Negotiation, Negotiation, Negotiation

UK Property Investment news and comments from Mark Harrison of YourPropertyExpert.com

Repossession and Foreclosure UK – three myths and misunderstandings

Posted by markharrison on January 4, 2007

Every so often, at a Property Networking event, I have someone come up to me and tell me that they are “interested in foreclosures”.

This normally indicates to me one thing – that they have been reading American books on property investment. In the UK, the law is quite different, and notably more on the side of “looking after the average person who falls behind on their mortgage” and less on the side of “whatever the contract said.”

The first thing to be aware of is that repossessions and foreclosures are different things.

  • In a UK repossession, the mortgage company “take back” the house, sell it, use the proceeds to pay off the amounts owed to them, and then send the balance to the borrower. The old duty to take “reasonable care to ensure…. the best price that can reasonably be obtained” has been slightly modified in the Building Societies Act 1997 to “take reasonable precautions to obtain the true market value of the motgaged property. It is normal, though NOT needed, for the mortgage company to get a Court Order to get a repossesion. The mortgage company does NOT have to sell the property via an auction – indeed, the Courts have recognised that this may well not be the best way to obtain the true market value.
  • In a foreclosure, by comparison, the mortgage company “take back” the house, sell it, and keep the entire proceeds. This is only possible as the result of a Court Order, and it’s nigh on unheard of for courts to grant this these days – normally they only ever grant repossession orders.

 

The second is that the big “hand the keys back myth” is just a myth.

  • If you are behind on your mortgage payments, you cannot just “hand back the keys” and have the clock stop on the interest payments.

  • A mate of mine was once a branch manager at a building society – on the day he took over the branch, he was shown a drawer containing about half-a-dozen sets of keys from people who had just brought them back, believing that this would stop interest accruing. I’ve no idea why this myth still abounds!

For the investor, the first two mean that, unlike in the US, it is very unusual for an investor to get a good deal simply by finding out which properties have been repossessed, and then buying them up cheap from the mortgage company for cash in hand.

The big market opportunities that do exist are finding people who MIGHT be repossessed, and negotiating deals with them that leave them better off than they might be if the repossession went through.

About these ads

31 Responses to “Repossession and Foreclosure UK – three myths and misunderstandings”

  1. Dave said

    “hand the keys back myth”

    It’s funny just how people do this. And just with houses, they do it with cars too. lol…they says things like….”I’ll just give it back, if you don’t make me happy”

  2. Yes. According to my ex-branch-manager mate, the people doing this genuinely believed that once they did so, the accrual of interest stopped.

    Ho hum, another myth debunked :-)

  3. accelerate future

    accelerate future source

  4. [...] Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation,… Negotiation, Negotiation, Negotiation where Negotiation, Property Investment and Web Marketing intersect Home About Mark About MyThingE.com Free Negotiation Mini-Course Repossession and Foreclosure UK – three myths and misunderstandings Every so often, at [...]

  5. [...] Conant)Mini Book Review – How to Get Rich (Felix Dennis)Half term fun – building a geodesic domeRepossession and Foreclosure UK – three myths and misunderstandingsThank you for the kind [...]

  6. jim javed said

    Hi,
    That was good information.
    I will greatly appreciate if you could please explain and elaborate more on finding people who might be repossessed and negotiating deals with them that leave them better off than they might be if the deal went through.
    Thank you much.
    Jim Javed
    jimjaved@tampabay.rr.com

  7. Jim,

    I’ve written several articles on that very subject for my main website.

    You can find them at http://www.yourpropertyexpert.com
    – Newsletter articles at the top or on the left-hand menu
    – The articles you want are called:

    # Below Market Value – Part IV (December 06)
    # Below Market Value – Part III (November 06)
    # Below Market Value – Part II (October 06)
    # Below Market Value – Part I (October 06)

    Regards,

    Mark

  8. Excellent article and a link and I certainly going to save for the next person who asks me!!

  9. [...] IS AT RISK etc. But after the sale, any surplus is returned to the borrower. If this were done via foreclosure proceedings the borrower would get nothing. Where the liabilities exceed the assets, any distinction here is [...]

  10. SEO expert…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  11. ebook, download, ebook download, filesonic, fileserve, uploading, hotfile, megaupload, rapidshare, filepost, filejungle, uploadstation…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  12. cheap printers…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  13. Mortgage Rates…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  14. web designer florida…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  15. health insurance…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  16. sextoy said

    sextoy…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  17. SEO said

    SEO…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  18. life story and biography of steve jobs in a book…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  19. [find shop | store locator | new zealand | shopping]…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  20. [stoke|manchester|UK]|web|film|seo|marketing]|production|design|designer|producer|quote|quotes]…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  21. Short Sale My Home Maryland…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  22. Short Sales In Utah Home…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  23. foreclosure…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  24. Terrific work! That is the kind of info that are supposed to be shared around the internet. Disgrace on the seek engines for now not positioning this put up upper! Come on over and consult with my web site . Thanks =)

  25. spiritual dating…

    [...]Repossession and Foreclosure UK – three myths and misunderstandings « Negotiation, Negotiation, Negotiation[...]…

  26. Fantastic points altogether, you simply received a new reader. What might you suggest about your publish that you just made some days in the past? Any sure?

  27. Thank you a bunch for sharing this with all of us you really know what you’re talking approximately! Bookmarked. Please additionally consult with my site =). We can have a link alternate agreement among us

  28. Howdy are using WordPress for your blog platform?
    I’m new to the blog world but I’m trying to get started and set up my own.
    Do you require any html coding expertise to make your own blog?

    Any help would be greatly appreciated!

  29. Ann said

    Hi I need advice. My property was sold on by my lender for a lower price then the mortgage. Is Judge explain the lender can only take back their loss so if the Mortgages was £100,000 but the debt was sold for £20,000 they can only claim back £20,000 plus their cost. Is this true.

  30. In other words, they go against the grain of the careers their parents had.
    Below are listed a few popular pubs where one
    can chill in Mumbai. The Bull’s Head Pub, Bangkok.

  31. Superb website you have here but I was wanting to know if you knew
    of any message boards that cover the same topics talked about in this article?
    I’d really love to be a part of online community where I
    can get feed-back from other experienced people that share the
    same interest. If you have any suggestions, please let me know.
    Bless you!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
Follow

Get every new post delivered to your Inbox.

%d bloggers like this: