Repossession - mortgage lender valuation

PasturesNew

I wrote stuff here, but, you know what, I deleted it... she's not listening.

silvercar

I hope the sale price cleared the mortgage otherwise the lender will pursue you for the difference, particularly if you have other property. They would be within their rights to slap a charging order on another property.

rosysparkle

CAS32 wrote: »

If the mortgage lender considers that the property is worth LESS than they originally granted the mortgage for 2 years previously, shouldn't they question their original acceptance of their accepted valuation, particularly as there had not been in a slump in property prices in the area, but in fact a rise over the time period?

Even if property prices in the area have generally risen in the time period, that does not necessarily mean that your property has also risen in value. Indeed, as it was a new build two years before, it is almost certain that it won't have risen in value.

As has been pointed out, all the other properties in the development sold for a similar price to our own at the same time. There was a mix of BTL investors and Private buyers.

So that shows that the valuatuon two years ago was an accurate reflection of the market at that time.

The point I am trying to make is the prinicipal of 'Duty of Care' by the mortgage lender when granting a mortgage, and also if and when re-possessed, that they attempt to market the property at prevailing market value ie. taking into account the upward trend of property prices in the specific area. Rather than commence by offering it for sale at not only below the market price, but also below the outstanding mortgage value.

But again, the upward trend of house prices in the area doesn't necessarily mean that a two year old ex-new build will have risen in value. Forget the mantra of house prices in the area rising, what was that individual property, in that particular condition, worth at the time of the sale? The answer is that just like every other property, it was worth what someone was willing to pay for it. As a repo, the EA handling the sale has to advertise the offers and invite higher ones. If someone had thought it was worth £249k, they'd have offered a lot higher than the eventual sale price.

You've been very unlucky that your property value dropped so much, but that's market forces, and not unlikely given that your property was a new build. You've been unfortunate that you didn't take out insurance against your tenant defaulting on the rent, but that was your decision. It was unfortunate that you couldn't manage the mortgage in void periods & while your tenant wasn't paying, but that's the business decision you took.

Turnbull2000

CAS32,

You gambled on property and lost. If you believe someone else should be held responsible, you clearly don't have a clue about investment strategies and risks.

Swallow your pride and walk away.

beingjdc

MarkyMarkD wrote: »

BTL mortgages require at least a 15% deposit, so it's not true that you can go into BTL without any money behind you, UNLESS the new build property sellers artificially inflate the price of the property and do some dubious deposit gifting.

I've seen 10%, and I'm sure the good folks at singingpig know a way round - for instance finding the deposit by remortgaging your own property, which in financial terms is the same or worse for you as a 100% BTL.

BettiePage

Turnbull2000 wrote: »

CAS32,


Swallow your pride and walk away.

Except she can't walk away as the mortgage provider will pursue her for the difference outstanding.

Imp

CAS32 wrote: »

To answer MarkyMarkD's point.

Surely it is a JOINT responsibility. Should not the mortgage lender Lend responsibly too?

If the mortgage lender considers that the property is worth LESS than they originally granted the mortgage for 2 years previously, shouldn't they question their original acceptance of their accepted valuation, particularly as there had not been in a slump in property prices in the area, but in fact a rise over the time period?

As has been pointed out, all the other properties in the development sold for a similar price to our own at the same time. There was a mix of BTL investors and Private buyers.

We also have another BTL property which we have owned since 2003, but in a different area.

The point I am trying to make is the prinicipal of 'Duty of Care' by the mortgage lender when granting a mortgage, and also if and when re-possessed, that they attempt to market the property at prevailing market value ie. taking into account the upward trend of property prices in the specific area. Rather than commence by offering it for sale at not only below the market price, but also below the outstanding mortgage value.

So from your previous posts, the house changed in value as follows;

June 2004 - £249,500
June 2005 - £249,500 - But prices always go up, what has happened here?
October 2006 - £215,000 - A valuation by a mortgage company who has no interest in flattering you to get your business
July 2007 - £225,000 - The highest price offered by all the buyers in your area, as advertised in the local papers.

So from June 2005 to October 2006, the value of the flat went down by 14%.

But we want the mortgage company to react to this reduction in value, so they should demand you repay them £35,000 of lost value so you do not end up in negative equity. This would have shown a Duty of Care, but you wouldn't have like it.

AT least with buy to let mortgages you generally need to put down 15%, so even with the 10% drop in value of the flat you are not in negative equity and can walk away from this experience a wider person.