Negative Equity - Possible way out?

raddyantic

Just to pick you up on the point you state: ‘mortgage company may agree to lose some of their interest rather than risk a client going bankrupt’. May being the operative word here, as they are only likely to agree to write off some of the debt and release their legal charge as a last resort, and would need to see evidence of your hardship in your account conduct. Tangible Evidence of your hardship to them would be maintenance of your mortgage account i..e you would have had to fall into severe arrears, to the point of having court action threatened – for them to consider these kind of proposals. Again it is a last resort from the lenders perspective to offer you concessions. It would depend on your mortgage company’s stance also, there is no harm in speaking to the lender’s relevant department or sending them a letter detailing explicitly your circumstances. That would be my informed opinion having worked as an underwriter and as a conveyancer.

JQ.

Yellabowley wrote: »

The point of the post was not so much looking for advice and more to make people in the same situation aware that there's another option.

But the point everyone is trying to make to you is very clear - THERE IS NOT ANOTHER OPTION, you have been badly advised. If the bank agree to you selling at a loss they will require you to pay the deficit, no if's, no buts no maybe's. They will not write-off the debt.

I'm no longer saying this for your benefit, but for the benefit of any future readers of this thread who think you know what you're talking about, you don't.

80schild

Yellabowley wrote: »

I had forgotten why a lot of people hate this site. But it didn't take long for the 'holier than thou' brigade to rear their ugly heads. You are unhelpful in the extreme and drag this forum down. Please don't post if you're not going to be helpful or constructive.

I'm trying to offer an alternative, and at that one which eats into the profits of the lender. If that lender chooses to pass this loss of profits on to borrowers then the borrowers will go elsewhere. If this prevents one person going down the IVA or bankruptcy route then that's better for everyone.

As for me I have never defaulted on a debt or failed to pay back what I owed on anything. People like yourself have to realise that there are people out there who end up with financial problems through very little fault of their own. Unexpected job losses, illness or being defrauded. Not everyone has borrowed beyond their means with no intention of ever paying it back. Maybe I should have insured against my child being born with a life threatening illness that would bring about the need for my wife to give up work and have to sell our house in the middle of a recession. Sorry but I missed that one on the comparison sites.

I now work every hour God sends in a world where overtime is non-existent. Did you enjoy Christmas with your family? I was working Christmas day. I hope you have a good night tonight. I start a 10 hour shift in 4 hours. I apologise if I don't fit your criteria for a decent hard-working mortgage payer.

Think before you decide to belittle people.

I agree some people on this site are so unhelpful, arrogant and self righteous!
I hope you find a solution soon. I have similar problems with negative equity but have luckily the advantage of inheritance money which both sets of parents have offered to us now (instead of when they die).

BitterAndTwisted

I disagree that anyone on this thread has been unhelpful, arrogant or self-righteous. They've just disagreed with the OP's fantasy of being mortgage and debt-free and this hasn't pleased the OP one bit. Which is a pity but often happens when folk get opinions which don't reinforce their erroneous point of view. The days when you could walk away from a big, fat debt and hand the key back are long gone, and a good job, too. A member of my own family has fled the country to avoid their own responsibilities in this respect.

SingleSue

olly300 wrote: »

Not all of them where chased for the short fall which is why the keys were handed back to the lenders.

Lenders changed their contracts around the mid-90s due to the increasing numbers of people doing this as the loophole got into the newspapers.

And yes I know someone who did this who wasn't chased. While others just sat it out as they were too late to do this, or for most of them too honest.

They chased us initially (or the insurance company did, we had an indemnity), we offered an amount per month, it was turned down, we tried to negotiate an amount which the building society thought was a decent amount but the insurance company did not, they refused to talk to us, we chased them to get things sorted but they refused to deal with us and everything went quiet.

For ten years......then they came back and asked us for over 30k.

p00hsticks

Yellabowley wrote: »

I am aware that it costs the banks to lend but in my situation it certainly hasn't cost them anywhere near what it cost me as I got stuck on a high interest rate.

As you said in your first post, you in fact decided to take out a five year fixed rate deal at what was at the time a cheap rate. The bank would in turn have made arrangements at that time to borrow that sum of money to lend to you. The fact that interest rates subsequently went down at a later date doesn't mean that the bank would have had to pay less for the money, any more than you did.

wolfplayer

SingleSue wrote: »

They chased us initially (or the insurance company did, we had an indemnity), we offered an amount per month, it was turned down, we tried to negotiate an amount which the building society thought was a decent amount but the insurance company did not, they refused to talk to us, we chased them to get things sorted but they refused to deal with us and everything went quiet.

For ten years......then they came back and asked us for over 30k.

Did you pay anything of that debt when they came back 10 years later, or just told them to go swivel?

Yellabowley

BitterAndTwisted wrote: »

I disagree that anyone on this thread has been unhelpful, arrogant or self-righteous. They've just disagreed with the OP's fantasy of being mortgage and debt-free and this hasn't pleased the OP one bit. Which is a pity but often happens when folk get opinions which don't reinforce their erroneous point of view. The days when you could walk away from a big, fat debt and hand the key back are long gone, and a good job, too. A member of my own family has fled the country to avoid their own responsibilities in this respect.

Perhaps you should try reading the posts before commenting. This was not my fantasy by any means. And I have been proved right that an alternative exists. It simply comes in the form of the deficit being transformed into a loan rather than the debt being written off. I was never trying to worm my way out of paying. Obviously some people do, and it was not my intention to fuel these people's desire to get out of paying for what they have bought. I was simply unaware that an alternative existed and was advising others that it did. I did not know how exactly that worked. It has been clarified and will hopefully now help anyone in the same situation.

For another member to come on here and call me a chancer and tell me to take responsibility for my debts was an insult. He possibly mistook my intentions but as yet there's no apology if that was the case. Every person who ever took out finance is a chancer as taking out finance is equivalent to saying "I can't afford this now but let me pay over time and I can". And there is always a scenario that will result in a borrower being unable to pay. Only those who alway pay cash upfront can honestly say they are not a risk to lenders as they don't borrow.

Yellabowley

poppysarah wrote: »

Well loan to sort the deficit... but speak to them first to see what they say.

But you're right not to rent. It might be stressful and you need to put your energy into your family.

Is there any charity for the illness that might be able to help with anything?

There are charities but at the current time I'm still in a position where I would rather make a donation than take money from the charity. There are people far worse off than me that need the money more. If it ever reaches the stage where I need the money for my sons care then I would consider the help but not until then. There are undoubtedly people in my situation but earning far less than me who need the charity's assistance more than I do.

Yellabowley

JQ. wrote: »

But the point everyone is trying to make to you is very clear - THERE IS NOT ANOTHER OPTION, you have been badly advised. If the bank agree to you selling at a loss they will require you to pay the deficit, no if's, no buts no maybe's. They will not write-off the debt.

I'm no longer saying this for your benefit, but for the benefit of any future readers of this thread who think you know what you're talking about, you don't.

We've already established that there is another option. The mortgage companies may be willing to convert the debt into a loan. Therefore being in negative equity does not necessarily prevent you selling your house. Which is the point I was trying to make as I had presumed that if I didn't acheive a certain selling price that I'd be stuck with it until prices picked up again.