House BI - Anyone with experience?

Captain_Longbeard

Hi all

I am a few weeks away from AD, and have recently received a comms from the OR (and a follow up conversation) which has left me baffled and worried.

Imagine this scenario;

House Value: Approx 120000
Mortgage: Approx 103000
Secured Loan: Approx 30000 (settlement figure)

House value at peak (around end of 2007) was 140000

When I went BR, the OR sent a letter to wife asking if she was interested in BI. She responded in the positive, and provided the valuation they wanted and then never heard again from them until this week.

Received a letter this week saying that OR has upto 3 years to deal with the BI. Not being sure what it meant, I phoned them.

The person I spoke to said that the house valuation meant there was some equity in the property that could be realised. When I asked about the secured loan, the response was "not interested in that, after sale that would become unsecured, and your other halfs problem as your interest in that could become part of your BR".

By my estimations, and based on local sales etc, the above figures are accurate (if not a little generous). SO that leaves a 13k "shortfall" if they do this, for the balance of the secured loan

So my question(s) to anyone with any experience in this area are this;

does this sound right? Why would they put another person (ie my missus) in debt for my BR? Surely if they have to sell the property, they must clear the outstanding mortgage and any secured loans on it? They must then give 50% of anything made to the other party with the remainder of the BI (which leaves little towards my BR)? I have 2 young children to think about, so what are my options (feeling pretty low about it all to be honest)?

Thanks as always to any and all thoughts/comments...

Captain.


PS - hope everyone is doing OK.

Captain_Longbeard

Should add that the OR hasn't indicated a figure or anything yet that they may accept for BI purchase...

nervousmother

Once the house is sold the secured loan would be paid off. It would only become unsecured if there was not enough money left over to clear it.

If the OP is on the mortgage as a owner then they will receive 50% of any profit.
They legally have 3 years to deal with the property, if they dont do it in 3 years then they will loose any interest they have in it. Most of the time though properties are dealt with within the first year as they are desperate for their cut.
If there was 14k equity after the loan was repaid, then that would be 7k they would be able to claim, so in order for you to keep the house you would have to do them a deal. they could let you keep the property if you offered them £3k to settle it.

Hope you understood the above.

sw09

Hi Captain,
I just wanted to say that you sound like you're in a similar position to my DH, could I ask you...did the OR ask you who paid the deposit? as in my dh case (see my long post!) it sounds like they're trying to go down this route...
I'd be intersted in hearing any developments with your BI.
Good luck,hope it gets sorted out quickly.

fiveyearplan

When I was negotiating BI the OR left no room for negotiation, didn't allow for any early redemption fees etc. Fortunately I only had a small amount of BI in the house and I could afford to buy it so I didn't question it. Also he went solely on my valuations and I really felt it was a good deal so didn't even investigate what further action I could have taken.