Mortgage shortfall NRAM refusing to help

simo1978

Hi,

I really need some advise as i feel like i have no where to turn. I've had a property for sale for over 2 years and finally received an offer for £42500 this week which in my opinion is a light at the end of a long tunnel. Issue is that if this offer was accepted there is a shortfall of £13k. I've spoken to NRAM who are not interested in helping unless i have the capital to cover the shortfall which unfortunately i don't and i have no equity to raise the funds. Family is not an option in terms of borrowing and financial situation means i'm unlikely to get a loan. So i guess the question i'm asking is do i have no way to force the issue with NRAM? I accept my liability to pay the difference and am more than willing to do so but apparently i don't meet the "criteria". The stinger is that if the property was reposessed they are likely to achieve less than the offer and they would chase me to pay the money which i would probably be allowed to pay monthly over a fixed period!! Am i really expecting to much here ??

Any help / advice would be greatly appreciated.

holly_hobby

Are you selling because you are struggling to service the mortgage ?

If so, and if this is a fair and reasonable offer, given the property, its location, specification and recent sale prices of similar units, then I may consider their actions against treating customers fairly (TCF)regs, and ask for an explanation why they refuse to engage in positive mediation in the matter.

I would also (if you're selling due to income issues), speak to Shelter - they are very helpful and can mediate with lenders (and know the regs that should be being followed) in such situations - http://england.shelter.org.uk/.

If you are just selling up because you're fed up where you are, or whatever the reason for moving, how about renting it out (with NRAM consent of course), until the market is more bouyant in your area/property type ?

Ultimately as a last ditch "hit the panic button", you could of course just voluntary surrender the property (hand the keys in so to speak). To which although there is no longer a CML repossesions register, the effective repo and the shortfall in any event (which may be greater than current sum, if the lender is left to dispose of the property itslef), will be recorded on your credit file for 6 yrs from registration (sfall pursuable for upto 12 yrs) - so any financial and/or private rental applications will suffer as a result of this action (nb - social housing may be your only accomodation option, until there is at least some significant daylight elapsed after any adverse data recording).

Anyhoo, speak to Shelter, CAB (whom also have duty solicitors whom may give repo advice).

Hope this helps

Holly

simo1978

Hi Holly,

Thanks for your response and advice.

The problem is we kept the property on when we married and bought our first home. Had consent to let but in hindsight rental market wasn't great and the tenant was an absolute nightmare with missed rent payments etc so you could say we had our fingers burnt. House has been for sale ever since.

The offer is £42500 with a redemption of £55000, the last three houses that sold in the street were as follows :

10/12 - 25K
02/12 - 49K
02/11 - 50k

I can only assume the more recent sale went to auction as a repossession which is what i am completely trying to avoid.

On the face of it and i know my opinion is biased this is a good offer especially when i am more than willing to pay the shortfall over a fixed period.

I understand the security issues once the house is sold but as the company i work for is struggling employees have had to take a pay cut to save jobs and i simply can't continue to lose £500 out of my account every month for an empty property so the offer was light at the end of a very long tunnel.

I have a wife and a 2 year old son that i have to put first and the frustration as i said in my original post is that if they repossessed i'm sure paying a shortfall over a fixed period would be acceptable but the answer was a simple cold NO!

Unbelievably one suggestion when i initially enquired was to see if i could remortgage elsewhere with a company that would allow me to sell and convert the shortfall to a loan. I'm still gobsmacked by this suggestion because how is that even practical. I have a cash buyer who is probably going to walk away because it's simply to much hassle and ultimately i see the dark prospect of repossession on the horizon.

I can't help but be cynical and think that they are not looking at the shortfall of 13k they are looking at the difference between what they would receive if the mortgage goes full term (14 yr) £80,000 vs the offer of £42,500!

I dread to think the issues others have or are facing in these situations.

Going to speak to them again today and see if i can make any progress.

holly_hobby

You need to illustrate to them that the offer is reasonable (if it is) given the current market conditions and recent sale prices, and whilst £12,500 is a decent shortfall, there is little be gained in retaining the property (unless of course we have a market upsurge ... which is doubtful given the current financial circs the market is in).

You need to advise them of your affordability issues, and that you current actions are to act reasonably, and in an attemt to avoid repossession proceedings.

If your primary residence is currently owned with sufficient equity (albeit under mortgage), they may suggest securing any shortfall as a second charge, with an accompanying repayment schedule.

If they refuse to mediate on this, I would ask for their written confirmation of this, in which they fully detail their reasons underpinning their refusal of your request.

You then have documentary evidence of their actions, and something to work with in the event of a forced possession order. In that you may present this to the court in order to demonstrate that although you had previously tried to mediate on the situation, NRAM steadfastly refused to engage or even begin any form of negotiation (which may result in the judge refusing or delaying their possession request, and giving you more time to sell).

Hope this helps

Holly

simo1978

Thanks again for your reply.

They advised that they would confirm via letter and i also requested a recording of the conversation which i will be surprised if i receive because it clearly indicates my willingness to repay over a period and there blatant refusal to even negotiate.

I really do not want to consider repossession as i was brought up to pay what you owe but i simply won't continue in this manner as i must put my family first. In theory if they sold the property for less than the £42,500 after repossession is there an argument to say they did not seek the best course of action considering a higher offer was made that they refused to accept?

If for arguments sake this was the only option left available to me could they make a claim against my primary residence? The reason i ask is that the house was purchased with a different lender under an 80 / 20 scheme with the developer so there is already a second charge on the property and no real equity.

Part of me really wants to take this fight on but i'm just a little fish and i fear they will wipe the floor with me and i end up in a potentially worse situation and i don't have the funds for legal advise.

I really just want to do the right things by everyone but my wife and 2 year old son are my priority whether they like it or not.

Thanks again for you help.

holly_hobby

Is this after you have re-spoken to them ? Or was this what was arranged when you started your thread ?

As a point of interest, the properties are awfully low priced, and seemed to have halved in value in just 12 mths ? (ie 50k to 25k) - whats the reason for this ? Or was the 25k sale, a repo or a property in need of serious renovations ?

Are they in an area that is undergoing re-generation, which when in midst of upheaval can really affect property prices ? If you wait (and let out) do you believe things will change ?

Are the low prices, because they are in an area where no one now wants to buy or rent ?

Or is there another underlying reason ?

My underlying feeling here is that NRAM don't believe you haven't tried to obtain the best price, and are now just trying to jump ship (rightly or wrongly ..!).

Yes, they can seek to put a possession order on your current home and/ or a charge - this will be at the discrection of the courts, to which in such circs the permission of any other chargees is neither sought nor reqd.

Have you spoken to shelter ?
Have you spoken to any sources of free legal advice ?

Holly