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Lenders' Right To Possession: Anytime, Any Place, Anywhere

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Martini Rosso Your bank's right to mortgage possession: "Anytime, any place, anywhere"

Mortgage possession defences
09 July 2014
I can distinctly remember my university lectures on mortgages. Not the content – I don’t think I ever really understood that – but the “gap” that existed (and still exists) between the popular understanding of what a mortgage is and what, in law, it amounts to. In particular, I remember being amazed that a mortgage was, in effect, a right to immediate possession of the property, regardless of whether there was any default on the part of the borrower (the right to possession arises “before the ink is dry” as it was put in various cases).
That unqualified* right to possession has come to the fore again in Thakker v Northern Rock Plc [2014] EWHC 2107 (QB) (Lawtel only from what I can see). The facts are quite simply (and, in my experience, common).
[Housing Law Blog article continues in full]..... http://nearlylegal.co.uk/blog/2014/07/mortgage-possession-defences/
Now, this is what I mean about the “gap” between popular understanding and the law. Very, very few people realise that their mortgage company has (unless the contract provides something else) an absolute right to possession, even if the mortgage company have broken all the regulatory codes going (or similar).

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It never occurred to me that the lender wouldn't foreclose and take possession of my/their house , had I reneged on my mortgage payments.

This is about people who have made all their mortgage payments on time.

This happened to a distant relative of mine way back in the 1960's, they walked in to see the Bank manager one Friday (after drinking a few lunchtime pints) and got into a shouting argument about a car loan they had applied for, they didnt get the loan and the bank also called in their mortgage forcing them to move into rented.

put them in their place - people were reverential to the local bank managers for good reason.

This is another reason why I think its important that you have a mortgage with a separate bank to all your other banking/savings accounts.

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This is about people who have made all their mortgage payments on time.

This happened to a distant relative of mine way back in the 1960's, they walked in to see the Bank manager one Friday (after drinking a few lunchtime pints) and got into a shouting argument about a car loan they had applied for, they didnt get the loan and the bank also called in their mortgage forcing them to move into rented.

put them in their place - people were reverential to the local bank managers for good reason.

This is another reason why I think its important that you have a mortgage with a separate bank to all your other banking/savings accounts.

Ah yes, I missed that bit, but I have always been aware that banks can call in pretty much any loan without reason or notice. However, they would be very unlikely to do so unless the borrower was in default or their circumstances had changed sufficiently for the lender to be concerned.

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Do they have a right to the property itself, or just the right to call in the loan at anytime?

Same thing.

I thought everyone knew a mortgage could be called in at the drop of a hat.

A mortgage is ( was ) a can't loose situation for the lenders ( if they are sensible in their lending ).

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Ah yes, I missed that bit, but I have always been aware that banks can call in pretty much any loan without reason or notice. However, they would be very unlikely to do so unless the borrower was in default or their circumstances had changed sufficiently for the lender to be concerned.

On a recent bbc news discussion on the new 7 day notice in the change to uk law re: spying on the internet.

It was theorised that if a web user was spied on, and chats with a doctor recorded , then the user google searched STD's (presumably aids), a likely conclusion that they had that disease could be drawn.

I would guess that If such info was bought by insurance co's /banks, that info may mean cancellation of insurance or credit called in as the risk asssessment would have changed for the user.

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It is THE fundamental reason why they QE'd to fill the gaps. When there was a run on the offshore SIV's, the next steps would be to not lend any new money but also to call in existing mortgages to remain 'solvent'.

In fact, this is exactly what happened in the Great Depression. Mortgages (up-to-date- mortgages) were simply being called in and the banks taking possession of property at knock down valuations.

And the debt free were robbed to save the indebted from losing the houses they hadn't paid for.

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Same thing.

I thought everyone knew a mortgage could be called in at the drop of a hat.

A mortgage is ( was ) a can't loose situation for the lenders ( if they are sensible in their lending ).

That's not the same thing! If they can ask for the money back, assuming you can find the cash, you get to stay in your home. If they can refuse to accept the repayment of the debt, and decide to just sell the house anyway, that is way worse, no?

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This is about people who have made all their mortgage payments on time.

This happened to a distant relative of mine way back in the 1960's, they walked in to see the Bank manager one Friday (after drinking a few lunchtime pints) and got into a shouting argument about a car loan they had applied for, they didnt get the loan and the bank also called in their mortgage forcing them to move into rented.

put them in their place - people were reverential to the local bank managers for good reason.

This is another reason why I think its important that you have a mortgage with a separate bank to all your other banking/savings accounts.

It's also a good reason why you want to limit the amount of 'business' you do with a bank.

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Um this just happened to someone I know in USA. Paid up in full and on time. Some sort of issue with who owned the "deed" due to interbank shuffling ie selling debt to each other. Someone down the line demanded the deed and they had 6 weeks to move out. Lost all equity and ended up in sisters garage. They tried to fight it but banks have unlimited resources. Men with guns ( police) aka (banking enforcement officers) came and turfed them out. Only now they are getitng back on track and this was through absolutley no fault of there own. Banks are evil and only out for themselves forget the friendly ads on tele if genociding mortgage owners was profitable every high street branch would have a gas chamber!

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Um this just happened to someone I know in USA. Paid up in full and on time. Some sort of issue with who owned the "deed" due to interbank shuffling ie selling debt to each other. Someone down the line demanded the deed and they had 6 weeks to move out. Lost all equity and ended up in sisters garage. They tried to fight it but banks have unlimited resources. Men with guns ( police) aka (banking enforcement officers) came and turfed them out. Only now they are getitng back on track and this was through absolutley no fault of there own. Banks are evil and only out for themselves forget the friendly ads on tele if genociding mortgage owners was profitable every high street branch would have a gas chamber!

Sounds very unlikely to me. More like the friend portrayed himself as blameless in some events in which he actually did something or failed to do something that was required.

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So should we all be firing letter of to trading standards, as the "Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it."

"Your home may be repossessed if you do not keep up repayments on your mortgage." is clearly untrue..

http://www.cml.org.uk/cml/policy/issues/136

This is because they can call in your mortgage at anytime.

I always thought "Your home may be repossessed and you can be persued fro 12 years for the balance of the debt if you do not keep up repayments on your mortgage." was more accurate.

Edited by Saving For a Space Ship

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How does this work in practice if the bank seizes the mortgaged property and you've been making the payments.

Lets say you have a £120,000 house and owe £20,000 and the house is repossessed, why would a judge give the order of repossession and secondly what happens to the excess equity if the bank disposed of it at auction for say £25,000 would the mortgage holder be able to sue the bank?

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Sounds very unlikely to me. More like the friend portrayed himself as blameless in some events in which he actually did something or failed to do something that was required.

There are a whole slew of press articles about exactly this sort of scenario happening in the US.

In US law, the original paper, hand-signed mortgage deed is the sole and absolute proof of who owns the security. Therefore in securitisation, the mortgage deed must be passed to the buyer; the original loan originator then forwards payments to the new owner. In the event that the loan is resecuritised or resold, then the deed must be passed along, and the payment forwarded on again, etc.

The problem is that if the holder of the deed doesn't receive the payments (for any reason; e.g. they are not forwarded by a party in the chain, or are lost during the chain) then they are entitled in law to take possession after 3 months. You would expect the court to sort this out, but like many high volume court cases, these are often rubber stamped and if an investment bank pitches up with a genuine mortgage deed and accounts showing no payments have been received, then the case may not be properly scrutinised.

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There are a whole slew of press articles about exactly this sort of scenario happening in the US.

Thanks for this. Shocking.

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Martini Rosso Your bank's right to mortgage possession: "Anytime, any place, anywhere"

Many lenders ask paid up borrowers to leave a £1 outstanding on their mortgage and they will look after the deeds for free,How does that look in this senario.?

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THere have been some standoffs too, where americans have faced this scenario caleed a bunch of mates round with guns and stood there ground against authorities. Not wanting a wild west shoot out the cops back down. THere is a lawyer who specialises in these cases but its an uphill battle his name escapes me.

There are also a bunch of sheriffs who are not happy about this either, being used to enforce unfair laws against there community, Its especially bad in small town america.

Of course the houses then just sit and waste away

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How does this work in practice if the bank seizes the mortgaged property and you've been making the payments.

Lets say you have a £120,000 house and owe £20,000 and the house is repossessed, why would a judge give the order of repossession and secondly what happens to the excess equity if the bank disposed of it at auction for say £25,000 would the mortgage holder be able to sue the bank?

I can't see any judge in the UK granting such an order. They look for grounds, and I can't accept that "because" would be looked upon favourably. No tfh responses please, and no comparisons between the UK and the USA....

Besides all that, why would a bank want a depreciating 'asset'?

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