Handing Back the Keys!greenspun.com : LUSENET : Repossession : One Thread
Hope someone can help me, a year ago we bought another house and started renting out the flat we had, This flat was on the market for 3 years and has had only 3 poeple looking, since then we have had trouble renting out the flat and we have had a baby, we've been keeping up the payments but know the wife can't work her normal hours and only doing part-time, If we hand back the keys to the bank can after selling the flat, can the bank make us sell the house we have to gain access the money in the house?
If we change the deeds to each others name ,one owns the flat and the other the house can this protect the house?
Hope someone can help
-- Mark Mckenzie (email@example.com), March 20, 2002
If you've had the flat on the market for 3 years with only 3 interested parties, then something is obviously wrong! Check with the estate agent, exactly what they are doing to market the place, because if its been on the market for some time, they might have left it aside. If you're not happy with whats been done, change agents. Depending on how much you owe the bank, it might be wise to lower your asking price.
Also ask your agent what you can do to make the flat more saleable. It might cost you some money, but you can do some repairs and redecoration reasonably cheaply, and it would be worth it to get a sale. Also make sure that you get feedback from people when they've viewed.
If you've had tenants in the flat when you've also been trying to sell, then it is offputting to buyers, even if they know they will be buying it with vacant possession, likewise tenants don't like to take places they think they might have to move out off shortly after moving in. If you're going to sell then do it with vacant possession, if you're going to rent it out then do it without the for sale board.
Something else you could try, depending on where you live, it might be worth getting in touch with your local Council housing office, or a housing association. One person that I know was able to sell their property onto a housing association and got rid of it that way. Even if these were not prepared to buy, they might be able to get you a tenant.
If you did decide to hand in the keys and the lender takes possession, you can be pretty much guaranteed that the lender will sell the property for far less than it is worth, leaving you with a huge shortfall. Take a look through this website for further information and see what has happened to others. Its impossible to say what will happen, you might get a shortfall letter soon after the repo, it might be years later, but avoiding repossession really is the best thing.
Before the bank can do anything about your current home, they must have got a money judgement order. If you hand in the keys, then the lender would have to take you to Court to get the judgement, if you are repo'd then they could get one at the time of the repo, which again would be through the Courts.
It is only at that time that the lender could get what is known as a Charging Order. This means that a charge or warning is put on your property and is held at the Land Registry. Whenever you come to sell your house, your buyers would see that there is a Charging Order and your solicitors would have to guarantee that that would be repaid and the Order removed before the sale went ahead.
Sometimes, if your current home has sufficient equity in it, then the former lender could try and force a sale. A plus point is that the courts don't like to make people intentionally homeless, and even more so where children are concerned, so you might find that the former lender would have to stick with a Charging Order.
On the face of it, changing the ownership deeds to each person owning a property sounds like a good idea, however I would not recommend that you do this, unless anyone else posts a message with better information than I can give.
There are a couple more things that you could try, depending on your circumstances. If your mortgage is capital and interest, then your last mortgage statement will tell you how much you actually owe. If you are not in arrears with your payments, then it may be possible to remortgage to the lower figure and with the lower interest rates and fixed rate products, you might be able to afford the lower repayments (be careful though of lock-in penalties in case you do sell).
If you are on an endowment mortgage then you still owe what you paid for the flat, but you could approach your lender and see about remortgaging to a better product, if it will help to lower the repayments.
If none of the above are possible, then I would suggest that you speak to your lender about the problems you've been having. At least they will be aware of your circumstances and might be able to help.
Hope this helps.
-- pendle (firstname.lastname@example.org), March 20, 2002.