DH huge mortgage shortfall - bank want to know about MY earnings to pay it back?

[quickMoneyQuestion]

Long story short - before he even met me, DH bought a house with someone else (not an ex!). He hasn't lived there for years and the other person has been paying the mortgage as they have been living there.

About 2 years ago that person starting having problems, we tried to help pay the mortgage but we can't really afford it now and nor can they.

So - they are selling. There is negative equity of about £50k and it looks like DH and the other party will have to go bankrupt as it is an impossible amount to pay off.

Before we get to that stage however, the sale is going through and the bank want to know how DH is intending to pay off the arrears. To the extent that they have asked him about MY income and salary. Well, I don't want to give this information, and nor do I want a penny of my income going to pay off these arrears - we have discussed it and would rather him go bankrupt.

My question is - am I legally liable for any of this? Do they have a legal right to ask about MY money and to expect me to pay some of it towards the arrears? None of this mess is to do with me at all and I already deeply resent the situation DH has put me in without having to pay any of MY money towards the mess!

Very interesting want2be!

bear The banks have experts called credit analysts that use models to predict the range of returns from their mortgage portfolios. Trust me when I say they have huge amounts of knowledge regarding risk that individuals do not have. I have also seen paperwork behind mortgages in default through my work as an auditor and it is shocking how unhelpful the banks can be when it comes to mortgage holders trying to find a way to keep their home.

Here in the US most banks have allowed people to refinance via the HARP program or just written off the debt with the government authorizing a grace on income from debt forgiveness up to a certain amount which is now expired. In the Us the £50k shortfall would be treated as income and taxes would need to be paid on it.

Why should the OP come back and tell us how the NE situation arose? Who cares how it arose?

Just sounds like you're wanting to apportion some blame to him, bear. Which is pointless

Of course the banks knew - anyone with a pair of eyes knew.

Head of mortgages at Abn-amro (Dutch bank) was taken to court. The bank was fined a laughable 150k euros!

(Sad end to story, he killed his family and himself).

In the UK the banks have gone the other way if now anything- they are very cautious on the values they lend based such credit analysis.

I completely agree that banks did take too many risks regarding LTV ratios and earnings multiples in the past, that came back to bite them and unfortunately a lot of people are paying a very high price for it.

That said, negative equity isn't exclusively due to this practice, sometime shit just happens and locations go down in value which can't be predicted, just as they rocket in other places.

I'm not trying to apportion blame walking. I've critised others on here who went down the 'why didn't he' route.

It is just relevant to the conversation; has anyone ever successfully persued a mis-selling claim on a mortgage over the purchase value of a property?

What's that got to do with it? No one is claiming it was misold. Maybe in the future people will say they didn't understand what they were buying (certainly happened with many financial products) but as far as I know it doesn't happen now. No one has suggested they were mis sold anyway.

A mortgage lender doesn't have an absolute right to their money back. It's just a product. They take a risk. They might get it back + profit, they might not. They're well aware they're only selling a product. People seem to think they're the HMRC or something .

I was just musing that, as much of the recent debate has been about banks knowing people overstretched themselves, if it turned out it was the case here, has a prevent been set for taking action against the banks?

Precedent not prevent grrr

No because the bank terms and conditions were clear and borrowers all know value will go up and down and they just about all have a solicitor who is there to advise the customer on the risks.

It happened with endowments deo

Sometimes but not all of them. It would only if you were given bad advice. Most people who took of an endowment weren't and for many many years an endowment was indeed a very good buy and the bank would have been wrong to sell you a repayment loan, because the endowments meant in those times you paid off the mortgage plus had a lump sum over.

www.financial-ombudsman.org.uk/faq/mortgage.htm

At some point most people who were sold endowments were blatantly lied to and misled.

You need proper independent advice- separate from any advice your DH gets. However I really cannot see a situation where you would not be liable or adversely affected by the bankruptcy. When you get married legaly are entitled to half of everything. You will take on half of everything good or bad, if you got divorced tomorrow you would not walk away with your own bank accounts. Everything would need to be split, this includes any depts. bankruptcy will really effect your ability to buy any property in the future and has some very serious consequences. In my opinion it is a last resort. Surely you share all other financial responsibilities so why is this one any different?

Showgirl did you not read the first 9 pages?

Getting married does not "tie your finances together"! Only when you start having joint account (mortgage, gas bill, bank accounts, Sky TV) do your finances and responsibilities, then merge.

My DH and I have no joint accounts or finances, as his credit rating is shocking and mine is great. Therefore we are not financially linked in any way.

If you don't have any joint finances at the moment then I would very much doubt they can hold you accountable for this. In fact, even if you do, I don't think they can, but if he is made bankrupt it will have an effect on your credit rating.

If you don't have any joint finances at the moment then I would very much doubt they can hold you accountable for this. In fact, even if you do, I don't think they can, but if he is made bankrupt it will have an effect on your credit rating.

Having numerous joint accounts or investments will still not make OP liable for her husband's debts.

I believe also that these days an individuals credit rating is not affected by whatever fate befalls a spouse.

Not sure if you are still here OP but just wanted to reiterate what others have said about getting advice. Worth a chat with CAB and certainly an insolvency specialist.
I had a very brief conversation with a debt recovery agent (bailiff) and was told that they often work for people who owe money as well as people who are owed. They work as negotiators and try to resolve disputes and get debt cleared. Your husband's lender seems to be quite unreasonable by not allowing him to rent the property out which would have helped service the debt so perhaps someone knowledgeable to negotiate before the sale would be helpful?

I was bankrupt some years ago as a result of a business failure. It had no effect on my DH, and no effect on us at all really as we lived in a house that was his alone. Official receiver is usually very generous with allowances. I needed a decent car to work, and kept my old car. School fees are specifically regarded as essentials - there is case law to that effect - so my sons stayed on at their private school. My personal bank was not involved, only the business one. Good old Lloyds gave me a credit card with £13k limit as soon as I was discharged!

Having a wealthy husband who owns a house and can pay school fees is not quite the same situation as being a couple with no assets, in rental accommodation, however.

Still, if bankruptcy is the best option, it's the best option, even if it does have an effect!