Repossessions And Ne

[twinkle]

Does anyone know what happens when a house is repossessed in a falling market? If the property is already in negative equity, will the bank try to get the best price possible and write off the rest of the debt, or hang on to the property until prices start to rise and recover the original loan?

[Bluelady]

Does anyone know what happens when a house is repossessed in a falling market?  If the property is already in negative equity, will the bank try to get the best price possible and write off the rest of the debt, or hang on to the property until prices start to rise and recover the original loan?

<{POST_SNAPBACK}>

Sell it for the best price possible and hound the morgage holder for the remainder of the debt.

[Elizabeth]

Does anyone know what happens when a house is repossessed in a falling market?  If the property is already in negative equity, will the bank try to get the best price possible and write off the rest of the debt, or hang on to the property until prices start to rise and recover the original loan?

<{POST_SNAPBACK}>

The flog it off at auction (this is probably some legalese to demonstrate have attempted to get best market price). The difference between the auction price and the value of the morgage then becomes a debt against the previous owner. This debt if anyone remembers homeowner news from the last 12 months, tends to come back and haunt the owner about 12 years later with interest, when they have finally got there life together (and presumed that the bank not being contacted for 7 years meant the debt was written off). So if its a lot, probably best declare yourself bankrupt at the same time so there is a time limit on the cost and the interest payments are halted.

[twinkle]

Ummm, perhaps I didn't make myself clear. I'm not a home owner so I've no house to be repossessed! I just want to know what banks do in a falling market IF they can't sell it at a price to cover the debt, do they hang onto the asset hoping it will increase in value later?

There have been a couple advertised in my paper recently with EAs.

[Loanshark]

The banks are prepared to take a loss they can offset that loss against corporate tax, the banks have recently being increasing debt provision against bad debts (they must be expecting something).

The banks know there are losses to be had against bad debt, it is built into the price of the loan it is the cost of doing business remember it is not even the banks money they are lending !

The top management of the bank will be more concerned about their annual bonus rather than the long term health of the bank.