Urgent help reqd

sibil

I have discovered that my father has a 96K mortgage outstanding on his house and no life-cover. It was sold to him in (i think) 2002 over a 25 yr period when he was 72 and on several occasions more money has been added on bringing it up to the 96k figure. The paperwork says that the debt is recoverable by the sale of the house (i beleive this is standard) but im worried about what will happen when he dies (hes 83). Am i responsible for the os debt if the bank sell the house at a loss. Also does anyone know if i have any recourse with the bank about this because clearly it cannot be correct to sell a 72 yr old man a 25yr mortgage.

tx

McKneff

I dont think it is illegal to sell a 72 year old a mortgage to be honest.

How much is the house worth

Lord_Elpus_2

It may be what is known as a Lifetime Mortgage. Google the term and do a bit of research. Without seeing the paperwork it is impossible to tell. These are common forms of equity release.

The short answer to your other question is no, you cannot be liable for any shortfall.

getmore4less

You will need to go back to the begining,

Why did he need the money and where has it gone.

Forget urgent, this will probably take some time

When he dies if the estate does not have enough assets to pay the debts it does not pass to anyone else to pick up.

RickTyne

I am not legally qualified, but I would think the previous reply is correct - you can not be be liable for any shortfall.

But maybe they could make a claim against your dad's estate? i.e if selling the house does not cover the debt, they could possibly make a claim against any other assets or savings which you and your siblings might otherwise inherit? Note the question marks - I dont know for sure this would be the case, but its a question I would ask, if I was in your position. (unless he has no other assets - in which case it doesnt really matter!)

sibil

thanks for the answers but its not a lifetime mortgage (ive checked) - ive seen the paperwork and its the normal kind you or i would get. he has no other assets only a funeral plan with Sun Life. the house is worth around 150k in the current market - was valued at 202K at the markets height - im just worried the bank will take the view that they need to sell so will take any amount........what happens with cc debt (seems he has 2 of them as well)! beginniing to wish i was an orphan

RickTyne

I expect the credit card debt will be the same - if there is anything left in the estate after the house is sold and outstanding mortgage paid, the cc company can make a claim on that. But the worst possible outcome is that you will not receive anything from your dad's estate - you won't be any worse off - financially that is. Certainly they cant touch the funeral plan - so at least that cost should be covered

holly_hobby

sibil wrote: »

have discovered that my father has a 96K mortgage outstanding on his house and no life-cover.
It was sold to him in (i think) 2002 over a 25 yr period when he was 72 and on several occasions more money has been added on bringing it up to the 96k figure.

Mge regulation did not come into force until 31 October 2004.

Your Dad having no dependants/co-occupants, meant there was no requirement for a life cover/term assurance policy. (which would have been costly anyway at his age).

That being said, this does sound like a traditional residential mge - as equity release lifetime mortgage arrangements don't have an end date - the mge is designed to be repayable upon the earlier of the mortgagors entry into longterm care or death.

So, a defined term of 25 yrs does sound like a traditional residential mge - although the redemption age of 97 sounds unusual in todays market (max is generally 90 with a select no of lenders).

There were however circa 2002 and earlier, lenders whom did offer residential mges on a C&I or I/O repayment method, without a defined maximum age, YBS used to be one of them - so that could be the case here. (of course since the tightening of mge regs and FSA regulation, such arrangements are long gone).

If so, the lender did have a duty of care to verify how the mortgagor would service the mge during the term (ie in this case retirement yrs) - to which I presume the evidence your Dad presented met their criteria (whether what you Dad presented was actually accurate, and not verified as per fast track cases, is another thing of course - if you're saying affordability is an issue).

sibil wrote: »

The paperwork says that the debt is recoverable by the sale of the house (i beleive this is standard)

If Dad selected an IO mge, and stated that his method of repayment was to sell the house, then thats what the statement alludes to.

Of course this is also appropriate for an equity release lifetime mge, but the defined term mentioned (of 25 yrs), is not consistent with such a EQ R Lifetime mortgage, and an arrangement I don't believe your Father has (from my reading of your post).

sibil wrote: »

but im worried about what will happen when he dies (hes 83). Am i responsible for the os debt if the bank sell the house at a loss.

The property will be disposed of by the executor/administrator, as part of his estate, and settlement of liabilities (following which bequests are satisfied). If there is any residual mortgage balance (or debts) outstanding after the complete liquidation of the estate, the creditors are unfortuantely left to absorb this a loss (which they will write off for tax purposes), with bequests also unsatisfied if there is nothing left in the pot .

This is due to the fact that debts are not transferrable to those not party to the arrangement.

So don't worry about how you may satisfy any shortfall at redemption.

sibil wrote: »

Also does anyone know if i have any recourse with the bank about this because clearly it cannot be correct to sell a 72 yr old man a 25yr mortgage.

tx

As I briefly discussed above, not if the delcared/evidence income was sufficient to support the borrowings - which they must have been to secure the mortgage..

Any success would be on the basis, that he was classed at the point of sale, as a vunerable individual (ie - learning difficulties, or evidenced cognative imparement, affecting his provision of information, decision making process, and capability to understand and reason the legalities of the contratual arrangement he was entering into - which doesn't appear to be the case from your post).

NB - even if you believe this to be the case, the result of any upheld complaint (ie the mge should not have been arranged), would probably result in Dad having to sell the property to redeem the mge, and find himself a new home ...... and if it turns out that he was a little fruity with his declared income thats an altogether different can of worms that will be opened !)

So .. to top and tail

1. the lender is prevented from pursuing 3rd parties/issue, for any mge shortfall realised at redemption (following the mortgagors death).

2. a residential mge into retirement is not necessarily a mis-sold mortgage, affordability would have been verified at point of sale, to achieve UW signoff.

Further to which the mge was effected pre regulation (occuring 31.10.04) - which is more in respect of ascertaining suitability of the product/repayment method.

Indeed, in respect of equity release lifetime mge arrangements, there are no income requirements/checks reqd, as typically (bar 1 current provider), the interest is rolled up onto the debt, or a % of property equity is sold in exchange for the equity release - removing the requirement of an affordability assessment.

Therefore I also doubt this is a mis-sold mge arrangement.

Hope this helps alleviate some worries.

Holly

Wh05apk

Looking at this another way, your dad purchased a property at the age of 72, presumably his income was sufficient, had the lenders declined him then due to his age, no doubt there would have been complaints of age-ism? had he not purchased the property, presumably he would have rented, which would probably have cost him as much if not more over the years, and would have have little savings lft by now to leave you.

Personally provided the repayments are affordable from pension income, and not reliant on the applicant working to 97 years old I see no problem in lending into retrement, unfortuntely lenders are now paranoid, with most getting jumpy once the mortgage goes beyond 65, in an ideal world we would all have our homes paid for by retirement, but realistically more and more people will not be so fortunate, due to unemployemnt/health/divorce etc, more and more people are looking t take mortages later in life, ad unfortunately a lot of these are having "artificial" restrctions placed on them by lenders - how many peope in thier 50's will still get a decent pension at 65? most will need to work till 67-68 unless they are fortunate.

As Holly also said, there was presumably no "need" for life cover, premiums would likely have cost as much as the mortgage anyway.

sibil

Holly hobby - does the mtg regulation you mention cover the fact that the original mtg loan was taken out in 2002 then added to a few times over the years - including after 2004 - thereby bringing the total up to 96k?

holly_hobby

All further advances, pre or post regulation, would be the subject of the lenders income verification.

Are you asserting that the lender failed to verify supporting income as part of the application process ?

If you tell me what you are trying to achieve, I and others, can guide you more accurately.

Holly