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Aibu to wonder how the hell it was deemed appropriate to sell my parents this mortgage

(36 Posts)
pud1 Mon 20-Jun-16 21:13:03

Quick back story. My mum dies last April and my dad died last October. Both aged 59. Both cancer. No wills. Mortgaged property. I have got grant of probate and have had the house on the market. Not been paying mortgage since dad died. This was agreed by lender dad left about 25k. This was mums death in service ( part time cleaner for nhs ). No life insurance ( think he cancelled it). I love them dearly but they were a financial nightmare.

The mortgage on the house was for 80k. The unpaid payments have mounted to about 4K so I owe about 84k. Out of this 25k I have paid for 2 funerals and paid utility bills as well as some renovations that were desperate on the house. Got 15k left.

As I have said they were a nightmare. They had an iva due to credit cards debts. My they had been paying this for about 3 years and there was 8k left on it. My uncle came to an agreement with iva company after mum died and they accepted 4K on full and final settlement.

Now to the point. The mortgage was up to full value of house if not a bit more. The mortgage was taken in 2007 and is an interest only. They had no means of paying it off once the term had finished. They would have been credited up to the eyeballs at the time the mortgage was taken out. I know that they are grown ups and they chose to take on the mortgage but I honestly can't see how it was allowed.
I have now had an offer for 77k so I can afford to accept the offer and pay it off with the money from mums death in service so sells well that end well but I can't shake the feeling of anger that this situation was even allowed to happen.

Tbf I know iabu but al I hear about is miss sold ppi and bank accounts. Surely this is also a form of miss selling

RosieandJim89 Mon 20-Jun-16 21:16:07

I suppose now a days people are working longer so the risk seems less. That said there are plenty of people 30 years younger struggling to get a mortgage.

StealthPolarBear Mon 20-Jun-16 21:16:39

Sorry to hear about your parents sad
Was this not a missold endowment? Seems a bit late for those though

pud1 Mon 20-Jun-16 21:17:40

No.there was no endowment. Just a straight intrest only. No way of paying it off.

KleineDracheKokosnuss Mon 20-Jun-16 21:20:19

Ask for a copy of the bank records. There should have been a question asked and notcie given that they need a way to pay it off. If not, you might be avle to go to the ombudsman.

Tbf,you might be able to anyway if it looks missold.

TooMuchMNTime Mon 20-Jun-16 21:22:04

OP that does seen very strange
They were 50, had debts already, and got an interest only mortgage on their only property? Normally you can't get that unless it's a second property and or has some endowment or similar vehicle attached.

Of course from your parents' perspective it would have looked great but from the lender perspective it seems odd.

PNGirl Mon 20-Jun-16 21:22:57

In 2007 they would pretty much lend anybody anything - this is why the US had the crash of 2008. We bought in 2008 and they were only just stopping the 110% "borrow and do it up" home loans.

pud1 Mon 20-Jun-16 21:25:00

Thanks for the replies. Would there be anyone I could get advice from. Fsa?

Grilledaubergines Mon 20-Jun-16 21:26:19

Sorry for your losses.

They would have been asked , and usually sign, to confirm they had made alternative arrangement to repay the capital sum. The onus is very much (or would have been in 2007, prior to the recession and tightening up of mortgages) on the customer.

maddening Mon 20-Jun-16 21:28:16

Mcobs has been tightened up since 2007 because of this very thing, might you have been better renting the house out for a bit to pay the mortgage down?

pud1 Mon 20-Jun-16 21:28:25

I know that they would have had no way to pay it off other than just selling it and renting

x2boys Mon 20-Jun-16 21:28:38

Was this not before the crash though my sil and her then partnet gor a remorgage u
In 2007\2008 there house was valued at 125 000 this was a mid terrace in a rough part of bolton with no garden no way was the house worth that and even now rhe house wpuld be lucky to sell for 90,000 but banks were lending stupid amounts at the time it all went wrong for my sil they ended up in huge anounts of debt and having the house reposssed

PNGirl Mon 20-Jun-16 21:29:42

May be worth trying - the above article suggests this type of selling was going on in 2007 but as they would have received yearly summaries it's hard to argue they didn't know what they would owe.

MistyMeena Mon 20-Jun-16 21:29:44

It could have been a self -certificate mortgage, they are no longer available. We had one, basically we signed to say we could afford it. No questions asked, very little proof needed.

TooMuchMNTime Mon 20-Jun-16 21:34:48

I had a self cert mortgage in 2005
What strikes me as odd is people in steady work asking for them
They were easy to get but the fees were higher and some lenders didn't give them
I don't think I was offered interest only
I do recall being offered way more than I wanted though! Ironically now I regret not taking it but that's a whole other thread.

NeckguardUnbespoke Mon 20-Jun-16 21:38:09

2007? Self cert mortgage. Madness by lenders.

Many people would have advised you to not apply for letters of administration as the estate is insolvent. Hard when it's your parents though.

CotswoldStrife Mon 20-Jun-16 21:39:38

Sorry for your loss, and for the hassle of sorting out the estate (and it can be a hassle at the best of times, never mind when it's complicated!).

As others have said, property prices were quite high in 2007 so they could have borrowed against the (house) valuation at the top of the market.

You can see if there is any of the original paperwork about but I know when we got interest-only mortgages it definitely said that you need a way of paying back the sum at the end.

Fintress Mon 20-Jun-16 21:41:20

Sorry to hear about your parents. What about trying the Citizen's Advice Bureau? They can be very helpful.

Cornishclio Mon 20-Jun-16 21:41:22

That would not be allowed now but yes in 2007 they were permitted. Things have tightened up significantly since then. Would either have them have got a lump sum from a pension? Some people use this to pay off a mortgage. You could say the mortgage company should not have lent it but maybe they warned your parents who ignored it or they were convinced that at some point they would receive a pension lump sum. Sadly it does seem as if your mum and dad were not good with money and did not plan for the future. A salutary lesson for us all.

Sorry you have had all this grief on top of losing both parents so close together.

grumpysquash3 Mon 20-Jun-16 21:42:07

Sorry for your losses.
Maybe your DP expected to sell up and downsize at the end of the term. It's one of many strategies....
I think you can only argue mis-selling if they thought it was something else (e.g. that they were paying it off), but if they knew it was interest only, then (sorry but...) it's fair game really. Their choice.

Micah Mon 20-Jun-16 21:45:25

2007 was when all the endowment miselling was going on.

They will have offered your parents a repayment and/or endowment mortgage, but can't force them to take it. If they had no dependents, then as long as they understood that they would have to sell at the end of the mortgage term an interest only mortgage isn't unacceptable.

I have an interest only mortgage and that was the process i went through.

pud1 Mon 20-Jun-16 21:46:25

This is the bit that I dont understand. I get that they would have been made aware that they would never have paid it off and probably signed something to that effect but the mortgage company must have been aware that they had no way TO pay it off. i have just for a mortgage and I had to prove everything even down to small direct debits that came out of my bank for silly stuff like hospice donations and the insurance on my washer.

Grilledaubergines Mon 20-Jun-16 21:50:05

But back then, and certainly with a self-cert, you didn't need to.

I had to borrow 5.5 times my salary to buy somewhere (very small property) and the only way was self cert. No questions asked

LonnyVonnyWilsonFrickett Mon 20-Jun-16 21:52:20

I'm sorry for your loss but I think that some ppl are their own worst enemies when it comes to money. My DM bought her council house on a tiny mortgage about 25 years ago and remortgaged three times on an interest only. She ended up on something like 80% LTV Which may not sound awful but keep in mind the house originally cost something like 25% what it would have in th open market.

When this all came out and I asked her what her plan was, she said she'd make herself bankrupt and get another council house. She hadn't really kept up with the waiting list situation and thought she'd just be able to walk into a house hmm.

It was a total nightmare and had she passed away I would have been in exactly the same situation as you OP. That said, I don't/can't blame the bank. She is an idiot with money.

JudyCoolibar Mon 20-Jun-16 21:56:09

I thought endowment misselling/self certification happened in the 1980s/90s crash and wasn't still going on in 2007? A friend of mine did a lot of work around fraudulent solicitors and estate agents arising from that and said he was told that mortgage companies were lucky to succeed in claims against them; they escaped massive contributory negligence findings on the basis that, back around that time, it was what every lender was doing. If it happened again, it was generally recognised they would not be able to claim damages because they could no longer claim that they didn't know of the obvious risks.

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