Redundancy, mortgage fraud & prosecution: a cautionary Reddit thread

[KievLoverTwo]

Posting without judgement. People have to do what they have to do to keep a roof over their heads.

However, I see people advising folks just to keep quite on MN now and then too. I neither agree nor disagree with that advice. Home ownership is tough.

Anyway, I felt duty bound to post it here.

www.reddit.com/r/HousingUK/comments/1p5e9fo/lender_pulled_offer_after_exchange_please_help/

Cut and paste of the OP's text:

"We are honestly in tears and don’t know what to do.
Currently buying our dream home, in a chain of five (people buying our house are FTBs). Conveyancing has taken over 4 months, but we finally exchanged last Friday, with an agreed moving date of 05/12.
2 months ago, my wife unexpectedly lost her job. Everyone we spoke to, all the advice we read on Reddit and other forums, told us to remain silent. This we did, because we knew we could just about afford the mortgage payments on my salary alone, and my wife has been frantically searching for a job. Then this morning, my MIL (who is gifting a small amount towards the deposit) phoned the solicitor to ask him about some final AML checks he needed to undertake, and during this conversation my MIL let slip that my wife had recently lost her job
Cue a call to us to confirm this was true, and we had no choice but to admit it was. He informed us that he would be placing the process on hold with immediate effect, and had a legal duty to inform our lender. He also reprimanded us for withholding it and said there’s a good chance we could be prosecuted for mortgage fraud. He also said that the lender is within their rights to withdraw the offer, place a mark against our credit files and that we will most likely now lose our (£60k) deposit.
As we feared, when we spoke to the lender later this morning they confirmed the withdrawal of our offer pending further checks (though we know that our current situation will not pass their affordability criteria). They will be investigating further the question of possible mortgage fraud.
To say we are scared out of our minds about the fall out from this is an understatement - my wife is virtually having a breakdown over the prospect of losing our entire life savings that we have spent the past decade saving, and our dream home. We’ve also been told that we could now be liable for our buyer’s legal costs - their solicitor informed ours that they will be looking at claiming compensation if we don’t complete on the 5th, and everyone else in the chain above us is furious and panicking of course.
I admit, we played a stupid gamble and it has backfired hugely. Please, any help or advice at all on what we can expect to lose, the effects and whether we’ll be able to save this house sale will mean so much to us.
EDIT: MIL is in her 80s and English isn’t her first language. She phoned the solicitor To ask what the final AML checks on her gift contribution would entail. We don’t yet know the full story but think she might have said something that raised red flags about our situation, solicitor got pushy and she admitted up to my wife being unemployed.
EDIT 2: I have looked into bridging loans and it seems the most we will get is 75% of the value of the property. As this is £400k we would be £40k short of the amount we need to complete, when our deposit is included. we don’t have any relatives that could lend this amount. Any ADVICE please???"

The moral of the story is that you can’t trust lawyers or mother in laws…

The buyer doesn’t have to accept the 60 grand that they’ve done nothing for, would be shitty behaviour to take it

Just out of interest, is there a timeline?
For seeking damages that is and how would one go about it?

The chain has collapsed after exchange/before completion so the £60k is gone. What’s more, everyone in this chain will look to seek compensation from the Reddit poster - the blame lies with them entirely - so the £60k is the least of it.

I think the poster is towards the end of the chain so let’s hope there isn’t a multi-million house in there.

The whole thing is a nightmare.

Well they’ve lost their own purchase and deposit for a start, not to mention solicitors fees which are going to mount fast.

Random advice off the internet on serious legal matters turned out not to be the brightest idea in the world, who'd have thought

Also, if there is a longer chain, each person in the chain has to claim against their buyer who then passes the losses ‘downstream’ until it reaches the person at fault.

So it could be multiple sets of costs. Also, ‘costs’ could include compensation for temporary rentals etc. Just expenses for 4 or 5 households could go well over the £60,000 (at which point, the Reddit OP may find they are being asked to pay even more).

So the solicitor should put their whole career and professional registration at risk to cover up someone else's fraud. Ridiculous. Solicitor's are held to extremely high standards of honesty and integrity and there is no way their professional body is going to cut them some slack.

"... all the advice we read on Reddit and other forums, told us to remain silent. This we did, because we knew we could just about afford the mortgage payments on my salary alone, and my wife has been frantically searching for a job. "

Lets not say the lenders were inflexible, what concern of theirs the cost to the buyer? And all the others in the chain, the stresses caused to them. At least the lender didn't risk their money on a how big a LTV mortgage? The buyers didn't actually default on a mortgage did they!

It’s not the buyer who would get the £60k, it’s the seller. If they were chain free they MIGHT waive it, but their sale falling through means it’s quite possible they won’t be able to buy their new house, which they will probably have already exchanged on, so they will be liable to their seller, and so on down the chain. Even if no one claims the full deposit from their buyers, everyone in the chain is going to want their costs met, so legal fees, mortgage arrangement fees, survey fees etc. That will all end up falling on the shoulders of whoever broke the chain. For five sales worth of those costs, yeah, that £60k is gone. IF this is all a true story, which I am not sure it is given a solicitor undertaking AML checks post-exchange!

I agree that AML checks post exchange seem far fetched. But it is possible there's been a misunderstanding and the solicitor wasn't speaking to the MIL about AML, but about something else related to the gift. During that conversation MIL casually mentions buyer's loet job, putting conveyancer in the position where they have to report.
It's not impossible the buyer didn't understand what the post exchange conversation was about. Given the lack of knowledge demonstrated by a number of people on this thread it is clear that this process is not familiar to many people. Even those pretending to know exactly what the conveyancer did wrong.

Why does the conveyancer not have legal privilege like any other solicitor would?

Legal privilege is a specific thing that doesn't automatically apply in all cases. And in any event, the Lender is the conveyancer's client. They owe a duty to their Lender client.

Sorry yes, I did think this - but the comment I was replying to implied it was preposterous that the conveyancer was working for the bank so I was building up an argument to that 😂

I know so many people who have kept quiet about a job loss/changing their hours because etc when buying a house

Yes I agree and don’t believe this