Has my sister been badly advised by Barclays and her solicitor?

opinions4u

Afro_Thunder wrote: »

Hi, I really wouldn't worry. I am a mandated underwriter for a building society and have used mortgage conditions similar to this and we only ever checked that they had been complied with if the customer subsequently applied for further borrowing or a subsequent house purchase. If she doesn't do this then she should be fine. There is no advantage to the lender in chasing them for evidence of repayment - there is not much they could do even if they found out about it.

Failure by the solicitor to comply with the mortgage conditions sits somewhere between malpractice and fraud.

Questions like why the OP sister is going into shared ownership and judgmental comments about her debts and qualifications are not relevant to the actual question being asked. These people should stop acting like !!!!!.

Shared ownership mortgages are statistically significantly more likely to go in to arrears than "normal" mortgages. The mere phrase "shared ownership" should immediately switch on an underwriter's attention to detail.

Debts, qualifications, choice of property type/location, source of deposit etc are all totally relevant to the overall underwriting decision. The numbers talked about in this post are out of the ordinary. It is not a normal case and a good underwriter would ensure that more questions are asked before agreeing to lend.

Get it wrong and it's bad for the borrower, bad for the lender and bad for the housing association that owns the other part of the property.

To be honest, your response does not appear to be one of a particularly prudent underwriter. Perhaps one who can tick the boxes but has no overall feeling for a case.

Debt_Free_Dreamer

Monkey_Joe wrote: »

I have given an explanation in the original thread that you reference above.

there is a significant time difference between both posts. What I wrote in the original post is what I believed to be true but after reading other threads on the same topic I doubted my original belief and hence made this thread to get some feedback.

should have made it more clear, my bad...

Have you gone back and retracted what you 'advised' the other poster?

If no, then I think you should.

Afro_Thunder

opinions4u wrote: »

Failure by the solicitor to comply with the mortgage conditions sits somewhere between malpractice and fraud.

Shared ownership mortgages are statistically significantly more likely to go in to arrears than "normal" mortgages. The mere phrase "shared ownership" should immediately switch on an underwriter's attention to detail.

Debts, qualifications, choice of property type/location, source of deposit etc are all totally relevant to the overall underwriting decision. The numbers talked about in this post are out of the ordinary. It is not a normal case and a good underwriter would ensure that more questions are asked before agreeing to lend.

Get it wrong and it's bad for the borrower, bad for the lender and bad for the housing association that owns the other part of the property.

To be honest, your response does not appear to be one of a particularly prudent underwriter. Perhaps one who can tick the boxes but has no overall feeling for a case.

Yes, yes all those things are relevant to the underwriting decision but what has that got to the do with the OP original query, whether his sister was badly advised in regards to the "all debts cleared within 30 days of completion" condition.

Questions like "why someone with her income is going into shared ownership" and sly digs/comments like "I'm suprised a pair of graduates don't know blah blah" etc have nothing to do with the question at hand. Its typical of this mortgage sub-forum! Don't get me wrong, there are many here who actually do help but unfortunately there are just as many jumped up so called "experts" who just use it as an opportunity to be judgemental.

Any way back on topic, Woolwich as of 2010 include that condition on all their mortgage offers. Its does not matter if its shared ownership, buying property outright, if you have 6k of debt or even 22k, its just a standard condition they include to cover their backs in case the customer defaults in the future and tries to blame the lender for being irresponsible. This is not to say that they are lending irresponsibly, everything you mentioned such as debts, income, deposit etc are all taken into consideration before an offer is made but no one can predict the financial situation of the customer in the future. By including that condition, if the customer defaults in the future and tries to BS the lender can say to the judge that they were aware of the customers debts and asked them to pay it off.

Its very simple.

RX-78

Really? And the judge will not question how the lenders thought people asking for 50k mortgage will clear up 22k of debt in 30 days? And writing in an impossible condition and than lending the money based on that condition being complied to will exempt them from being irresponsible lender?

I cant believe the leagal team at the bank is naive enough to think that will get them off the hook.

Back to the OP - I'm no expert but sounds to me like you will probably be "ok" as long as the payments are being made. But you are leaving yourself hugely valunarable if anything goes wrong. If they start to default, I can see the bank being fairly heavy handed in dealing with her. Its a bit like seatbelts - no one needs it if they know they will never crush their car, trouble is no one can predict the future.....

Ditch_Crawler

Afro_Thunder wrote: »

Any way back on topic, Woolwich as of 2010 include that condition on all their mortgage offers. Its does not matter if its shared ownership, buying property outright, if you have 6k of debt or even 22k, its just a standard condition they include to cover their backs in case the customer defaults in the future and tries to blame the lender for being irresponsible

That is precisely the bad advice which this thread is all about!

I can understand that a person of low intelligence could fall for such bad advice. I am not a university graduate, but there is no way I would have signed up to such a condition unless I understood why it was there, and was able to comply with it.

D.

RecoveringAlcoholic

trouble is no one can predict the future.....

But, but, but........................

OP can predict the future.

Yes there is nothing to worry about since my sister and her husband will never miss their payments.

Afro_Thunder

RecoveringAlcoholic wrote: »

But, but, but........................

OP can predict the future.

I don’t know what you’re trying achieve with a post like this?

The OP is entitled to remain positive about his sister’s future. Whereas Barclays don’t have to and need to take into consideration the possibility that one day she may not be as financially secure as she is today.

zzzLazyDaisy

Ditch_Crawler wrote: »

If your sister's mortgage was not in fact a debt consolidation deal, then I can't get away from the idea that the condition got in there by mistake,

This is a standard condition with shared ownership mortgages.

It is to do with the affordability calculation, which is often much more stringent in SO purchases (possibly because the lender cannot repossess or sell a share of a house if the buyer defaults). If they had said upfront that they could not afford to pay off the existing debts, then the lender would almost certainly reduced the amount of mortgage that it was willing to lend. The fact that the lender may or may not check that the debt has in fact been paid off does not alter the fact that it was a term of the mortgage that they agreed to, knowing they could not comply with.

Ditch_Crawler

zzzLazyDaisy wrote: »

If they had said upfront that they could not afford to pay off the existing debts, then the lender would almost certainly reduced the amount of mortgage that it was willing to lend

So, effectively, it was a debt consolidation deal (which has been pretty obvious to me all along).

I can't understand /believe that the rep and the solicitor did not explain this at the time.

But your post still doesn't explain why the condition is 'standard' - if the mortgage was small, and the existing debt also small, then there will be occasions when the combined debt is easily sustainable, and the affordability check would show that such a clause was unnecessary.

D.

Afro_Thunder

Ditch_Crawler wrote: »

That is precisely the bad advice which this thread is all about!

I can understand that a person of low intelligence could fall for such bad advice. I am not a university graduate, but there is no way I would have signed up to such a condition unless I understood why it was there, and was able to comply with it.

D.

What does her being a “university graduate” got to do with anything? Lol, it’s typical of this forum; judging by the post of some forum members they should rename this forum to.....

‘MoneySavingExpert.Com Forum for school leavers only because anyone with a higher qualification(s) should know better’

What a load of poo!!

Anyway, back to topic, what do you believe will happen? Do you think Barclays will check up in a month and then boot her out of her house for not paying off 22k of unsecured debts within 30 days of completion? Don’t you think they have better things to do? Also, if her debts where such a big deal to them would it not just be simpler to just ask the couple to pay it off before completion?

(1) She received a mortgage offer from Woolwich – this means that they believe that at present she and her husband can afford the mortgage repayments in addition to their debts repayments and other expenses. If they felt otherwise, they would have either not made the offer or asked them to pay off all debts before completion. They don’t just hand out mortgages to anyone these days (as you all should know).

(2) I believe one poster mentioned that the Barclays FA/Sales rep could have “fiddled” with their application and told the underwriters that they will pay up. If this is the case, then all Barclays reps must be doing this since a lot of people who have received offers from Woolwich in 2010 have had the same condition on their offers (whether they asked for it or not). Also, what’s the difference between paying off the debt before completion and 30 days after completion? Would it not just be simpler to get it all sorted before the exchange?

(3) As I said before, the OP has received an offer from Woolwich because she at present can afford the mortgage repayments in addition to her other expenses. If this was not the case she would not have received the offer. However, Woolwich have to take into consideration that one day everything might not be so “rosy”. The customer may fall ill, they may lose their job etc and history has shown that many people who have failed to meet payments have resorted to blaming banks for being “irresponsible” when lending to them and try and weasel out of taking any responsibility. Therefore, to cover their !!!!!! for such scenarios many lenders include such conditions so that if the customer does try to plead “irresponsible lending” in the future the banks can just tell the judge that at the time “the customer could afford the repayments and that they asked them to pay off all unsecured debts within a certain time limit”.

If the OP sister keeps up with her payments she has nothing to worry about. If some of you think this is bad advice then fine.