Now There’s Even a House Prices Crash Calculator

After years of talking up the property boom and the ‘you can’t lose with property’ articles in the media, the newspapers are now full of doom and gloom about the future of UK house prices.

The reality may be that a housing market depression may be caused by nothing more than the fact that we all start to believe that house prices will fall, we don’t put our houses on the market and we don’t try to move home.

This means that house prices will fall and those affected most will not be those who can ride out the storm and stay put in their homes, but those who are facing repossession.

This Is Money the website arm of the London Evening Standard have even published a price crash calculator so that if you aren’t scared enough already, you can truly frighten yourself into worrying about what your house will be worth if prices fall the same way they did in 1992!

The threat of negative equity however is now a very real one and millions of people will find it impossible to refinance their mortgages and will be forced onto their lenders’ top standard variable rates.

Stop Repossessions Org UK Sees Rise in Negative Equity Repossessions

As 2008 marches on and the global and economic situation looks ever more bleak, so are the tales we are hearing from UK homeowners facing repossession.

Back in 2007 a rough estimate would be that 70% of those people who contacted us by phone or email had some difficulties with their mortgage repayments, were in arrears but were also in a position to:

a) Repay the arrears over a given period either by direct agreement with their mortgage lenders or by a court judgement.

b) Remortgage with a new lender in order to get a fresh start with a new payment record appearing on their credit score

Fast forward and now it is rare that we are hearing from people who have enough extra monthly income to repay their arrears over time and many lenders (especially the sub prime) are refusing to accept repayment plans to pay off morgage arrears.

The majority of people contacting us are now also at the start of the negative equity trap.

The true and actual cost of their borrowings, (which consists not just of the amount borrowed but also the huge penalties, legal and court fees and Early Redemption Penalties), have risen dramatically, whilst the value of their homes is in many cases starting to stagnate, if not fall.

A homeowner who previously remortgaged their £200,000 home with a 90% mortgage (£180,000) and who has either added a secured loan (say £10,000 – new total £190,000) or had a County Court Judgement for unpaid credit card bills of a similar amount, and who has an early redemption penalty of say £7,000, may be mortgaged to £197,000.

One missed mortgage payment and not only can the interest rate rise dramatically so that monthly costs are hugely increased, but legal fees and punishing penalty fees will be also be added.

Suddenly we could be looking at redemption costs of over £200,000.

Sell the house?

Not always possible.

Estate agents will charge a minimum of 1%, more if you go with multiple agents. That’s at lease £2000. Legal fees and the Government’s ridiculous HIPs pack will add another £1500.

It’s now going to cost £3,500 to sell the home and get nothing in return.

But it doesn’t stop there.

If you remortgaged before the Northern Rock crisis hit in September 2007, then the chances are that your lender was giving signals to surveyors to over value properties.

The market is always rising so why not let them over value your home and then lend you more money in return for more profit?

By the time you may be in trouble house prices should have risen by enough to bring down your mortgage level to less than 100% – just in case they need to repossess.

But the reality is that homes are now only selling if the price is right.

Now it’s a buyer’s market again.

Houses which comfortably sold for £200,000 back in 2007 are now sticking in agent’s windows at £189,000.

Suddenly it could cost you as much as £10-20,000 to buy your way out of repossession.

But who is going to lend you the money to pay the costs?

It is not going to happen.

If you do have equity in your home then you do have options to avoid repossession find out here

Does Alistair Darling Want You To Be Repossessed?

Maybe the Government, along with the usual middle class do gooders at the Citizens Advice Bureau (CAB) and Shelter actually want you to be repossessed and lose your home?

Surely, that can’t be right?

Yet the Scottish newspaper the Sunday Herald Reports today the following:

“Prompted by concerns raised by Citizens Advice, Shelter and the Council of Mortgage Lenders, chancellor Alistair Darling announced last week that he has asked the Office of Fair Trading to investigate potential consumer detriment in the sale-and-leaseback market.

A spokeswoman for the Council of Mortgage Lenders said: “While we welcome the review, it is disappointing that no immediate action will be taken to regulate sale-and-leaseback schemes.

“Homeowners in difficulty may currently be considering selling their property through these schemes at a discounted value, without an independent valuation of their home, and with no real security of tenure.”

Whilst it is true that there are some rogue rent back traders out there (especially those offering to pay 100% of market value who in reality keep at least 40% back for many years), this Government is expert in knee jerk politics.

So many of the laws that have been passed since Labour came into power seem to be a reaction to scare stories in the tabloids.

The reality of the sell and rent back scenario is that it gives homeowners a last resort to keep their homes when all else has failed.

If the Government legislate against that last resort because a powerful lobby of middle class people feel that that they need to legislate against other people having the right to sell their homes for less than market value in order to stay in them, the outcome (like that of many of their policies) will be exactly the opposite.

CAB and Shelter may talk the talk but they won’t offer you a home when you are repossessed and evicted.

As for the CML (Council of Mortgage Lenders) – well who do you think supplies the financing and re-mortgaging for sell and rent back companies?

Is Alistair Darling (or any other of the wealthy Islington-ite Labour Government) going to provide you with a nice Council House or put you to the top of the housing list when you are repossessed?

I think we all know the answer to that one.

If you are thinking of selling and renting back make sure that you do the research and ask for references from other sellers when dealing with a rent back buyer.

Facing Repossession? Don’t Borrow More Money!!

There are many websites out there that promise to help you avoid repossession byborrowing more money!

If you truly are facing repossesion then borrowing your way out of trouble is the recipe for disaster.

This is because if you have mortgage arrears or a possession order against your home from your mortgage lender or a second charge loan company, no one is going to lend you money at a lower interest rate than you are currently paying. If they do, it will be for a limited time before massive interest rates kick in.

This means that you will almost certainly lose your home. If not today, then in the coming months as you struggle to make even higher payments.

Most of the loans available to people in your position are on  a variable interest rate. The Bank of England rate may go down, but these companies are not linked to the Bank of England interest rate, so you will probably find their rates going only one way – UP!

Any solution to stop repossession of your home MUST also help to get you out of debt, not further into debt.

For repossession solutions and help in reducing your liabilities with credit cards and other unsecured debts contact us via our website Stop Repossession Org UK

More Homeowners Face ReMortgage Hell as Lenders Pull 100% loans

Homeowners facing finance problems may be a step closer to repossession as mortgage lenders pull their 100% loans.Cheltenham & Gloucester Cut 100% mortgages

This means that for those who need to remortgage soon, not only are rising interest rates from sub prime lenders and falling or static house prices an issue, but they may now find that they are unable to remortgage to the full value to pay off their current mortgage with an existing lender.

If a property worth £100,000 was 100% mortgaged 2 years ago and has fallen in value even by a few percent, then this means that a new mortgage may only cover around £88,000 towards paying off the existing mortgage.

The result?

Many will be unable to remortgage, will fall into the dreaded negative equity not seen since the early 90s, and will be forced onto so-called standard interest rates with their current lender.

With some sub prime lenders this is 10% or more.

This news in from The Guardian online:

“Cheltenham & Gloucester will tell homebuyers today that they must put down a minimum deposit of 10% if they want one of its mortgages, as the clampdown on lending gathers pace. Meanwhile, Royal Bank of Scotland and NatWest are withdrawing from offering mortgages for more than 95% of a property’s value.

C&G – owned by Lloyds TSB – is one of the biggest mortgage providers to rein in its lending in response to the credit crunch. The change means that a typical first-time buyer in London will have to stump up almost £25,000 to obtain one of the company’s home loans.

RBS/NatWest has already pulled out of offering mortgages above 95% through brokers; after March 7 this will also apply to branch-based home loan applications.”

Read the full article here

Real Life Repossession Cases – Mrs B vs Kensington Mortgages

In order to help other home owners who are facing repossession, we are going to start posting actual cases.

These will be based on situations faced by people who have contacted us but of course, names and identifying information will remain hidden.

Case #1

Mrs. B
Location: Wakefield
Value of Home: approx £500,000
Total Mortgage: £108,000
Lender: Kensington
Second Charge: None
Loan Arrears: £24,000

Mrs B contacted us after receiving a Bailiff’s Warrant for Possession from her local county court on behalf of her lender, Kensington.

She had followed standard procedure to ask the court to allow her to pay her substantial arrears over 2 months. For this she used the Court Form N244. Because her court was busy the judge could only hear her case late on Friday morning, repossession by bailiffs was set to take place at 11am on Monday.

Normally, if a homeowner asks the court to help agree a repayment plan with their lender the judge will recommend that the lender accepts the plan and will suspend the repossession.

However, the judge can only suggest this to the lender.

In Mrs B’s case, the judge took on board the extenuating circumstances (serious illness in the family, coupled with a very low mortgage compared to property value and no other lenders involved) and urged the lender’s solicitors to ask them to accept the payment of £24,000 arrears over a 2 month period.

This is a large sum of money, but also a very short repayment period for the lender to agree to, and Mrs B was able to show that she could make these payments.

However, the lender refused the Judge’s recommendation and stated that only arrears payment in full before the bailiffs arrived on Monday would be acceptable. This was lunch time on Friday.

Unfortunately, Mrs B didn’t contact us until late afternoon on Friday.

If she had contacted us earlier we would have been able to arrange a cash buyer for her home with an option to buy it back later. Unfortunately, there was not enough time to even get ID documents to a solicitor before the repossesion was to take place on Monday morning.

To make matters worse, Mrs B had made a payment of £5,000 on the Friday morning, which instead of being money she and her family could use to find rented accommodation after the bailiffs repossessed her home, would only slightly reduce the overall amount owed to her lender, especially once the lender had added on its legal fees, penalties and costs of selling her home at auction, probably with a very low reserve just to cover their costs.

If you even think you might be facing a similar situation in the near future, seek advice now, because like Mrs B, you might believe that just paying arrears when you go to court will be enough to stop your lender from repossessing your home.

Increasingly, lenders are unwilling to accept arrears repayment arrangements because they fear that by not repossessing today and getting their money back, that your property may not be worth enough to cover your mortgage and loans if there is a property crash.

For more information on the repossession process visit our website Stop Repossessions Org

50% of Repossessions Are By Sub Prime Lenders

 

According to statistics published today by BBC Radio 5, FIFTY PERCENT of all repossessions in 2008 involve sub prime lenders.

No surprise there then?

Repossession House Keys

Except that sub prime mortgages only make up 6% of UK mortgage lending.

Among the other fifty percent the highest number of repossessions are being brought by high street lenders Britannia Building Society, Bradford & Bingley, and (no surprise here) Northern Rock, all of which have pursued an agressive mortgage lending policy in the last 5 years.