Jump to content
House Price Crash Forum
Sign in to follow this  
okaycuckoo

Voluntary Repossessions

Recommended Posts

I was told earlier today by a housing lawyer that voluntary possessions of residential houses must be on the rise. He was guessing because he didn't have the figures, but we agreed that the decline in possession orders is a false dawn.

Just now I came across a long research paper from York university analysing what exactly is going on. Easily the best UK research I've read on this subject.

It's a PDF (takes a minute to download) - link at this site, middle of third paragraph under Help for Homeowners (a few other interesting links there was well):

http://www.gardencourtchambers.co.uk/bulletins/category/bulletin_detail.cfm?iBulletinID=532

Skip to p.76 for conclusions - even in those few pages HPCers will find alot of suspicions confirmed. Highly recommended.

Question remains: how are all these houses hiding from the market? The lender still has a duty to fetch the best possible price - is it possible they have no intention of pursuing the shortfall, making the security effectively non-recourse?

Share this post


Link to post
Share on other sites

I was told earlier today by a housing lawyer that voluntary possessions of residential houses must be on the rise. He was guessing because he didn't have the figures, but we agreed that the decline in possession orders is a false dawn.

Just now I came across a long research paper from York university analysing what exactly is going on. Easily the best UK research I've read on this subject.

It's a PDF (takes a minute to download) - link at this site, middle of third paragraph under Help for Homeowners (a few other interesting links there was well):

http://www.gardencourtchambers.co.uk/bulletins/category/bulletin_detail.cfm?iBulletinID=532

Skip to p.76 for conclusions - even in those few pages HPCers will find alot of suspicions confirmed. Highly recommended.

Question remains: how are all these houses hiding from the market? The lender still has a duty to fetch the best possible price - is it possible they have no intention of pursuing the shortfall, making the security effectively non-recourse?

Fantastic stuff, tyvm. :)

Share this post


Link to post
Share on other sites

From page 83 of the report:

The macro-economic implications of the research are clear. Voluntary possessions were often precipitated by an inability to sell due, in part, to falling house prices and falling sales which together increased the likelihood of a shortfall debt. The need to ensure a stable market is therefore paramount if voluntary possessions are to be limited.

Oh dear. So never mind the excessive debt and over-inflated prices that will have been responsible for a large number of people overstretching themselves. Just keep proppin' up that market at all costs...

Share this post


Link to post
Share on other sites

For Pension Credit customers, the capital limit up to which help can be provided is £100,000, but these customers do not serve a waiting period before receiving eligible assistance, and there is no two year time limit on payment of SMI.

Happy Days Grandma !

Share this post


Link to post
Share on other sites

Thanks, some very interesting stuff in there;

p51 (SMI is where the government pays the mortgage interest)

...In another case, the mortgage was paid easily until the couple separated. The man, who remained in the marital home, and wanted to keep the home if at all possible, found himself with responsibility for all the costs as his partner refused to pay anything. He was unable to meet the costs and to limit and recover the arrears he took a lodger and then looked for additional work (overtime) which proved impossible to find. To make some mortgage payments he paid other bills (food and utilities) with his credit cards, which over time became a commitment he could not meet. His mother contributed to the mortgage. He stopped work in order to access SMI (and his lender changed his mortgage to interest only) but he had no means of bridging the first 13 weeks, so arrears increased further before help was available...

Share this post


Link to post
Share on other sites

I was told earlier today by a housing lawyer that voluntary possessions of residential houses must be on the rise. He was guessing because he didn't have the figures, but we agreed that the decline in possession orders is a false dawn.

Just now I came across a long research paper from York university analysing what exactly is going on. Easily the best UK research I've read on this subject.

It's a PDF (takes a minute to download) - link at this site, middle of third paragraph under Help for Homeowners (a few other interesting links there was well):

http://www.gardencourtchambers.co.uk/bulletins/category/bulletin_detail.cfm?iBulletinID=532

Skip to p.76 for conclusions - even in those few pages HPCers will find alot of suspicions confirmed. Highly recommended.

Question remains: how are all these houses hiding from the market? The lender still has a duty to fetch the best possible price - is it possible they have no intention of pursuing the shortfall, making the security effectively non-recourse?

Once the ratio for deposit to lending comes in, banks will have to cash these in.

Other end is that I have charges on other people's properties, but due to the decline in property values, a repo won't get my money back, so there is nothing I can do. The sub-prime mortgage company has first charge, and they will just trump up the charges on a repo so that they profit and I loose.

Share this post


Link to post
Share on other sites

p69

A borrower with very limited arrears on their mortgage gave voluntary possession to the first charge lender because of arrears on a second charge loan. The property sold for under £68,000 and repaid the mortgage of about £27,000. This left a surplus of £41,000 which they could not access because of the claims of the second charge lender. They heard nothing from them for many months after handing back the property, and ceased paying the second charge loan. They (incorrectly) formed the view that as the second charge lender would have received something following the sale perhaps the rest of the debt had been written off. Eventually they heard that the second charge loan now stood at £85,000. The debt had been passed to a debt management company who requested monthly instalments of several hundred pounds or alternatively a one-off full and final settlement of £63,000. Following advice, the couple have filed for bankruptcy as they have only a state pension as income.

:huh: How large was the second charge loan and what happened to the 41k??

Share this post


Link to post
Share on other sites

For Pension Credit customers, the capital limit up to which help can be provided is £100,000, but these customers do not serve a waiting period before receiving eligible assistance, and there is no two year time limit on payment of SMI.

Happy Days Grandma !

As infuritating as this is, and it is very infuriating.. I wonder how the cost of paying SMI compares to putting an old dear in a council house, which the council would be obliged to do if they lost their home ?

It's also maddening how these people choose to lose their jobs to gain benefits, or how they blow the cash declare themselves bankrupt and walk away again on benefits. Sure, people can fall on hard times but this deliberate abuse of the system gets my goat.

Edited by exiges

Share this post


Link to post
Share on other sites

Other end is that I have charges on other people's properties,

I believe you've mentioned this before, and I'm not sure if I've missed where you've explained it, but why do you have charges on other people's properties, it's not your everyday occurence, particularly on mutliple properties.

Share this post


Link to post
Share on other sites

p88

The following case study is an example of a 100 per cent mortgage plus a further unsecured loan taken out by a first time buyer followed by the rapid development of arrears and subsequent voluntary possession.

A couple bought a property in early 2008. The property value was £98,000 and they 'topped it up' to £117,000 to enable them to purchase the necessary household goods as it was their very first property. Some of this money also went towards paying off unsecured debts they both had. The monthly mortgage together with the 'top up' amounted to less than they were paying in rent each month so, at the time, it seemed a sensible option. In June of the same year one partner lost their job and could not find similar employment due to the economic downturn. They made an agreement with the lender to halve the monthly payment but this was only a temporary measure and they had to return to the usual payments after a few months. Then in January 2009 the couple separated and were told by the lender that the only option was to give voluntary possession. However, despite the last payment being in January 2009, the lender did not finalise the process until January 2010. This resulted in an ever increasing amount of arrears. When interviewed they owed the lender £25,000 in arrears from the mortgage and top up loan and a potential further £25,000 if the property sells at the current asking price – £25,000 less than they initially paid. Thus, a possible £50,000 of debt is outstanding. They believe that first time buyers should be offered more information at the time of obtaining a mortgage and during any period of arrears. They would not return to homeownership again.

This was a few months after house prices started dipping and there were plenty of media articles explaining the potential unsustainability of the whole system, but plenty more urging people to buy into the dip and banks still giving 100%+ loans. I think it's failure here of people to understand the cost of risk; the risk of relationships not working out, the risk of unemployment and the risk of being on the hook for capital losses. I think I'd feel sick to the stomach right now if I were them, I bet renting looks cheaper now.

Edit to change page number ref

Edited by russell

Share this post


Link to post
Share on other sites

Question remains: how are all these houses hiding from the market? The lender still has a duty to fetch the best possible price - is it possible they have no intention of pursuing the shortfall, making the security effectively non-recourse?

...possible they are waiting for prices to rise instead of crystalising the loss .....if the customer is bankrupt they are unlikely to recover any shortfall in the medium term .... :rolleyes:

Share this post


Link to post
Share on other sites

As infuritating as this is, and it is very infuriating.. I wonder how the cost of paying SMI compares to putting an old dear in a council house, which the council would be obliged to do if they lost their home ?

....

Thatcher sold all the council stock. People end up in B&B if they are homeless and this is far far more than the SMI. However, it is annoying and no matter how you look at it your tax contributions are going to the banks to keep housing expensive. In the longer term cutting benefits is circulatory as it strengthens this feedback loop. Attempting to "balance the books" notwithstanding the merits of doing so will see more people needing help with their mortgage and so more SMI and more taxpayer cash from a now falling tax take.

Its a slow motion train crash. I can't see an answer - borrowing to stimulate the economy will not work long term either. Best just to watch and enjoy as best you can.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.