Leeds Bs Mark Down 7Mnth Old Valuation

[peakoil]

A friend of mine down in Kent found a place he wants in December 2009. He's in rented at the moment and has been forced into it by his missus (anyone on here who's married and in rented knows the pressure...) - anyway, he got a mortgage offer in December 2009.

Last week he finally got the chain complete and was ready to exchange so he telephoned leeds BS to check his mortgage offer - as it was only guaranteed for 3 months, then he had it extended for three months (this meant that on paper the deal had expired by a few weeks). They said "everything is fine - go ahead and exchange".

He did - with a 10% deposit.

When the solicitors contacted the leeds for the mortgage money however - they said they would not cover the original amount and said they would offer 42000 less in borrowings.

This left my friend completely stuffed - 10% down and no chance of raising the money. His solictor threatened legal action against leeds but conveniently the call was not "recorded for training purposes"

Eventually they have agreed to lend him 16000 less than they originally agreed - but only on the threat of legal action. I don't know what the exact figures are because I'm too polite to ask - but it won't be any more borrowing than about 200k or 250k at the outside.

Thought it very interesting that leeds have clearly decided the property is worth less than in December 2009 (he has had a substantial pay rise since then too - so it can't be based on affordability).

Mr Oil.

[The Masked Tulip]

Leeds are one of the safest places to have your money apparently.

I read in The Sun - yes, the Sun - at the height of banking worries that the Leeds fund all their mortgages via their savings and do not dip into markets for their funds.

[huw]

This sounds odd, IME solicitors want to see evidence that the money is available before they exchange. I've never bought with a mortgage but I would have thought the solicitor would want an offer on file before proceeding ... I've certainly had selling transactions held up while the buyer's solicitor waits for a firm mortgage commitment.

Does anyone know if this would be part of their normal duties, i.e. this solicitor might have acted negligently in proceeding to exchange without guaranteed funds?

[plummet expert]

This sounds odd, IME solicitors want to see evidence that the money is available before they exchange. I've never bought with a mortgage but I would have thought the solicitor would want an offer on file before proceeding ... I've certainly had selling transactions held up while the buyer's solicitor waits for a firm mortgage commitment.

Does anyone know if this would be part of their normal duties, i.e. this solicitor might have acted negligently in proceeding to exchange without guaranteed funds?

YES. The solicitor has acted negligently in allowing Mr Oil's friend to exchange without having the mortgage offer renewed in writing. Do hope Mr Oil's friend is not actually bashful Mr Oil (he can be a bit slippery sometimes I've heard). Mr Oil...his friend I mean, should immediately contact the Law society and ask for a list of solicitors who will act in a negligence claim against another. If Mr Oil's 'friend' had known of the problem he may have been able to offer less money for the property or pull out. That opportunity has been denied him.

[Pent Up]

A friend of mine down in Kent found a place he wants in December 2009. He's in rented at the moment and has been forced into it by his missus (anyone on here who's married and in rented knows the pressure...) - anyway, he got a mortgage offer in December 2009.

Last week he finally got the chain complete and was ready to exchange so he telephoned leeds BS to check his mortgage offer - as it was only guaranteed for 3 months, then he had it extended for three months (this meant that on paper the deal had expired by a few weeks). They said "everything is fine - go ahead and exchange".

He did - with a 10% deposit.

When the solicitors contacted the leeds for the mortgage money however - they said they would not cover the original amount and said they would offer 42000 less in borrowings.

This left my friend completely stuffed - 10% down and no chance of raising the money. His solictor threatened legal action against leeds but conveniently the call was not "recorded for training purposes"

Eventually they have agreed to lend him 16000 less than they originally agreed - but only on the threat of legal action. I don't know what the exact figures are because I'm too polite to ask - but it won't be any more borrowing than about 200k or 250k at the outside.

Thought it very interesting that leeds have clearly decided the property is worth less than in December 2009 (he has had a substantial pay rise since then too - so it can't be based on affordability).

Mr Oil.

They have reduced their valuation by 16% since December? That's an awful lot are you sure?

[The Masked Tulip]

Perhaps this is one of those ludicrous stories where a house is advertised for X, desperate buyer offers full asking price and then gets angry with building society who says "They're having a laugh!"?

[deflation]

They have reduced their valuation by 16% since December? That's an awful lot are you sure?

It may be their lending criteria. My BS, the Dudley, were lending 4.5 x up til 2009. They now have a sliding scale from 3 x up to a max of 4 x if you are on £35k+.

[Cicero]

YES. The solicitor has acted negligently in allowing Mr Oil's friend to exchange without having the mortgage offer renewed in writing. Do hope Mr Oil's friend is not actually bashful Mr Oil (he can be a bit slippery sometimes I've heard). Mr Oil...his friend I mean, should immediately contact the Law society and ask for a list of solicitors who will act in a negligence claim against another. If Mr Oil's 'friend' had known of the problem he may have been able to offer less money for the property or pull out. That opportunity has been denied him.

Agreed. Verbal confirmation, even if noted on the file would be insufficient.

A quick confirmatory fax received from LBS, checked and placed on file immediately before exchange, would have absolved the solicitor of any claim in negligence.

[Gigantic Purple Slug]

A friend of mine down in Kent found a place he wants in December 2009. He's in rented at the moment and has been forced into it by his missus (anyone on here who's married and in rented knows the pressure...) - anyway, he got a mortgage offer in December 2009.

Last week he finally got the chain complete and was ready to exchange so he telephoned leeds BS to check his mortgage offer - as it was only guaranteed for 3 months, then he had it extended for three months (this meant that on paper the deal had expired by a few weeks). They said "everything is fine - go ahead and exchange".

He did - with a 10% deposit.

When the solicitors contacted the leeds for the mortgage money however - they said they would not cover the original amount and said they would offer 42000 less in borrowings.

This left my friend completely stuffed - 10% down and no chance of raising the money. His solictor threatened legal action against leeds but conveniently the call was not "recorded for training purposes"

Eventually they have agreed to lend him 16000 less than they originally agreed - but only on the threat of legal action. I don't know what the exact figures are because I'm too polite to ask - but it won't be any more borrowing than about 200k or 250k at the outside.

Thought it very interesting that leeds have clearly decided the property is worth less than in December 2009 (he has had a substantial pay rise since then too - so it can't be based on affordability).

Mr Oil.

Don't suppose you could tell us the property type ?

New build flat or townhouse ?

[miko]

I was working for a developer in 2007 selling new build flats as the market tanked . Mortgages products were being withdrawn all the time and lenders were demanding bigger deposits and lending less based on earnings. Things were changing constantly a product that was there at the start of the week had been withdrawn a few days later.

We did hear of a few cases ( not on our site ) where people had got a formal written offer of a mortgage which their solicitor would also have got , they exchanged contracts and then the lender withdrew the mortgage offer. Apparantly there is something in the small print that they can do this . So having exchanged the buyers were stuffed.

Due to this and the ever changing mortgage market we started to advise our buyers not to exchange untill the funds had been sent to their solicitors . We had cases where people exchanged and completed on the same day.

In the above I am not sure if there is a case against the solicitor , as even if they had got the extension of the mortgage offer in writing as opposed to a verbal offer over the phone , the lender could still have withdrawn the offer prior to sending the funds , as in the terms of their mortgage conditions.

[tomwatkins]

I was working for a developer in 2007 selling new build flats as the market tanked . Mortgages products were being withdrawn all the time and lenders were demanding bigger deposits and lending less based on earnings. Things were changing constantly a product that was there at the start of the week had been withdrawn a few days later.

We did hear of a few cases ( not on our site ) where people had got a formal written offer of a mortgage which their solicitor would also have got , they exchanged contracts and then the lender withdrew the mortgage offer. Apparantly there is something in the small print that they can do this . So having exchanged the buyers were stuffed.

Due to this and the ever changing mortgage market we started to advise our buyers not to exchange untill the funds had been sent to their solicitors . We had cases where people exchanged and completed on the same day.

In the above I am not sure if there is a case against the solicitor , as even if they had got the extension of the mortgage offer in writing as opposed to a verbal offer over the phone , the lender could still have withdrawn the offer prior to sending the funds , as in the terms of their mortgage conditions.

Not the same at all. This is an agency contract and covered by the laws of agency. The solicitor must excersise due care which clearly they have not in this case as they did not get the offer in writing prior to exchange (normal practice so would pass the test of "reasonableness" which is important). If the building society were the ones to withdraw at the last minute then obviously the solicitor has done everything that a "fit and competent" professional would have done in the circumstances and therefore is blameless. I have ben through the same sort of stuff as a chartered surveyor. In any case the solicitors PI would cover it.

[miko]

Not the same at all. This is an agency contract and covered by the laws of agency. The solicitor must excersise due care which clearly they have not in this case as they did not get the offer in writing prior to exchange (normal practice so would pass the test of "reasonableness" which is important). If the building society were the ones to withdraw at the last minute then obviously the solicitor has done everything that a "fit and competent" professional would have done in the circumstances and therefore is blameless. I have ben through the same sort of stuff as a chartered surveyor. In any case the solicitors PI would cover it.

I Said that the lender can and have withdrawn offers after giving written confirmation that there is an offer there .

Yes the solicitor was neglegent in not getting the extension on the offer in writing , however even if he or she did what is to stop the lender then withdrawing the mortgage , it has happend .

[peakoil]

Don't suppose you could tell us the property type ?

New build flat or townhouse ?

very interesting these comments about negligence, I was suprised that the solictor was being so helpful without charging an additional (and large) fee. Perhaps there is at the least some worry of culpability.

The house is a 1930s detatched (3 or 4 beds not sure which) needs new kitchen, bathrooms, etc. etc. Good location in the town, just an average family home I guess.

[Cicero]

I Said that the lender can and have withdrawn offers after giving written confirmation that there is an offer there .

Yes the solicitor was neglegent in not getting the extension on the offer in writing , however even if he or she did what is to stop the lender then withdrawing the mortgage , it has happend .

Theoretically, signing the mortgage deed represents the creation of the contract between lender and mortgagor. If the offer was withdrawn after the deed was signed, then the mortgagor could bring an action for breach of contract. Not as easy as it sounds in practice though, given the disparity of resources between the parties.