What does this mean?

FeelingLow

hi everyone after going BR on the 4th feb i knew it would get complicated with regards to our house, but when i asked my OR in my interview what now happens to the house she said she didn't know as the mortgage company had acted illegally by giving us the re-mortgage without consulting the council as they still had an interest in the house via the right to buy scheme, (something to do with first & second charges)our CAB advisor said that the mortgage company are now being sued by the council & although we signed & applied for the re-mortgage (hubby did this without my knowledge) if they hadn't given it us or had contacted the council as they should of done we wouldn't of had to go down the BR route

BUT we did & here we are & as they say "no point cring over spilt milk"

yesterday i received a letter from the OR & to be honest i dont understand it, our CAB advisor isn't working this week but i get a sense that we need to deal with this letter quickly, it states that our interest in the property now belongs to the trustee (which i understand) but then goes on to say that it may be possible for the trustee to transfer the beneficial interest to us, a realative or a friend.

they want us to get a valuation of the house & up to date details of the ammounts owed to crditors claiming mortgages & other charges over the property,which we should obtain & supply,

it then says that once we have done this they will agree on a value to be paid for the interest on completion of the transfer, & will be reqiured to be paid £211 in advance to cover their solicitors fees, it says if the value is nil or in negative equity a payment of £1 will be required to be made for the interest,

it then says "in the event that it is not possible for anyone to make a suitable offer, or agreement cannot be reached the beneficail interest in the property will remain vested in the trustee until 3 years has elapsed from the date of the BR order, the interest will not be returned to you upon discharge from BR, the trustee may decide to take other action to realise the interest, e.g selling to someone else, applying for an order of possession, obtaining a charging order or reaching some other legal agreement with you about the interest"

what in simple tearms does this mean? the OR has all our paper work regarding the house & the house is in negative equity, the house has been on the market at a little below the current market price for almost 6 months now, are we still liable for the house? the mortgage company have set a court date for the 17th to reprossess.

sorry this is long winded & i hope you can make sense of my post:rotfl: i would appricate it if anyone can shed some light,

thanks in advance

Richard_S

Hi FeelingLow,

If the house is in negative equity then you can arrange for a friend or relative to purchase that Beneficial Interest from the O.R, for a nominal £1 plus the O.R's legal fees of £211.

If you plan on moving out and the house is repossessed then you don't need to do anything, and you won't be liable for any shortfall once the house is sold.

If the cost of paying the mortgage and any arrears, and the loans secured on the house, are approximately the same as renting a suitable alternative property, then the O.R should allow those payments to be included in your I&E Budget.

The ball's in your court really, it depends on what you intend to do regarding alternative accomodation.

Regards

Richard

FeelingLow

thanks Richard we moved out of the house into rented in December, but what i dont understand is if someone wants to buy the interest what happens do they then become liable for the mortgage? or do they have to find a mortgage & buy the house at the market value?

Richard_S

FeelingLow wrote: »

thanks Richard we moved out of the house into rented in December, but what i dont understand is if someone wants to buy the interest what happens do they then become liable for the mortgage? or do they have to find a mortgage & buy the house at the market value?

Hi FeelingLow,

I didn't realise you'd already moved out of the house, and neither does the O.R by the sound of it; although you've probably told them.:rolleyes: :rolleyes:

If you'd stayed in the house and a third party had bought the B.I then they wouldn't be responsible for any mortgage arrears, or shortfall if the house was subsequently sold. As you've moved out, and presumably don't intend going back, then there'd be no point trying to sell the B.I. You have to be the legal owner of the property to sell the B.I.

In law, when you buy a house, even with a mortgage, you are the legal or registered owner of the property, and any mortgage or loan is charged as security againts that property. If it increases in value, there becomes an equitable interest in the house, that rests with you the legal owner. In bankruptcy, you no longer control your financial affairs and any B.I becomes due to your estate, through the O.R or a Trustee.

If there is positive equity, the O.R can either sell the property to realise the B.I or sell it to a third party; usually a friend or relative of the bankrupt(s). If there is little or no equity, you can purchase that B.I for £1 (because there's no value to it) and then if the property increses in value in future years it becomes yours.

I hope that hasn't confused you.:D

Richard

silvercar

There is going to be one big legal mess, but luckily none of this is your problem.

As Richard_S has explained, the letter all relates to you being able to arrange for someone to buy the unmortgaged part of your home's value. As the property is in negative equity you would have been able to buy it for £1 + legal costs.

As you have moved out, you don't want or need the house, so the letter is irrelevent to you, you don't need to respond to it.

The lender will repossess and arrange for the house to be sold. The money from the sale will go first to pay off the mortgage and then the other charges on the property. If there in't enough money to pay everything off, the amount still owing is included in your bankruptcy, so you have nothing to worry about.

The fun begins when the council say that their charge on the property (usually the right to buy discount) should be paid before any amount over the original mortgage. In this case it appears that the remortgage was obtained without council agreement, so the mortgage company wants it charge paid first with only the excess going to repay the council discount, the council will claim that the remortgage was obtained without its consent and so it was unlawful and the council charge should be cleared first.

If the council wins, that is pure Karma for you, if you are blaming the remortgage for your bankruptcy. Either way it is not your problem as whoever loses out the loss is included in your bankruptcy.

Richard_S

Hi silvercar,

There's nothing funny about the situation FeelingLow is in, but I have to admit that the thought of a mortgage lender and a local authority going head to head is mildly amusing; especially as FL hasn't really done anything wrong.

My money's on the local authority.:rolleyes: :rolleyes:

Richard

FeelingLow

thanks guys that makes more sense! the council are BLAZING about it!

i knew this would get complicated but i'm just glad it doesn't really now involve us, & yes if we hadnt been given the re-mortgage we wouldnt of gone BR, as we had no real debts till then, but i do realize that we are to blame too.

my money is on the council too richard!

SyncMaster_3

Just a side issue relative to the above thread. My house was repossed on
31st March (I moved out Jan when I became BR). I have had no correspondance at all about repossion (thought I would have something). The property is in negative equity. My question is as the bank have repossed the house as of 31st march what is my legal status reqgarding owwnership?
The reason I ask is that since moving in Jan to a rented property I have struggled to pay the rent and wanted to claim housing benefit, but understood that if you own a property you cant get HB? SO now I am thinking that as the repo has taken place whats my situation? Can I answer the question on the HB application and say I dont own any property?
Thanks

I also have another question about claiming working tax credits, but will open a new thread for that one.

Richard_S

Hi SyncMaster,

If the property has been repossessed you probably won't hear anything until it's been sold, and then they'll send you a demand for any shortfall; not that you're liable for it, so just pass it on to your O.R.

As far as HB applications is concerned you don't own any property. It's been removed from your ownership by virtue of the repossession. I don't know when the Land Registry would be updated to show that you're no longer the owner, and if HB did a property search it may well still have your name on it.

I think I'd contact the CAB just to confirm what I've said.

Regards

Richard

maxmycardagain

duck down in the trench, let the council+lender fight it out

nothing to do with you now.