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?

Did you have any sort of second loan secured on the house? If so then the £25k left over after repossession costs will have gone to the lender of the second loan. If not then it sounds like you were screwed over and it should go to you.

Worth looking on the moneysavingexpert forum to see if anyone else is in this position with your lender.

Very good luck. Don't forget to ask them for 6 years' worth of interest on the 25k (at whatever rate you could have earned if you'd had it in savings all that time, less tax).

Wouldn't money owed include interest on the loan though? I have 140k to pay on the mortgage, and 200k equity in the house, but will have paid 250k in total (capital plus interest) at the end of the mortgage period. So if my house was repossessed I probably wouldn't get 70k back because the bank would have got less than it would have if I had stuck to the mortgage term. Or does interest count as "profit"?

When banks sell houses for repossession, estate agents (usually two, sometimes three companies) are asked for three figures as a valuation, a normal market valuation, a price that would pretty much guarantee a sale within a max of 12 weeks, and an auction price. The property normally goes on the market around the 12 week valuation, in my experience (estate agent), but is decided by a surveyor at the bank based on what the different agents say. So not ridiculously low, but aimed to not be sitting on the market for years either.

Sorry my numbers look daft, the 250k will be what we pay on the 140k, the 200k was the deposit from previous property.

Yes, money owed at the time of repossession (which bank is entitled to keep) would include interest on the loan as well as the capital amount you were lent.

BUT you only owe the amount of interest that has accrued on the debt up to the date of repossession (in fact, up to the date the bank sells the house).
You do not owe interest that would only have accrued if you went all the way to the end of the full mortgage term (ie if there was no repossession).

So eg if your full mortgage term would be 25 years, but you get repossessed after 10 years, you will owe the bank 10 years worth of interest (to the extent you have not already paid that interest as part of your repayments during the 10 years). You will not owe 25 years worth as the bank has got their money back early.

(Mind you, I bet that banks usually whack on an early repayment fee or a repossession fee, to compensate themselves for the "lost" interest.)

Thanks minipie - good luck Beetroot!

minipie is absolutely correct.

Wow, this is a really complex subject but all things money and finance seem to be that way. It seems fully reasonable that the lender would put the house back on the market for a price that is would sell at, so a bit under the market value. I'm just pleased there should be some left over no matter what.

Reality... regarding the exP. 16 yrs ago she put all the bills and mortgage in her name after she'd thrown him out of the house (again) and ran up massive debts on BILs credit/debit cards. He couldnt get a bank ac at his address because of these debts. She regularly threw her first husband out and he eventually committed suicide. These debts nearly drove BIL there (car, field, hosepipe ). A SS report said she deliberately chose men she could dominate. Yes poor old BIL is a wimp, as in soft as butter! Anyway on the strength of these bank statements she is saying she should get more of the equity than him (not true as he paid money to her throughout) She won't cooperate, she adjourned the first court case, lied on her court statements, destroyed all his property, emptied a bank account in his name of £2.4K after activating the PIN number. Its just a legal (expensive) nightmare, but BIL is doing it all legally, while she has lied and cheated for a year. She expected him to cave in and sign the house over to her (which he nearly did!) but we have supported him throughout and he not going to be walked over any more.
She is so arrogant she expects him to cave in rather than let it be repo'd, and she said she would rather that than let him have his share!

Bet you're sorry you asked.!