Repossession. How much is the mortgage company likely to ask re price?

[sneezecakesmum]

My BIL may be having his house repossessed because he left the property a year ago and his ex partner is refusing to put it on the market.

He is entitled to 50% of the equity but she will not cooperate and sell, and can't afford to buy him out. He is taking her to court in March but she is quite likely not to turn up, so there will be no time to reschedule the case.

The mortgage comes to an end in April and would need to be jointly remortgaged by both of them. This is out of the question. The bank have already extended so unlikely to do so again. It is held as joint tenants on the mortgage.

There is around 100K equity, much of which will be lost if it is repossessed. The banks outstanding amount is around 60K + costs of repossession.

The legal side is all sorted. The question is this: can the bank offer it for sale at a riduculously low price to just recoup the oustanding mortgage?

Do they have a moral/legal obligation to get the best price possible? So that they can give the owners some equity back.

Even after its repossessed does BIL and EXP still have to pay the mortgage?

Has anyone been is this position and how did their mortgage provider respond?

Sorry, once the property is repossessed the bank own it. The former owners - BIL & Ex - won't see a penny no matter what price the house fetches.

Once the repossession occurs then, no, no more mortgage payments are required unless the property fails to sell at a high enough price to clear the mortgage. In that case, the bank will chase BIL & Ex to pay the shortfall.

Even though there is 100K equity in the house, are you saying they will lose all of that

Tried asking bank what would happen and got gobbledygook.

Yes, every penny I'm afraid. To explain it in different terms - say you bought a house for 120k, that house would then become yours, you would be the owner. If you then managed to sell that house for 200k would you give the 80k back to the original owner you purchased from? I'm afraid that's how repossession works - the property ceases to be owned by you (BIL in your case) and becomes property of the bank. Any profit made from the sale belongs to the bank.

Sucks I know .

To answer another query in your OP, the bank do have a duty to attempt to achieve a decent price for the property (IIRC) - but only to try and make sure the mortgage debt is covered in full wherever possible because, as I said above, if the sale price does not cover the mortgage debt then the bank will chase for the "leftover" debt.

I don't think that's true, similar happenend to a friend of mine and she was given the remaining equity once the bank had taken the mortgage and costs off ( I think, it was a long time ago).

sorry cross post - yes they will chase for any ujnderpayment debt

Yes, Reality. That is what the bank wants, the equity. That's why it's worth their time chasing for a repossession order.

Also, that is why a borrower will always get a better mortgage deal (interest rate, terms etc.) if they are borrowing a low percentage of the property value. Because the lender knows that if anything should happen and the mortgage not be repaid, they would have all that lovely equity .

Thats what beetroot is saying Reality, and to be honest, it sounds reasonable, if horrible.

I think we need to have a word with our bank, (his was diabolical!) to see if we can get any sense out of them to confirm this. Maybe an estate agent too.

Sounds dire but beginning to think its right

The stupid exP needs to be made aware of this too. If she carries on like this they will both be big time losers!

That's interesting Peppamum, because when our house was repossessed 5 years ago we lost every penny. As did a friend who was repossessed more recently.

It is NOT true that a mortgage company keeps the remaining equity if they repossess and sell your house for more than the mortgage debt plus fees and any interest owed.

This is from the CML website:

If the sale of the property results in a surplus after all the money owed to the lender and any other secured lender has been repaid, then this surplus is returned you.

It would appear that things must have changed then MoreBeta - either that or we are owed some money! Very interesting .

The bank will repossess and sell for the best price possible (they have a legal obligation to do so) then after all the fees and their debt is repaid the balance goes to the former owners. So in Reality's scenario, the £50k would go to the bank plus fees then the balance paid back. They bank is not allowed to keep 'profit'.

Did you have a lot of equity in the house betrootpasty? Maybe they took so much because of all the court costs for repossession?

Going to look into this in more depth. We roughly estimated instead of £50K each if sold off cheaply for a quick sale, they would be lucky to get £30K each.

Um, am very glad you started this thread OP. I've explained it to you in the exact same way it was explained to us. I am now searching to see if there are new laws in place or if we were, pardon the expression, screwed over .

It makes the situation for your BIL better though - sorry for panicking you!

Singing....what you say is what we were all hoping would be the case. Poor beetroot was very unlucky. We just hope the ex sees sense and puts it on the market.

Feel much better now, as that seems more fair...even though fair is often not what banks are

About 25k after the mortgage debt & all costs were covered. We had our post redirected for quite a while so received all of the letters/documentation regarding the sale, costs, interest etc.

The whole thing is panic inducing, must have been dreadful for you beetroot, this is why BIL and us cant understand the exP putting herself through that instead of putting it on the market!

Beetroot

You should look into what happened to you - the house is security against the debt, to enable the mortgage company to ensure that the debt can be repaid. It isnt the same as then becoming owners of the house.

I will cats - as I say, I explained it to OP as it was explained to us. If that was wrong at the time (2006), then someone somewhere owes us money!

Good luck beetroot...go to that CML webpage on the link, and if you had equity chase it. The financial ombudsman was brilliant for us on another matter.

Thank you sneezecakes - believe me I will! I hope your BIL gets things sorted in a good way aswell .

Beetroot, if the outstanding mortgage and all the bank's associated debts with repossessing it (plus any secured loans on the property) were repaid, then any money left over belongs to you. You need to look further into what happened in your case if you think there were any profits left after the sale.

Beetroot do get onto it quickly since it sounds like your repossession was nearly 6 years ago (6 years is time limit for many legal claims, may not apply in your situation if you were lied to, but best to be safe and get in before the 6 years anyway). good luck.

Thank you minipie - am now hoping that we are owed money! I've no idea whether the same laws applied in 2006 but will certainly be looking into it straightaway. As I think I said above, I also know someone else who lost their equity (with the same lender, not sure if that's relevant) & was given the same explanation at the time. We shall see!