Mortgage Holder Demolishes House......

chambta

Just wanted to run this scenario by people on here.

I'm sure it's happened and the reason I post this is I suspect a customer of the bank I work for is doing/has done this.

A guy inherits his late mother's property as an only child. There's a detached bungalow on a large plot but he would like a nice, detached house instead.

With the bungalow in place and mortgage free Mr decided to remortgage his newly acquired property and takes out 80k (home improvements he says and he's right), at around 50% LTV.

Mr's next move is to demolish the bungalow as his plan is to have his dream home built using the 80k he has in the bank.

However, other things crop up (no idea what!) and he ends up with a plot on land and no cash with a mortgage to boot.

Has he committed any crime?

What do the bank do when he stops paying the mortgage and the 'house' is repossessed?

VIGILANT22

Ask the debt management arm of the bank you state you work in....

Dan_1976

He has just demolished a house that is up for security. I imagine he has broken planning laws and possibly commited some sort of fruad. The Bank will call in the debt, well I would and then sling him up!

MarkyMarkD

It's not a crime, as long as he had planning permission for the demolition and replacement with the new property.

I am not certain whether or not it is a breach of his mortgage agreement. As long as he keeps up his payments, the lender won't know or care.

The lender ought to ask what the improvements are, if that was the purpose of the loan, and that might likely make them more cautious in advancing the funds in the first place.

If the plot of land was large enough to support a detached house, it's quite possible that the plot post-demolition is worth the value that the lender has advanced in any case, so they wouldn't be upset if they repossessed a plot of land.

The fact that the bloke things it's worth demolishing, means that the plot is relatively valuable, unless he's just an idiot.

Dan_1976

Sorry the planning is for the new one, no planning needed for the old, he would have broken his contract unless they gave him permission.

TBeckett100

not you business is it? or will my bank start talking about me on public internet forums?

happybroker

Amazing....perhaps indicative of the quality of some of the staff employed in the banks just now, and we wonder why the world of finance is in a pickle!!

Gorgeous_George

I think it is potentially mortgage fraud. Demolition and a rebuild is not 'home improvements'.

The way forward would depend on the lender's view of the situation, on the value of the land and that of any new property that was planned to be built.

Maybe the lender would be prepared to make a further advance providing the proposed new home's value was high enough to support it. Any new advance would be loaned in stages and only when evidence of build progress was provided to the lender.

The other question is what happened to the money. Demolition and site clearance probably ate up a fair chunk but £80K sounds a bit high.

GG

VIGILANT22

happybroker wrote: »

Amazing....perhaps indicative of the quality of some of the staff employed in the banks just now, and we wonder why the world of finance is in a pickle!!

agreeded....and you would imagine a bank employee's contract would state that such matters if suspected should be reported to the bank and not on a public forum....

getmore4less

VIGILANT22 wrote: »

agreeded....and you would imagine a bank employee's contract would state that such matters if suspected should be reported to the bank and not on a public forum....

I would guess RBS do like their employees to be much more discreet.

happybroker

getmore4less wrote: »

I would guess RBS do like their employees to be much more discreet.

oops!!:rotfl: