Repossesing your home
Discussion
Im not in this situation, but I am curious as to the process when a mortgage lender, reposses your home.
From the point, you default what happens. When the home is taken from you and then resold, how much do you actually get back from the mortgage company?
I ask this, because Im trying to get my head around, why people will approach companies who buy the house quickly before the court date occurs and sell the house greatly below market value. Just want to understand how this benefits the indivudal, which I guess begs the question of the alternative, and actually loosing your home.
Thanks guys.
From the point, you default what happens. When the home is taken from you and then resold, how much do you actually get back from the mortgage company?
I ask this, because Im trying to get my head around, why people will approach companies who buy the house quickly before the court date occurs and sell the house greatly below market value. Just want to understand how this benefits the indivudal, which I guess begs the question of the alternative, and actually loosing your home.
Thanks guys.
In the spirit of the whole bank penalty fiasco with everybody claimiing them back. Are they allowed to charge you penalties? And typically what sort of a % is this. I only question it due to the number of companies profitting from purchasing prior to the court settlement. So their must be a margin in there somewhere!
lewistintin said:
In the spirit of the whole bank penalty fiasco with everybody claimiing them back. Are they allowed to charge you penalties? And typically what sort of a % is this. I only question it due to the number of companies profitting from purchasing prior to the court settlement. So their must be a margin in there somewhere!
The penalties would probably be in the administrative and legal, auctioning or other fees involved.
As far as I am aware, there is not the same issue as with bank charges.
The margin is there because people bidding on repossessed houses know the score and bid accordingly, they are not marketed the same as 'estate agent' houses, and are sold to the highest bidder in 7 days! Hardly the best way to ensure the best price!
The margin for the companies buying them, including those who buy the house and rent it back to the same occupants is that the moment they buy it, they know they are buying for 20% lower than the market value, so day 1 profit.
In reality it takes a LOT for a lender to repossess a house.
Before I met my ex g/f she didn't pay a full mortgage payment for 6 years before the Building Society finally took back the keys.
As long as she was in touch with them, and making occasional payments - even £10 a month, they were happy as it would cost them a lot in court fees etc.
The house cost £40,000 when bought, they sold it for £32,000 and she paid them £1000 as a full and final offer to close the whole affair.
Before I met my ex g/f she didn't pay a full mortgage payment for 6 years before the Building Society finally took back the keys.
As long as she was in touch with them, and making occasional payments - even £10 a month, they were happy as it would cost them a lot in court fees etc.
The house cost £40,000 when bought, they sold it for £32,000 and she paid them £1000 as a full and final offer to close the whole affair.
The lender is under a legal obligation to ensure the repossessed property is sold for full market value, otherwise they can be sued. They then take what they are owed with any excess going to the borrower.
This is why many repossession properties are sold at auction as that's a very easy and effective way (in the eyes of the law) to esatblish the market value of a property.
This is why many repossession properties are sold at auction as that's a very easy and effective way (in the eyes of the law) to esatblish the market value of a property.
johnnywb said:
The lender is under a legal obligation to ensure the repossessed property is sold for full market value, otherwise they can be sued. They then take what they are owed with any excess going to the borrower.
This is why many repossession properties are sold at auction as that's a very easy and effective way (in the eyes of the law) to esatblish the market value of a property.
This is why many repossession properties are sold at auction as that's a very easy and effective way (in the eyes of the law) to esatblish the market value of a property.
Cite please, 'cos I don't think they are, though I'd like to be proved wrong on this one.
It's the lenders property, they can sell it for whatever they want. What they want is quick, auction prices are generally way lower than a high street sale. Often, that's due to condition and no preparation for sale, but if the right buyer isn't there on the right day and it goes silly cheap, that's just tough.
Taken from the mortgage conduct of business rules.......
A firm must ensure that, whenever a property is repossessed
(whether voluntarily or through legal action) and it administers
the regulated mortgage contract in respect of that property, steps
are taken to:
(1) market the property for sale as soon as possible; and
(2) obtain the best price that might reasonably be paid, taking
account of factors such as market conditions as well as the
continuing increase in the amount owed by the customer
under the regulated mortgage contract.
Part 2 leaves it nice and open for the lender to sell for whatever they can get, be that from an open market sale, or be that from an auction.
A firm must ensure that, whenever a property is repossessed
(whether voluntarily or through legal action) and it administers
the regulated mortgage contract in respect of that property, steps
are taken to:
(1) market the property for sale as soon as possible; and
(2) obtain the best price that might reasonably be paid, taking
account of factors such as market conditions as well as the
continuing increase in the amount owed by the customer
under the regulated mortgage contract.
Part 2 leaves it nice and open for the lender to sell for whatever they can get, be that from an open market sale, or be that from an auction.
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