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Converted Lurker

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or genuine concerns?

Lenders and surveyors debate new-build valuation scams

The Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have begun talks to deal with reports of over-valuations on new-build properties, following a move by some mortgage lenders to pull out of lending on new developments.

At the beginning of December The Mortgage Works announced that it would no longer accept any new applications for buy-to-let mortgages on newly built properties. The lender will now only accept buy-to-let applications on properties aged over one year.

Announcing the change, Matthew Wyles, director of The Mortgage Works, said: "Owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract."

As a result, lenders are being ripped off. What happens is that the developer agrees to sell, say, a 300,000 pound property. The buyer obtains an 85 percent mortgage and borrows 255,000 pounds. On completion, the developer grants a discount of 15 percent and gives the buyer cash back of 45,000 pounds, leaving the lender with a 100 percent loan on the property.

Wyles explained at the time of announcing the ban: "In these cases the lender may be unaware of the actual price being paid and end up relying on a valuation which might in turn be based on erroneous assumptions."

http://today.reuters.co.uk/news/newsArticl...-VALUATIONS.xml

Edited by Converted Lurker

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This little game has been going on for years and they all damn well know it. Why mention it now? To cover their arses becuase they are running out of poeple willing or able to stump up the momney to keep the game going.

This whole charade has been set up and allowed to conitnue to keep the fat fees going for all concerned, now the defaults are rolling in and everybody is left pointing the finger at each other.

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This little game has been going on for years and they all damn well know it. Why mention it now? To cover their arses becuase they are running out of poeple willing or able to stump up the momney to keep the game going.

This whole charade has been set up and allowed to conitnue to keep the fat fees going for all concerned, now the defaults are rolling in and everybody is left pointing the finger at each other.

Yeh! The blame game! Going to be fun to watch! :lol:

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This little game has been going on for years and they all damn well know it. Why mention it now? To cover their arses becuase they are running out of people willing or able to stump up the money to keep the game going.

This whole charade has been set up and allowed to continue to keep the fat fees going for all concerned, now the defaults are rolling in and everybody is left pointing the finger at each other.

I saw a similar point made, shame is they can`t quite be as vociferuos as you, might scare away the advertisers/sponsors :D I`ve tided up your spelling a bit there BTW ;)

http://firstrung.co.uk/articles.asp?pageid=NEWS&cat=47

Edited by Converted Lurker

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I love this bit.....

[The RICS claims that overvaluations are coming to light because the market is no longer rising. "When prices are rocketing, if a house is overvalued the market catches up quickly enough anyway. With the market stagnating, the problem quickly becomes apparent," commented Andrew Smith of RICS.]

Is that a tacit admission from RICS that it doesn't matter if their valuations are ******? :blink:

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I love this bit.....

[The RICS claims that overvaluations are coming to light because the market is no longer rising. "When prices are rocketing, if a house is overvalued the market catches up quickly enough anyway. With the market stagnating, the problem quickly becomes apparent," commented Andrew Smith of RICS.]

Is that a tacit admission from RICS that it doesn't matter if their valuations are ******? :blink:

I think its very hard to do a sensible valution simply because everyone (the buyer, the seller, the mortgage company and the estate agent) wants the transaction to go ahead. Hence most of the time just having a quick glance and saying yes is the correct response.

Only when the market turns and banks start to panic (i.e. now only the buyer, the seller and the estate agent want to the transaction to go ahead) does this change. Then all of a sudden everyone needs someone to blame for the reason why the buyer, the seller and the estate agent are having a hard time actually buying and selling the property.

Edited by eek

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  • 301 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%



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