same day, but we agreed to move in with my parents for 2 weeks so the chain (us) had two completion dates, one for the sale of our old house and 2 weeks later another date for completion on the new house. If i'd read posts like this i dont think we would have agreed to do it, both our EA and solicitor said it simply doesnt happen, people pulling after exchange, but now mortgage companies sound like they are complicating matters further, the moving system in this country is bad enough without added complications ......

Vexta and Welshwoofs i really feel for you and hope you both have a satisfactory outcome.

vexta

Hi Welshwoofs

Thanks for your reply, I have been reading your thread as it seems kind of similar. It does seem very daunting, the thought of portracted litigation. Have spoken to our vendors who seem suprisingly relaxed about it at the moment and they seem to be happy to give it a week or so to see if she can get a new lender. I just hope their stance stays this way.
The thing is, none of us want to start all over again, our vendor knows we're desperate for their house and we know that our buyer is desperate for our place as we're next door to her daughter. All of our respective solicitors are advising that we wait a little, I just don't know how likely it is that she'll get a new mortgage with a history of bankruptcy?
Don't know how that works.
Does anybody know if it's possible to get a new offer in a short space of time with a history of bankruptcy??

chickmug

vexta wrote: »

Does anybody know if it's possible to get a new offer in a short space of time with a history of bankruptcy??

I am out of touch but why not ask your agent and/or broker this question.

Even with no adverse credit history it will take time but either way they should all be keeping you informed on a day by day basis to give reassurance and hope?

Good luck

zzzLazyDaisy

I heard of something like this happening a few years ago (but I think the FTB at the bottom of the chain pulled out just before exchange).

Anyway, in that case the people at the top of the chain were downsizing and they stepped in and bought the flat at the bottom, so the move went ahead.

I suppose it was lucky that they had the spare cash and/or possibly wanted a BTL.

I suppose there isn't someone in your chain who wants/is able to step in?

GDB2222

If she can get a mortgage at all, she may have to pay an arm and a leg in interest. Having been turned down will count against her.

You are actually quite fortunate, as if this degenerates into a court case, you will be suing the old lady who is your buyer, and hopefully she is not broke. Her buyer, on the other hand, may well be broke. So, the little old lady of 79 will carry the can for her useless buyer's problems.

Look, I didn't say it is fair, just that it could be worse, and you could have the skint girl as your own buyer.