Bottom of chain has mortgage pulled AFTER exchange

dippydog_2

Thanks - FTB in rented accommodation buying a house that needs work so will not move into it on completion anyway...

So I think I should suggest to solicitor we do it all in one day.

barnaby-bear

GDB2222 wrote: »

Yes, but the real point here is that nobody in their right mind would go ahead on that basis. Of course, not many people read the small print, so they may not be aware of what they are doing. Their solicitor should advise them, but as this is apparently the norm, they perhaps won't. To be frank, I am not aware that the offer to grant the loan can be withdrawn on a whim, and I really doubt that it is so.

On the other hand, if somebody fails to provide all the relevant particulars on the application form (and a bankruptcy 5 years ago is clearly relevant), it is not surprising that the mortgage offer can be withdrawn. Hiding the bankruptcy details or providing them at some later stage of the application is really asking for trouble.

It's very rare for them to actually pull offers though - they reserve the ability to cover, in practice VERY VERY rare (they are obliged to treat customers fairly but also have legal obligations to protect shareholders):

1) undisclosed info. e.g. a past bankruptcy
2) new info. - say a series of new loans/CCJs appears on credit check -
3) change of circumstance e.g. redundancy - this could genuinely not be known about at time of application - but should the mortgage company really commit to proceed?

You'd think people would be barking to exchange without an offer even but plenty do/did on off-plan flats (you probably can't get an offer 2 years in advance that'll still be valid).....

vexta

Quick update.
We've heard from our vendors (top of chain) that as one of them is going away for five weeks at the weekend they need to make their decision as to whether to serve a notice to complete on Friday.
So our FTB needs to show documentry evidence of funds available by then or the whole thing descends into litigation. I do feel sorry for her as I think what's probably happened is that she's told her broker of her bankcruptcy but he's maybe not passed this info on. Either that or the lender did know but is now refusing to admit it. Either way to be a FTB living with parents and then totally lost her deposit (£17,000!) because of someone else's incompetence is so cruel...
Meanwhile our vendors who, if anyone remembers from my original post also had their mortgage pulled and decided to move out and rent to become top of chain are now likely to walk away with a tidy sum leaving us and our buyer (who are in the middle) scrabbling around to see if there's any way of getting any compensation whatsoever! Doesn't seem like a very fair system to me...
Anyway, all we can hope and pray for now is that the FTB has a rich uncle or something to step in. Most unlikely!

Welshwoofs

vexta wrote: »

Quick update.
We've heard from our vendors (top of chain) that as one of them is going away for five weeks at the weekend they need to make their decision as to whether to serve a notice to complete on Friday.

Unfortunately I'd think it's pretty unlikely that the FTB will have a written offer of a mortgage in place by Friday, especially with a shaky financial background.

If your vendors serve a notice on Friday for you to complete, have you decided what you'll do? Will you be able to complete somehow? If you can't, you'll find you'll then owe them a percentage of the sale price of the property (your contract will state what percentage it is) plus all their costs and you're going to have to recoup that loss somewhere (i.e. from your buyer if she fails to complete).

This could all end up, unfortunately, with a lot of compensation being expected off the old lady if all the FTB has to her name is £17k.

franklee

Welshwoofs wrote: »

Will you be able to complete somehow? If you can't, you'll find you'll then owe them a percentage of the sale price of the property (your contract will state what percentage it is) plus all their costs and you're going to have to recoup that loss somewhere (i.e. from your buyer if she fails to complete).

Yes, it sounds like just the initial 17K passed up the chain from the FTB has been paid so far and we don't know what each of the properties cost so don't know how far that goes.

Welshwoofs wrote: »

This could all end up, unfortunately, with a lot of compensation being expected off the old lady if all the FTB has to her name is £17k.

Yes it is the ones with more who'll get stung as the FTB may not have any more and so may be facing bankruptcy again which doens't get the others compensated.

vexta

well all three properties are around the same value so no-one ends up with anything apart from our vendors ending up with the £17k. I'm hoping they'd be satisfied with that and wouldn't want to add any costs on as that £17k would totally cover their costs and still leave plenty over!

Hippychick

If a notice to complete is served then you still have ten days to complete before the contract becomes 'void'. If it looks like she may get funding somehow is there anyway you could convince the top of the chain to hold off serving the notice a few days just until it gets sorted?

It may not be over yet, I do feel for you though and hope it does work out.

Welshwoofs

franklee wrote: »

Yes it is the ones with more who'll get stung as the FTB may not have any more and so may be facing bankruptcy again which doens't get the others compensated.

That's what I'd be worrying about too - an FTB living at home with parents, previously bankrupt, £17k deposit saved. If that chain disolves into litigation that £17k is going to be a drop in the ocean.

If everyone wants to go ahead, I wonder if there's any advantage in the old lady in #2 spot trying to auction her property as a quick sale method? She'd take a hit on the price, but if her buyer has next to nothing, she's going to take a bloody big hit anyway

JayZed

Damn, Vextra, really sorry that it's panning out like this. I feel very sorry for your old lady and your FTB as well, but to be honest if it does come to litigation, you have forget about feeling sorry for them, look out for yourself and recover what you can from your buyer. I realise that living next door to her daughter is going to make that difficult, but you might just have to grit your teeth.

If the FTB did tell her broker about the bankruptcy and this wasn't passed on to the lender, then I should think she has a pretty strong case of negligence against the broker. If it was the lender who overlooked it, it might be more difficult for her to recover her losses because of the nature of the contract between her and the lender, though at the very least she should make a complaint to the ombudsman.

FraudBuster

I do feel sorry for her as I think what's probably happened is that she's told her broker of her bankcruptcy but he's maybe not passed this info on. Either that or the lender did know but is now refusing to admit it. Either way to be a FTB living with parents and then totally lost her deposit (£17,000!) because of someone else's incompetence is so cruel...

I wonder if the broker was arrangeing a Lie-to-Buy mortgage for her.