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  • FIRST POST
    • milomilosh
    • By milomilosh 12th Jun 19, 7:55 PM
    • 6Posts
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    milomilosh
    HSBC pull out of mortgage 2 days before completion
    • #1
    • 12th Jun 19, 7:55 PM
    HSBC pull out of mortgage 2 days before completion 12th Jun 19 at 7:55 PM
    Hello

    I have got myself (or have at least been put) into a bit of a pickle. And any comments or strategies moving forward are greatly appreciated!

    I had an offer accepted on a house in February which was in a pretty poor condition. Initially I discussed options with my mortgage broker for a bridging loan to buy the property, but as I was tied into a fixed term mortgage with HSBC on my current flat (which would incur early repayment penalties) we decided to see if they would lend on the property. From here the timeline is as follows:

    April 4th - Valuation carried out on property on behalf of and arranged by HSBC
    April 16th - HSBC issue mortgage offer to myself/my broker

    June 7th - Exchange of contracts (both for the sale of my flat and purchase of new house)
    June 14th - Completion Scheduled

    But now two days before completion HSBC are saying that the valuation report has deemed the property un-mortgagable and that they will not lend on it. HSBC are saying they did not receive the valuation report until June 4th (and have not raised this as an issue until today!). This has obviously caused a huge amount of stress and means that we will be unable to complete the purchase.

    At this stage we think it will be best to continue with the completion of the sale of our flat as to not incur any penalties from this side and ensure we have some cash going forward.


    - How can the bank give a Mortgage Offer without a positive valuation?

    - Am I protected in any way against costs/penalties I will incur as a result of being unable to complete the purchase (at this stage around £20,000+)?

    - Has anyone had any similar experiences? Both my solicitor and mortgage broker have said the situation is ludicrous.

    Any help is greatly appreciated.

    Thanks
Page 1
    • elsien
    • By elsien 12th Jun 19, 7:59 PM
    • 19,867 Posts
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    elsien
    • #2
    • 12th Jun 19, 7:59 PM
    • #2
    • 12th Jun 19, 7:59 PM
    Any idea of the reason it has been assessed as unmortgageable and is there a mechanism to challenge that?
    All shall be well, and all shall be well, and all manner of things shall be well.

    Pedant alert - it's could have, not could of.
    • muhandis
    • By muhandis 12th Jun 19, 8:08 PM
    • 981 Posts
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    muhandis
    • #3
    • 12th Jun 19, 8:08 PM
    • #3
    • 12th Jun 19, 8:08 PM
    What does the mortgage offer say about the valuation?

    For instance, on my Halifax mortgage offer, under supplementary information, they confirm that "Your property valuation was completed by a surveyor."


    A Barclays offer says "A valuation has been undertaken for Barclays purposes only at a reduced fee and therefore no copy will be supplied to the applicant." and "Value of the property to prepare this Offer: £xxx,xxx.00"


    Does the HSBC offer say anything about it being 'conditional upon outcome of valuation' or anything to that effect?
    Last edited by muhandis; 12-06-2019 at 8:11 PM.
    • milomilosh
    • By milomilosh 12th Jun 19, 8:48 PM
    • 6 Posts
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    milomilosh
    • #4
    • 12th Jun 19, 8:48 PM
    • #4
    • 12th Jun 19, 8:48 PM
    Within the Mortgage Offer's special conditions it states that the offer is "subject to valuation". Beyond that there is no mention of the valuation.

    The reason it has been assess as unmortgagable will be in the valuation report but HSBC are apparently very cagey about anyone outside HSBC talking to the valuation team. Hopefully my solicitor and mortgage broker will be able to make inroads tomorrow and find out more; It's a Victorian property so the issues could rage from damp to more complex structural issues..
    • muhandis
    • By muhandis 12th Jun 19, 9:52 PM
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    muhandis
    • #5
    • 12th Jun 19, 9:52 PM
    • #5
    • 12th Jun 19, 9:52 PM
    Setting aside HSBC's inordinately long delays, I don't understand how the conveyancer permitted the client to exchange without confirmation about the valuation when the offer mentions that its "subject to valuation".

    I hope you find a way to minimise your losses.

    Within the Mortgage Offer's special conditions it states that the offer is "subject to valuation". Beyond that there is no mention of the valuation.
    Originally posted by milomilosh
    • LRmortgage
    • By LRmortgage 13th Jun 19, 4:58 AM
    • 331 Posts
    • 156 Thanks
    LRmortgage
    • #6
    • 13th Jun 19, 4:58 AM
    • #6
    • 13th Jun 19, 4:58 AM
    I too am very surprised that the Solicitor allowed you to exchange contracts with that condition in the offer.

    Did they raise this with you before exchange? Did you tell them to go ahead anyway?

    If they didn’t raise it with you, I’d suggest they are somewhat liable here. Obviously I don’t know the full details, but as a broker I am surprised that this has happened and would be asking questions of the Solicitor.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • silvercar
    • By silvercar 13th Jun 19, 7:22 AM
    • 39,459 Posts
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    silvercar
    • #7
    • 13th Jun 19, 7:22 AM
    • #7
    • 13th Jun 19, 7:22 AM
    Did you have a survey or home buyers report? If so I would be looking at that and asking whoever undertook that to speak to the valuation department at the lender.

    I am also shocked that your solicitor allowed you to exchange without explaining this risk. Usually they make sure that they have a copy of the mortgage offer before exchange.

    Are you sure you have actually exchanged, rather than just having signed the papers ready to exchange?
    • kingstreet
    • By kingstreet 13th Jun 19, 7:39 AM
    • 35,515 Posts
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    kingstreet
    • #8
    • 13th Jun 19, 7:39 AM
    • #8
    • 13th Jun 19, 7:39 AM
    When you apply directly to HSBC is has a two tier system.

    First it underwrites the individual and issues an offer to lend, subject to an acceptable valuation.

    Then it carries out the valuation on the selected property and issues a full formal offer if it's acceptable.

    It seems that someone has mistaken the former for the latter.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • muhandis
    • By muhandis 13th Jun 19, 8:26 AM
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    muhandis
    • #9
    • 13th Jun 19, 8:26 AM
    • #9
    • 13th Jun 19, 8:26 AM
    - Has anyone had any similar experiences? Both my solicitor and mortgage broker have said the situation is ludicrous.
    Originally posted by milomilosh
    I was under the impression that the OP used a broker?

    When you apply directly to HSBC is has a two tier system.

    First it underwrites the individual and issues an offer to lend, subject to an acceptable valuation.

    Then it carries out the valuation on the selected property and issues a full formal offer if it's acceptable.

    It seems that someone has mistaken the former for the latter.
    Originally posted by kingstreet
    • davidmcn
    • By davidmcn 13th Jun 19, 8:44 AM
    • 13,112 Posts
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    davidmcn
    When you apply directly to HSBC is has a two tier system.

    First it underwrites the individual and issues an offer to lend, subject to an acceptable valuation.

    Then it carries out the valuation on the selected property and issues a full formal offer if it's acceptable.

    It seems that someone has mistaken the former for the latter.
    Originally posted by kingstreet
    Would they have instructed solicitors at the first stage? I'm not particularly familiar with HSBC, but in my experience it's rare for lenders to issue instructions to solicitors which are still conditional on underwriting/valuation points.

    Solicitors will usually view the mortgage offer as the lender indicating that they're ready to lend subject to the solicitor signing off on their side. Obviously the solicitors should be checking there's nothing buried away in the offer, but the lenders aren't exactly helping matters if they fail to flag up unusual conditions.
    • kingstreet
    • By kingstreet 13th Jun 19, 8:59 AM
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    kingstreet
    We don't do a lot with HSBC so I was relying on my earlier knowledge of the direct route. AFAIK via the intermediary route, it works the usual way with offer issued after valuation.

    Seems very odd.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Mortgage_Adviser
    • By Mortgage_Adviser 13th Jun 19, 2:33 PM
    • 302 Posts
    • 124 Thanks
    Mortgage_Adviser
    HSBC issue the conditional offer subject to valuation, prior to the valuation taking place.
    If the conveyancers have checked this type of offer and have not spotted that it is not a full unconditional offer then OPmay have a legal claim against his conveyancers for not spotting that the client hasb't got a full offer and proceeding to exchange.
    • diggingdude
    • By diggingdude 13th Jun 19, 9:01 PM
    • 1,195 Posts
    • 1,620 Thanks
    diggingdude
    Any update?
    House owner as of 27.3.2019
    • milomilosh
    • By milomilosh 16th Jun 19, 11:01 AM
    • 6 Posts
    • 0 Thanks
    milomilosh
    Update to follow.

    Want to see situation resolved before I jinx it.
    • JMA74
    • By JMA74 17th Jun 19, 5:06 PM
    • 693 Posts
    • 501 Thanks
    JMA74
    Up until quite recently the broker route was doing Offers issued subject to valuation. It was then up to the conveyancer to get a copy of the valuation to check any conditions and to decide if the offer was valid or not.
    Obviously this caused chaos with chasing down valuation reports at the last minute so it was changed.

    I can only assume the direct route still uses this old way of doing things and there is a case of no one reading the mortgage offer here.
    You should have noticed the subject to offer bit but more importantly so should your conveyancer.

    It is easy to blame HSBC here but if the offer is issued subject to valuation then its not their fault. Its either your broker for not telling you it declined (although i cant see how a broker did this recently as it feels like this change to 'proper' offers happened last year some time). Your conveyancer for not reading the offer, or yourself for not reading the offer and authorising exchange.

    Eager to see a resolution cause you are potentially in a mess here but hopefully there is a way to fix things.
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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