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big_jay

Handing Back Your Keys To The Bank

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A friend of mind has run into trouble paying his mortgage. He is planning to move back to Italy (holds an Italian Passport as well as UK), he bought May 2004 on an interest only mortage. He's planning to hand back the keys to the bank without a repossession order.

What will happen to him if he hands back the keys to bank without a repossession order?

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May be expensive . . . . . link

As for sending the keys to the lender, this is the worst move to make in this situation (except if you do nothing and let the item be repossessed).

In this case, sending the keys back to the lender will most likely result in the item being sold at auction. Then the lender will come after you for the difference between what you owe and what it sold for, as well as repossession fees, penalties. This can result in poor credit marks (almost certainly) and/or a lawsuit.

The best way to handle this situation is to sell the item yourself. Even if you need to sell it a small loss, the money you pay out of pocket will more than make up for the huge toll that will be taken on your credit rating (not to mention the potential legal fees).

Further advice from Shelter

http://england.shelter.org.uk/advice/advice-4171.cfm

:(

Edited by get real

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thats true. My brothers gf (golllllldigger) did exactly this in the last crash. She moved in with him, THEN did it. the bank chased them BOTH for about 10 years. In the end, they got away with it, although if she ever wants any credit in her own name again it could be tricky...

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What will happen to him if he hands back the keys to bank without a repossession order?

A friend of mine did this a few years ago.

The building society auctioned the house for next-to-nothing, then presented my friend with a bill for the shortfall in mortgage. It was about £60,000. She declared herself bankrupt and had to pay nothing, though of course her credit history is now shot to pieces and she'll find it hard to get another mortgage.

Always talk to the lender. Always.

If he's going back to Italy, why not put the property in the hands of a managing agent and rent it out to try to recoup the mortgage?

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A friend of mind has run into trouble paying his mortgage. He is planning to move back to Italy (holds an Italian Passport as well as UK), he bought May 2004 on an interest only mortage. He's planning to hand back the keys to the bank without a repossession order.

What will happen to him if he hands back the keys to bank without a repossession order?

Would any rental on the property cover the interest + running costs of the property, factoring in an interest rates rise or two?

If not I reckon he'd be better off getting rid of the place while there's still a market for the dud "investments"

Can he sell the place for what he paid for it, not sure of location but in many places he'll probably be down 10% or more by now, factoring in costs etc.

Anyone else get the feeling this board is going to become chock-full of these types of stories in the coming years?

Edited by BandWagon

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Would any rental on the property cover the interest + running costs of the property, factoring in an interest rates rise or two?

If it covered only 80% of the cost it would still be a great investment if he hung onto it. The market will recover, he can return to the UK and cash in. For the 20% he'd be chipping in it would be a fine investment.

If not I reckon he'd be better off getting rid of the place while there's still a market for the dud "investments"

Can he sell the place for what he paid for it, not sure of location but in many places he'll probably be down 10% or more by now, factoring in costs etc.

Yeah, great idea. Buy high, sell low.

Anyone else get the feeling this board is going to become chock-full of these types of stories in the coming years?

You know the answer to that. Most people here want that to be the case. No one knows it. The truth, I suspect, is that the usual pattern will be followed. A dip here, a rise there. We'll all be proved right and all be proved wrong over a period. The long term trend is that property values will rise. It's when to buy that's the big unknown.

Edited by brassfarthing

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Thanks you for all your responses but the rental income would not cover the IO mortgage, let alone another couple of rate increases.

If he sold now he may break even if the sale was quick. Houses in Wales (well Bridgend) seem to be selling well enough, not sure about length of sale. There does seem a lot of houses coming back onto to the market, maybe due to large chains breaking down.

As for Bandwagon Statement: Anyone else get the feeling this board is going to become chock-full of these types of stories in the coming years? I am not a regular HPC poster on this forum, but I do know loads of people who are struggling with every day living expenses and these are not people living the high life. Normal everyday people who just can't afford to live in the current climate.

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If it covered only 80% of the cost it would still be a great investment if he hung onto it. The market will recover, he can return to the UK and cash in. For the 20% he'd be chipping in it would be a fine investment.

It's very naive to think you can buy at any price, and the place will make a good investment.

Many people in Japan discovered that after 15 years of falling prices, and the Irish are about to discover the same.

House prices rise when they're supported by strong yields. UK property prices are supported by speculation and gross stupidity.

Yeah, great idea. Buy high, sell low.

Around 1995 was the trough, and around 2004 was the peak of this bubble (depending on location).

We are a long way from the bottom, this housing market has a long way to fall.

If the place is cash-flow positive at least he may be able to hold out for 15 years.

You know the answer to that. Most people here want that to be the case. No one knows it. The truth, I suspect, is that the usual pattern will be followed. A dip here, a rise there. We'll all be proved right and all be proved wrong over a period. The long term trend is that property values will rise. It's when to buy that's the big unknown.

Yep, the usual pattern, there will be a massive correction, as happened in 73-77 and 89-95.

But this time there won't be inflation to bail over-indebted fools out of their mistakes.

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It's very naive to think you can buy at any price, and the place will make a good investment.

Many people in Japan discovered that after 15 years of falling prices, and the Irish are about to discover the same.

House prices rise when they're supported by strong yields. UK property prices are supported by speculation and gross stupidity.

Around 1995 was the trough, and around 2004 was the peak of this bubble (depending on location).

We are a long way from the bottom, this housing market has a long way to fall.

If the place is cash-flow positive at least he may be able to hold out for 15 years.

Yep, the usual pattern, there will be a massive correction, as happened in 73-77 and 89-95.

But this time there won't be inflation to bail over-indebted fools out of their mistakes.

Apart from the point about Japan, literally everything you say is speculation, and what you hope will happen. You just can't see the difference between what you hope will happen and what will actually happen. They may be the same, they may not, but it's useless to talk about the future as though it is certain. It isn't.

Japan is often quoted, and the reason it is often quoted is that it's such an exception to the norm.

We both agree that the short term prospects for the UK are not great. I think prices will drift a bit as they have done for the last year or so. You think that there will be a full-blooded crash. We'll see.

What I am certain about is that the long term trend in the UK is for house prices to increase once again.

The important point though is that this is really a secondary consideration. A house is a place to live and make your own. Once you're on the property ladder you're likely to stay on it for decades, and eventually a combination of rising salaries, bouts of inflation, occasional mortgage overpayments and rising property prices will be enough to ensure that buying your own place is a very good decision.

If you hold out, you may indeed benefit from the crash you'd love to see, but this is just as much a gamble as waiting around and possibly seeing the market recover.

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He should MEW for 100k, spend 1k on a flight club class to Italy and laugh his head off when he gets there.

Read my mind :)

I would commend anyone who got one over on a bank! They are making BILLIONS out of the public!

TB

Crime doesn't pay?.... does in this country!

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Read my mind :)

I would commend anyone who got one over on a bank! They are making BILLIONS out of the public!

TB

Crime doesn't pay?.... does in this country!

What are the chances of the bank pursuing him to Italy?

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I would commend anyone who got one over on a bank! They are making BILLIONS out of the public!

Very little chance in the long run. They just recoup their losses by cutting rates to savers, increasing CC interest rates and bank charges. :(

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This isn't about getting one over the Bank (Northern Rock, I believe), but a real person who is married with two kids. He wants to start over again in another country. But because of the current climate of high house prices, cost of living with low wages has found himself in financial trouble.

Neither he or his wife drinks, smokes or dine out on a regular basis. They both work, each own a cheap second hand car (N and W reg), live normal lives without any over indulgence. These are normal people who can't afford to live in the UK. Just to add that my friend works in the IT industry so a low wage for him is above the national average.

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Very little chance in the long run. They just recoup their losses by cutting rates to savers, increasing CC interest rates and bank charges. :(

Many banks are now international so I'd have thought it'd be pretty easy to chase what they're owed?

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If the banks can chase you for the outstanding monies, what would happen if you hold dual citizenship -could you affectively kill off your British identity?

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Of course the bank could chase the debt within the EU easily, a UK court judgment is directly enforceable (without having to go to court again in e.g. Italy) provided the debtor is within the EU. The debt, with or possibly without a Uk court judgment (which would not be hard to get) could probably be sold on to an Italian debt collector.

Financially a 'fire sale' to get out of the situation quickly is usually a bad idea, but if for personal reasons or extreme financial distress he wants to go ahead, why not put the house in an auctioneer's hands himself instead of letting the lender do so? That way at least he could set a reserve at say two thirds of market value, which could protect him against the possibility, that that particular lot bombs and sells for a fraction of what it should fetch. If reserve is not met, just put it back in the next auction. I have seen auctioneers knock down a lot cheap to a regular buyer as a favour, that is the kind of risk where the the seller being able to set a reserve would offer some protection.

Edited by contrarian

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Of course the bank could chase the debt within the EU easily, a UK court judgment is directly enforceable (without having to go to court again in e.g. Italy) provided the debtor is within the EU. The debt, with or possibly without a Uk court judgment (which would not be hard to get) could probably be sold on to an Italian debt collector.

Financially a 'fire sale' to get out of the situation quickly is usually a bad idea, but if for personal reasons or extreme financial distress he wants to go ahead, why not put the house in an auctioneer's hands himself instead of letting the lender do so? That way at least he could set a reserve at say two thirds of market value, which could protect him against the possibility, that that particular lot bombs and sells for a fraction of what it should fetch. If reserve is not met, just put it back in the next auction. I have seen auctioneers knock down a lot cheap to a regular buyer as a favour, that is the kind of risk where the the seller being able to set a reserve would offer some protection.

Not good advice, I wouldn't think. An auction isn't likely to yield a good price, and I can't see why the seller would want to sell it for two thirds of the mortgage value, leaving him to find the other third.

No, there's only one way of dealing with this situaiton, and that's responsibly. First he must keep paying the mortgage. Next he must talk to thelender if he's in trouble. He then has to sell the house. If the value has dropped since he bought then he should hang onto it until prices recover. If he wants to leave the country, fine, but we can't all just do what we want when we want for heaven's sake (though the way some people talk on here, you'd never believe it). He should sort out his finances before getting out. In fact, if he plays his cards right and hangs on for a bit he should have a nice profit from the house to get him off to a good start in Italy.

Could he let out a room of the house?

I'm surprised he's in such financial trouble if they both work and don't waste any money.

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The building society auctioned the house for next-to-nothing, then presented my friend with a bill for the shortfall in mortgage. It was about £60,000.

I think you'll find that you've been misinformed by your 'friend'. (It's quite normal for people who have failed financially to blame others - particularly the lenders.)

A Mortgagee in Possession has a legal duty to sell the property at the best price available at the time after having marketed the property in a proper manner. In other words, if they 'auctioned the house for next-to-nothing', that would have been it's value at the time. 'Market value' being the price that a willing buyer would pay.

This is the reason that you see notices in the papers about property being sold at a certain price and the Mortgagee in Possession inviting higher offers before they proceed. They know what they're doing and they make sure that they have acted within the letter and spirit of the law.

p

Edited by patprimer74

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You know the answer to that. Most people here want that to be the case. No one knows it. The truth, I suspect, is that the usual pattern will be followed. A dip here, a rise there. We'll all be proved right and all be proved wrong over a period. The long term trend is that property values will rise. It's when to buy that's the big unknown.

Really.

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A Mortgagee in Possession has a legal duty to sell the property at the best price available at the time after having marketed the property in a proper manner.p

So says a lawyer. But a lawyer also knows the obstacles to obtaining a remedy would be great where a fair market price is not acheived. However, it may be that in practice almost all mortgagees do in almost all cases obtain something like a market price. Maybe members with relevant experience could say whether that happens.

Edited by contrarian

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Of course the bank could chase the debt within the EU easily, a UK court judgment is directly enforceable (without having to go to court again in e.g. Italy) provided the debtor is within the EU. The debt, with or possibly without a Uk court judgment (which would not be hard to get) could probably be sold on to an Italian debt collector.

Surely the up front costs would be prohibitive - especially when they have no idea where he has gone. In any event if he has put the money in say a Lichtenstein based bank but claims to have nothing how will the bank be able to prove different? Even if they can it will be beyond UK jurisdiction.

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Surely the up front costs would be prohibitive - especially when they have no idea where he has gone. In any event if he has put the money in say a Lichtenstein based bank but claims to have nothing how will the bank be able to prove different? Even if they can it will be beyond UK jurisdiction.

Unless he plans on living like a hermit, he'd be pretty easy to trace if the banks wished to do so.

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Surely the up front costs would be prohibitive - especially when they have no idea where he has gone. In any event if he has put the money in say a Lichtenstein based bank but claims to have nothing how will the bank be able to prove different? Even if they can it will be beyond UK jurisdiction.

They seek him here, they seek him there... the banks will seek you every-frickin-where... for years and years and years

I used to work with one of the guys that chased people for money... think rottweiler and trouser leg.

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  • 302 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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