Repossession - mortgage lender valuation

CAS32

We bought a brand new 2-bed apartment in the Greater London area as a Buy-to-Let investment in June 2004 for £249,950. The apartment was repossessed by the mortgage lender in October 2006. We have just been informed that it has only just been sold (July 2007) for £225,000. This is despite the fact that property in this area has been rising year on year.

All the other properties in the development were bought for a similar price at the time we originally purchased.

In October 2006 we contacted several local estate agents who valued the property at that time at between £265,000-£285,000. Currently (July 2007) the valuation is between £290,000-£306,000.

Since October 2006 the mortgage lender has insisted that the property was only worth around £215,000. Even though they granted us a mortgage based on a valuation of £249,950 back in June 2004.

Our questions are:

1. Can we legally contest either the valuation at the time of the original time of purchase, or the valuation that is now been applied to the property by the mortgage lender, by lodging a claim for negligence on their valuation?

2. Given that the property valuation by the lender of £225,000 this would suggest at the time of our original purchase that it should have been valued at around £185,000, and not £249,950. Therefore would we have a case of miss-selling by the mortgage lender?

We haven't come across any others who may have challenged the mortgage lenders, but that is not to say that there haven't been any such cases, it maybe that they have been settled away from public gaze.

We are considering taking such action and would greatly appreciate any comments.

CYBERCIDERSAVER

The length of time that the lender has had it probably means they've done as much as they can to get the best price.

I wouldn't waste any money on legal fees. Use what money you have to fund the shortfall!:D

MarkyMarkD

If you'd sold the property yourself, rather than just ignoring your mortgage arrears, you wouldn't be in the situation of arguing about the property's valuation.

They've sold the property for the best price they could get for it. Valuations are irrelevant - the best price someone would offer is all you can expect them to get. They have standard procedures to ensure they get the best possible price in the circumstances, including getting the estate agent to post statutory notices in the press asking for offers over the amount they have already been offered.

It's not the lender's fault that you over-paid in the first place, if that's indeed the case. They don't have a duty of care to you for your mis-valuation of the property, unless you paid a surveyor for a full valuation (not just a limited assessment on behalf of the lender) in which case you have a case against the surveyor, not the lender.

In short, you got yourself into this situation and, unless you had a proper survey done, you have no case against your lender.

Why on earth didn't you simply put the property on the market when you stopped being able to afford the mortgage?

mpsavuk

It was probably sold at Auction hence the low price?

PasturesNew

Also, if you bought it brand new, the price can be expected to be lower in the first couple of years as the property is now "second hand" and you might have had some tasty incentives thrown in with your deal (fees paid, extras, etc).

People buying brand new flats - and selling within 2 years - have recently mostly been finding that the flats are selling at less than they paid for them.

Indeed, I have seen evidence of properties such as yours losing as much as £100k at resale.

It's all part and parcel of the business you entered into. Not all property goes up, not all property is going up. Indeed, much property (especially new build flats) is going down - there were too many bought by BTL people who are now trying to sell them - when even developers can't sell brand new ones with incentives.

MarkyMarkD

You are absolutely right, Pastures. There was something in the press this weekend about exactly this problem. The new build properties are sold with oodles of incentives and are really worth £30k-£50k less than they are being sold for.

And then when you come to sell on, you are competing against lots more new builds with incentives, and no other new BTL landlord is going to buy a secondhand one.

So maybe the price falls another £50k against what it's "really" worth in a stable market.

Turnbull2000

Honestly :rolleyes:

Suppose I bid for an item on Ebay, win said item and pay as I'm obliged to do. Do you really think I'd have a leg to stand on if soon after I decided I've paid over the odds and wished to sue? The property was clearly overvalued on original purchase, yet you went ahead with the transaction. There's no-one else to blame but yourself. Take some damn responsibility.

I'm starting to wonder if some of the threads are just wind-ups...

CYBERCIDERSAVER

I think that is a little harsh. The world and his wife jumped on the BTL bandwagon so you can't blame them for trying. SPECULATE to accumulate and all that. (or in this case NOT)

Be interested to know if that is their only BTL and if they have enough savings to pay the lender £25000.

franklee

CAS32 wrote: »

In October 2006 we contacted several local estate agents who valued the property at that time at between £265,000-£285,000. Currently (July 2007) the valuation is between £290,000-£306,000.

Those valuations are asking prices? What about the actual prices achieved for the others? Have you looked on www.houseprices.co.uk ?

Like others I would be interested to know why you didn't sell it yourself before repossession? How many months of payments did you miss before the lender took action?

What do you know about how it was sold. Was it done by a local estate agent or auction or what details do you know?

I would guess (and it is only a guess) your possible case if you have one, which you may well not, would be if it was sold too cheaply rather than if you overpaid originally...

You say you paid £249,950 but what extras and freebies did you get, did you get your deposit paid or anything like that only that would mean you actually paid less.

mightymouse

CYBERCIDERSAVER wrote: »

I think that is a little harsh. The world and his wife jumped on the BTL bandwagon so you can't blame them for trying. SPECULATE to accumulate and all that. (or in this case NOT)

Be interested to know if that is their only BTL and if they have enough savings to pay the lender £25000.

The amount inc all costs would be nearer £50k - less any deposit already paid plus ongoing interest on any shortfall......... are their other assets?

I think the argument might be that you wanted buy at that price and were pleased when you got the mortgage and you then left it to the lender to sell in a forced sale situation.

Unless you can prove negligence by valuer on purchase or lender on sale regret there is not much you can do.(already said)

cats!

This is a wind up!