Repossession - mortgage lender valuation

PasturesNew

6-9 months from now you might be "grateful" when you spot that the next 2 to sell only make £185k

CAS32

Thank you for all of your contributions.

I equate this to the unlawful bank charges. It can be argued that bank customers should not go overdrawn, have cheques bounced, exceed their overdraft limits etc. but that doesn't make their charges right and proper.

I feel that I just need to clarify what our grievance is with the mortgage lenders.

The mortgage lender doesn't just grant a mortgage on the valuation we or the property builder gives them. The mortgage lender actually sends a surveyor/valuer themselves to the property to decide whether they accept the valuation. If they agree to the valuation, subject to other additional criteria they will grant a mortgage.

However, if they feel that the property is overvalued at that time, the mortgage lender will reject the mortgage valuation, and decline the mortgage application based on the valuation irrespective of any other satisfying criteria. We have had personal experience of applying for a mortgage on another property in a different development, whereby the mortgage lender (a different one than the one we are dealing with now), rejected the valuation as too high and declined a mortgage, a situation which we were happy to accept.


Our point is this:

They accepted a valuation of £249,950 in May/June 2004. We have documentary, as well historical evidence to show that property prices have risen steadily in this particular area where the property is located, and in addition contacted several local estate agents who have also confirmed this. So how can they accept a valuation of £249,950 in 2004, property prices rise consistently over the 3 year period, yet the mortgage lender values the property at LESS than the original valuation?

Where is the incentive for the mortgage lender to at least sell for the original valuation plus other selling costs, when they know that whatever price they sell it for, that they will just ask the original mortgage borrowers for the difference?

WE could have sold it for an Undervalued price, in fact probably anyone could have!

We feel that if they have valued the property at such a low price now, that they - or their surveyor/valuer - were negligent at the time of the original valuation in 2004. If they had informed us that the valuation at that time was too high, they would not have granted us a mortgage, or we could have negotiated with the developer a much lower price which the mortgage company would have agreed with, or looked for another property.

It is ethically and morally wrong for a mortgage lender to grant a mortgage knowing that a property is grossly overvalued as would appear to be the view of the mortgage lender in this specific case.

Our case would be based on their original negligence, whereby we 'relied on their expertise', on their acceptance of a particular value placed at the time of our purchase.

When the property was originally repossessed and before it went to Court, we asked the mortgage lender if we could be given 3 months to find a buyer, but were turned down. We also asked the same question in Court, but again the mortgage lender refused.

Logically, there is much more incentive for the original mortgage borrower to get the best price possible to mitigate their losses. What incentive is there for the mortgage lender, when they can chase the original borrowers for the difference?

Like the Banks, Mortgage Lenders also should be more accountable when it comes to valuations and repossessions.

bs0u0128

was it worth it, TO YOU, when you bought it, regardless of whatever the mortgage co said

if someone says a pencil is worth 50 grand and theyll lend you it to buy it, you would, id imagine, tell them where to go, so thus, you must have thought the figures reasonable

Romani_Ite_Domum

CAS32

Go for it! Sue the !!! out of the lender. If successful It would cause a market crash of 50% overnight.

Guy_Montag

The valuation was a snapshot in time. You expect to find out the value it would get today, not the value it will be in three years time. This mistake you made was to assume housing only goes up - well sometimes it goes down too.

I suggest you look at nethouseprices.com & check out what similar properties went for when you bought yours & what they go for today.

Doozergirl

I think it would be far easier for a mortgage lender to sell at the best price they could get, rather than chase the previous 'owners' for large sums of money.

I wouldn't expect a new build flat to increase in value in line with other houses. I have recently seen a flat sold at auction (after having been marketed with an EA) £152,000. It was bought in 2005 originally for £249,000 but the £152,000 is more in line with local prices. There is another repossession on in the same builder with an EA which is floundering on the market at £155,000 after several price drops. Each time a flat sells, the price of neighbouring flats drop again.

I do wonder what the surveyors were thinkin when they agreed with the valuation - I suppose if there were significant deposits out down then they wouldn't be overly concerned about the resale value - the valuation is for the lender after all, not the purchaser.

But, I could see quite obviously from a mile off that flats being sold for the same price as four bed detached houses on the same street, was simply wrong. Why the buyers couldn't see this, I don't know. It perhaps isn't the same as your situation OP, but I do agree with silver that a valuation at £265-285 would place the property at £250k for me. Prices have risen minimally in my area over the last three years, but it would be fair to say that the prices of these flats have quite literally crashed.

Rick62

I find it frightening that someone would invest £250k in a business with so little understanding of how that business works.

The bank has not 'sold' the property to Cas for £250k, nor have they given him any sort of guarantee or assurance of the value. They have lent Cas, say, £210k, which happens to be secured on the property. They are then looking for Cas to pay that loan and the charge on the property is extra security. The valuation the lender did is purely for them to assess the adequacy of the security for their own purposes.

Cas, you have not explained why you did not sell the property rather than go into arrears? How long was the mortgage in arrears before they repossessed? Banks operate on very tight margins on BTL, if you do not pay them in accordance with your agreement you can't expect them to wait forever.

CAS32

Guy_Montag wrote: »

The valuation was a snapshot in time. You expect to find out the value it would get today, not the value it will be in three years time. This mistake you made was to assume housing only goes up - well sometimes it goes down too.

I suggest you look at nethouseprices.com & check out what similar properties went for when you bought yours & what they go for today.

When we bought our property the prices they sold for were approximately all the same. Only one identical property to ours has been sold, and that was sold after about 12 months later (2005) for the same as the original purchase price at £249,950.

kathleenryd

My student daughter and 4 friends signed up and payed a deposit on a house
3 moinths ago. They signed up early in order to get a house that was safe traveling distance from places of work (my daughter has part time work in a city centre restaurant and returns by bus late at night). The also handed over two post dated checks for the first two months rent (July and August).
They were assured that they could move in on 1st July.
On 1st of July I took my daughter and all her sgtuff to the house - we met up with her friend who had driven all the way from Felixstowe with all her stuff to find out that the landlord had decided to extend and remodel the interior and there was no way they could move in (outside walls had been knocked down and there was no water , bathroom, tiolet, kitchen etc).
We called the landlord and he attended the property and under duress he offered them the use of another property until July 30th. The other property was ok but was not located in a place that was safe to travel to by public tansport late at night so my daughter is now staying with a friend.
She went to see the proprty today and there is no way that it is habitable - again no facilities and the landlord has gone on holiday for a month.
He has also divided what was to be my daughters bedroom into two so her space is now much reduced.
She originally sourced the property through an agency but the landlord then told them he was not dealing throught the agency anymore so the deposit etc was paid directly to him.
Aparently he owns 12 houses and the one my daughter is renting we discovered is in his sons name who is also a student.
What can we do - my daughter now says she doesn't want to live there as she doesn't trust him.

Kathleen

Helen_Richardson

Property as a long term investment