Council of Mortgage Lenders Clarify what SHOULD happen after repossession!
The Council of Mortgage Lenders (CML) have given general direction as to what happens AFTER repossession, after an increase of concern and a lack of public knowledge have caused an increase in enquiries.
The CML have failed to direct customers to the Financial Conduct Authority (FCA) rules on a home being sold after repossession because it often creates confusion over a Mortgage Lenders obligations and leads to more questions than answers.
What happens to the mortgage until the property is sold?
The CML confirm in their statement listed on their website that your Mortgage Lender has a duty to sell your home after you have been evicted, and claim they are legally bound to sell the property for as much as can reasonably be obtained, however the CML fails to point out that the Mortgage Company is also allowed to take the rising cost of Interest into account to help make their decision in accepting a sale on the property.,
As it says in the statement, until your Home is sold by your Mo
rtgage Lender, the mortgage is not repaid, despite you having already faced eviction. With the Mortgage having not been redeemed, the interest and management charges still accrue, increasing the outstanding balance of your mortgage account.
The increasing balance enables the mortgage lender to accept a lower offer on your property because they can claim that if they did not accept the offer then the situation and outstanding loan balance would have only gotten worse.
Who are the experts that make the decision?
Where the CML claim that your lender gets expert, independent advice, on the price and method of sale……it is difficult to believe them.
Most repossessed properties are no longer sold through auction like a lot of Homeowners believe, however, it is an Asset Management company that is usually paid to deal with a property from the point of taking the keys from the bailiff, right through to handing the keys to the new owner. The introduction of an asset management firm provides your mortgage lender with a degree of protection because they are not making the decisions themselves.
Technically therefore, the longer your home takes to sell, the more money the mortgage lender and the asset management company makes, and so long as they get their money out of your property, the sale price makes no difference to them.
The asset management company usually instructs a local agent to assess the property at their maximum fee band (because its coming out of your pocket), and due to there being very little regulation surrounding estate agency, they will no doubt have a number of investors on their books looking for properties at a discount.
The estate agent will therefore get paid his maximum fee, and is likely to receive a big thank you for securing a sale for the investor. If he does a quick and efficient job then the agent is likely to be used again.
How do I stop this from happening to me?
The best way to avoid being in this position is to avoid being evicted in the first place. We can help you with that if you contact us.
If you have already been evicted then we should still be able to help, although it is a lot more difficult as your lender has the right to demand the full clearance of the mortgage, NOT just the arrears if you have already been evicted.
We have recently helped a Homeowner get his property back after 6 years since he was evicted. His lender (Kensington Mortgages) had increased the amount owing on his mortgage by over £200,000.
If you need our help and advice, we are only a call away!