Northern Rock house repossesion -now for sale 100K below valuation!

[olrac123]

Hello All,

 

The usual story of not being able to keep up NR mortgage payments since the big bang. We put our house up for sale to try and pay NR back but there were no takers. The house was advertised with a local west coast estate agent for one year. Last summer we decided to move out and sent the keys back to NR. Repossesed now by NR. Now the property is being remarketed by another "local" regional estate agent. The main grief is the price difference. Our property was valued at 185K in July 2010. Now in January 2012 the asking price is offers over 77k. It also states in the advert from the estate agent that the home evaluations is only 85K. The property has been well maintained and was a new build in 2003 (Farmhouse conversion) so surely this is not possible - a differerence in value of 100K in the space of 14 months? We are legally responsible for the short fall but does the NR not have a legal obligation to get the maximum value for the property? Are the Estate agents being complicit in this to get a quick deal, and can we take any actions against NR and /or the Estate Agents to rectifiy this price difference?

 

Many thanks.....

[Crocdoc]

After the property is repossessed

 

A lender who takes possession of a client's home will sell it in order to recover the money s/he is owed.

Responsibility of the lender when selling the property

 

The lender has a duty of care towards the client when selling the property. This means that the lender must get the best price that can reasonably be obtained at the point when it sells the property. However, in practice, lenders often sell properties at auction and repossessed properties sold at auction often sell for less that they would if sold on the open market.

89

A lender who sells a property without due care could be sued for negligence. However, this has never been tested in the courts. There may also be a claim for negligence against the conveyancer used by the lender, but this can be very difficult to prove.

90

A lender also has a duty to mitigate its loss. This means that it must not only get the best price possible at the point at which it sells the property, but it must also generate an income from the property, until it is sold, by renting it out, or account for why it has not been rented out. The client would have to show that the lender could have let the property and chose not to do so.

91

The Financial Ombudsman Service advice to lenders is that they should obtain two valuations, one of which should be independent. The client may write to the lender to ask for the valuations that were obtained before putting the property on the market.

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If the lender has acted without due care or has failed to mitigate its loss and as a result the client's debt to the lender has increased, the client could complain to either the building society or the bank who may instruct the lender to pay compensation to the client and also complain to the Financial Ombudsman Service.

[sequenci]

This is taken from the National Debtline fact sheet covering Mortgage Shortfalls:

 

Building societies have an obligation to find the ‘best price which can be reasonably obtained’ whilst banks have a ‘duty of care’ to a borrower. From 31 October 2004 the FSA Mortgage: Conduct of Business rules say that all lenders must obtain the ‘best price that might reasonably be paid’. It is possible to dispute the amount being claimed by the mortgage lender in some cases. You have six years from the date of sale to make a claim against the lender. You will need proof to support any case, such as valuations for your house at the time.

 

If you can show that the house was sold for substantially below the proper market price taking into account the market conditions at the time of sale.

If the house was not marketed sufficiently to obtain a good price.

If you arranged a sale which was refused by the lender, but after repossession the house was sold by the lender for a much lower price.

If the house stood empty for a very long time you may be able to argue that the mortgage company should have rented it out and therefore off set possible rental income against the shortfall balance.

If the lender decides to leave the house empty and not sell it either, then you may have an argument for asking the court to order a sale.

Check who bought the property. Your lender should not have sold it to a related company.

 

From 31 October 2004 the Financial Services Authority (FSA) has taken over the regulation of mortgage lending and problems with existing mortgages. This applies to all mortgages where the lender had a first charge over the property and at least 40% of the property is occupied by you and/or your immediate family. It does not apply to secured loans regulated by the Consumer Credit Act 1974. If you are not sure what type of loan you have, phone us for advice.

 

The new rules say that the lender must market the property as soon as possible and obtain the ‘best price that might reasonably be paid’ taking into account factors such as market conditions and the increasing amount you owe on the mortgage debt.

 

The full fact sheet is here:

 

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=11_mortgage_shortfalls

 

Also,

 

You should really consider getting the prcess involved.. As much as I hate the paper - The Daily Mail would be all over this

[olrac123]

Well that was quick! Many thanks for these replies....A few questions. Does the fact that the house is in Scotland make any difference in the eyes of the law? Scots Law differs in many areas but not sure about property. Would you reccomend getting in touch with the Estate Agent to enlighten them of their "precarious" situation? I will need to check through my old paperwork for the first evaluation from the Estate Agents in 2010. Since then they have also gone bust so cannot approach them for the paperwork. would the evaluators that carried out the evaluation work in 2010 still have a record of this? hope so because it cost about 500 pounds. worthy of mention - the original house for sale web adverts from 2010/2011 are still available to be viewed on the internet. They show the same house in detail along with "offers over" 170K- is that of assistance to my argument?

 

Many thanks.

[Crocdoc]

My previous post is taken from Scottish Legislation, although I am not aware of any variation.

 

I hope this helps.

[olrac123]

Ok- that should cover my situation then. Many thanks!

[sequenci]

The NDL eqivalent fact-sheet is here:

 

http://www.nationaldebtline.co.uk/scotland/factsheet.php?page=14_mortgage_shortfalls

[Bang!]

It is possible to dispute the amount being claimed by the mortgage lender in some cases. You have six years from the date of sale to make a claim against the lender. You will need proof to support any case, such as valuations for your house at the time.

 

I suspect this might only be five years the property is in Scotland?

[sequenci]

I suspect this might only be five years the property is in Scotland?

 

5 years for interest

20 years for capital - or 6 years under the council of mortgage lenders voluntary code of practice.

[Bang!]

Thanks - I stand corrected. I used to deal with it often as a CAB adviser while a law student too - although its going back quite a while now.

[citizenB]

http://www.consumeractiongroup.co.uk/forum/showthread.php?340421-Some-Good-News-for-Scottish-Homeowners-facing-repossession