Purchased a repossessed property - now the bank have found more debt!!

AdrianC

kp1989 wrote: »

Yes, sorry my mistake it's a threat to repossess and the seller is forced to sell to repay the debt

OK, that makes a VERY big difference.

The seller cannot sell the place, if he can't clear the secured debt with the proceeds of the sale. It's that simple. It will leave his creditors with outstanding debt but no security on it. How it's got to this stage, who knows. Somebody's dropped a clanger, that's for sure. If it'd sold for more...? Well, he'd have been OK.

If you really want this place, you're going to have to wait for it to be repossessed or for him to sort his problem out. At least you're in a good place when it DOES get repossessed to start negotiating straight off with the lender. "Look, it went to an open auction, this is the highest bid, I've got everything in a row, can we just get on with it?"

martindow

Is it possible that the bank involved will accept that it has sold at its value and will let the sale proceed, writing off the difference?

The current 'sale' saves them the costs of repossessing and marketing the house. Unless they think it has sold well under value this could be a reasonable option for them.

ethank

If it was your bank would you?

They don't really care if they repossess or not, and they hardly ever write off debt, they would still attempt to recover from the debtor.

bouicca21

Are we sure this extra debt is secured debt? It could just be that the seller has some unsecured debts as well as whatever he/she owes the bank? The story about the ex forging a signature might be, shall we say, imaginative.

davidmcn

ethank wrote: »

they hardly ever write off debt, they would still attempt to recover from the debtor.

Not "write off" as such, but they will quite often agree that a customer in negative equity can sell, with the shortfall being converted into an unsecured loan. Which sounds like what the seller here was trying to organise until they decided to dispute it with their bank instead.

Thrugelmir

AdrianC wrote: »

Somebody's dropped a clanger, that's for sure.

Vendor appears to have got it wrong. Simple as that.

silvercar

martindow wrote: »

Is it possible that the bank involved will accept that it has sold at its value and will let the sale proceed, writing off the difference?

The current 'sale' saves them the costs of repossessing and marketing the house. Unless they think it has sold well under value this could be a reasonable option for them.

Sounds like there is enough money to clear the main mortgage but nothing for the secured debt, so it wouldn't be for the main mortgage lender to write off the difference.

If repossession happens, then the main mortgage gets cleared first and the secured charge gets any remainder.

So the main lender just needs to show that they got the best price they can in a reasonable timescale from a proceedable buyer.

The only time this may not apply is if the main mortgage lender also gave an unsecured loan and the seller is trying to get them to agree to write that off as part of the sale. NRAM (formally Northern Rock) were popular for this with their 'together' mortgages.

AdrianC

If the second charge is with a different lender, then the debtor would need to get both to agree to lift their charge in order to sell the place. The first charge, the mortgage lender, is easy. The second charge - well, what's in it for them?

silvercar

AdrianC wrote: »

If the second charge is with a different lender, then the debtor would need to get both to agree to lift their charge in order to sell the place. The first charge, the mortgage lender, is easy. The second charge - well, what's in it for them?

Agreed. Though in the case of a repossession, the mortgage lender does not have to worry whether there is enough to repay the second charge.