Bottom of chain has mortgage pulled AFTER exchange

andys15

I really cannot see how contracts have been exchanged without a concrete mortgage offer. I am sure that this cannot happen. If a concrete mortgage offer was there, then surely it is the fault of the lenders, which therefore would make them liable for any costs incurred, and all members of the chain should be able to site them as a reason for the chain collapsing. If contracts were exchanged, everything must have been in order, it simply must have.

JayZed

GDB2222 wrote: »

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.

It may well cost her an arm and a leg in interest, but it's going to cost her a lot more (possibly another bankruptcy) if her vendor sues her for compensation. Hopefully her broker and solicitor are advising her that getting an expensive poor-credit-history mortgage is the less bad of the options.

GDB2222

andys15 wrote: »

I really cannot see how contracts have been exchanged without a concrete mortgage offer. I am sure that this cannot happen. If a concrete mortgage offer was there, then surely it is the fault of the lenders, which therefore would make them liable for any costs incurred, and all members of the chain should be able to site them as a reason for the chain collapsing. If contracts were exchanged, everything must have been in order, it simply must have.

It appears that crucial information was withheld from the mortgage application and only came to light later, thus enabling the lender to withdraw from the deal.

Welshwoofs

JayZed wrote: »

It may well cost her an arm and a leg in interest, but it's going to cost her a lot more (possibly another bankruptcy) if her vendor sues her for compensation. Hopefully her broker and solicitor are advising her that getting an expensive poor-credit-history mortgage is the less bad of the options.

Yup, that seems like the only way to go to me. If the chain loses the buyer at the bottom then it may start getting very crazy unless everyone agrees to politely withdraw and shoulder their own costs...or set back completion indefinitely until a new buyer is found at the bottom.

Just having a quick breeze around bad credit mortgages and they seem to be touting around 8%+ rates. OUCH!

andys15

That is surely the lenders fault though for not checking all was in order. Regardless of whether or not they had the paperwork to say she had been a bankrupt, it shouldn't matter. If contracts were exchanged with a mortgage agreed, then the lenders will be the ones in breach of contract.

JayZed

andys15 wrote: »

I really cannot see how contracts have been exchanged without a concrete mortgage offer. I am sure that this cannot happen. If a concrete mortgage offer was there, then surely it is the fault of the lenders, which therefore would make them liable for any costs incurred, and all members of the chain should be able to site them as a reason for the chain collapsing. If contracts were exchanged, everything must have been in order, it simply must have.

I think you'll find that lenders reserve the right to withdraw a mortgage offer at any time up to completion. Even if it's true that they had been told about her previous bankruptcy but overlooked it, I think you'd have a hard time suing them.

zzzLazyDaisy

JayZed wrote: »

Even if it's true that they had been told about her previous bankruptcy but overlooked it, I think you'd have a hard time suing them.

You might have a complaint to the financial ombudsman though, if it can be shown that the bankruptcy details were disclosed to the lender before the mortgage offer was made, and the FTB relied on that offer to exchange (obviously) and then the lender withdrew the offer on the basis that although they were given the bankruptcy information, they overlooked it, and now want to change their mind.

silvercar

Some comparisons with a previous experiance I had, though exchange hadn't happened so there was no legal obligation on anyone. Recounting here only to offer a potential solution. We didn't have any of the grief that seems to be going round at the moment.

2006, so the market was very different.

Chain of 5 became a chain of 4 when the FTB couldn't get a mortgage and disappeared (before exchange). We decided that the chain was otherwise solid, the house we were buying was worth fighting for, so we bought our new home and bought the house that the FTB was due to buy, as a BTL.

In retrospect, we should maybe have asked for contributions from others in the chain to make it happen, but having agreed prices felt uncomfortable doing that.

From the moment we decided to save the chain it took 4 weeks to exchange and another 2 weeks to completion. This was before HIPs etc, so we had to do all the searches etc. What took the longest was the new mortgage application for the BTL.

If you have got someone in the chain that can jump in, you could all drop prices by a few grand each to ease things. All you need (:eek:) is to be able to assist the new FTB or someone in the chain to purchase.

What it needs is one of the buyers in the chain to get hold of everyones email or phone number and talk through the chain. So everyone is on board and communicates.

Although I cringe as I say it, a buy-me-quick company could save the day.

Everyone in the chain (estate agents, solicitors, buyers etc) suddenly move quickly and become very co-operative - it helps that your buyer's buyer is your seller, you know no-one is going to try anything dodgy along the way.

picardygirl

So does exchange actually mean anything then? I've heard of monies being delayed on day of completion and being dragged over to the next day, but never of mortgage offers being pulled ....... has this always been the done thing or are lenders doing more checks between exchange and completion now ?? Scarey !!!

owitemisermusa

vexta wrote: »

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!

Surely, banktruptcy would have shown up on a credit check?

I think the lender should be held accountable somehow...