Jan
21
Is there a way out of this one? A friend surrendered their house back to the mortgage company?
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The house was surrendered the house due to arrears, but only a few days ago. I now want to re-buy the house for my friend then sell it to get the equity out of the house and return the difference to the friend. Buying the house for me is not an option, neither is a family loan, they never work. The house was a council house which they now own.
Q1. Would a mortgage company refund the difference to the owner if/when the house sells for more?
Q2. Would the mortgage company allow us to pack back the arrears, now?
Q3.Is there a time limit to sell an ex-council property and not have to pay something to the council?
Help please… got to get this sorted and get the max equity out for the friend.
Sell House Quick
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4 Comments
April 21st, 2009 at 3:57 am
Answer to you Q3 is that i think its 3 years.
April 22nd, 2009 at 7:37 am
When a situation like the one you described occurrs the owner, your friend, is in a period where they can buy the house back for themselves by paying an amount which the mortgage company will tell them. You will not be able to buy their house but you can give them the money to buy it back. This will not allow you to sell it etc. like you mentioned, howev er, it will get the house back for your friend. That is a very nice thing you can do for your friend.
Your best bet is to get in touch with a Real Estate Attorney for the answers. This situation is not one that has a cut and dried answer and it is not a simple answer either. Every case is different and the mortgage company can give your friend advice on how to keep her house. They will not talk to you about it though…privacy act….you know. This can be worked out but you need the correct answers for that specific occurrance.
April 23rd, 2009 at 8:37 am
Q1 - the house now belongs to the Mortgage lender. Normally it will go to auction … typically it will sell for 20% less than an Estate Agent could get for it on the open market … if it makes more than the outstanding Mortgage + Charges your friend will get the balance.
If it comes up short, your friend will be sent a bill for the balance.
Q2 - ???? don’t understand .. if you are asking “can you buy it direct from the Mortgage lenders ?” I would say ‘no’, however there is nothing to stop you going to the Auction and bidding for it….
Q3 - check the original documentation = quite likely ‘yes’, however the details will have been spelt out in the original sale docs. (the Council may will have taken a ‘charge’ against the house .. in which case the Mortgage lender will repay the Council before passing any left overs to your friend)
April 25th, 2009 at 6:10 pm
I presume you are in the UK?
In the UK, once the house is surrendered your friend can’t get it back. It now belongs to the mortgage company and it is too late to settle the arrears and get the house back now.
The mortgage company is only interested in getting back enough money to redeem the mortgage plus its expenses. Their expenses will be high because there will be interest on the arrears, court charges, estate agents/auction fees, penalty charges and possibly bailiffs costs. Voluntary Surrender is not a cheap option, cheaper than eviction but still costly.
Council houses bought under the ‘right to buy’ scheme all had periods when any reduction had to be paid back to the council if the property was resold. IIRC it varied from council to council. If the clause is still valid then the mortgage company is obliged to settle the debt from the proceeds of the sale, they are also obliged to settle any other legal charges if there are any registered against the property. If there is any money left once all the debts have been settled then they are obliged to return it to your friend. If there is insufficient money raised from the sale then they can look to your friend to make up the difference!
The plus side is that the mortgage company can’t just sell it cheap to get rid of it.