Finally admitted we cant afford our home but need advice on the practicalities

[dizzy81]

Hi All, Im hoping somebody can help me. Myself and my husband have been struggling with debt for a few years now. we took out a together mortgage with NRock in 2004 and paid way over the odds for our house its currently in at least 30k negative equity with no prospect of selling due to the current market and the area which we live in. We have accepted that we cannot afford to be homeowners as we have no spare money for maitaining the house or repairs, for example central heating is on its way out, havent been able to decorate since 2005 ect. anytime anything breaks/wears out it is like the end of the world as we try to get the money together and quite frankly I cant deal with the pressure anymore.It may have been worth fighting for the house if our neighbours werent a nightmare as well, they stay up every night drinking, playing music ect but thats a different story. This place doesnt feel like home and I want my children to be able to play out without abuse from the neighbours. Anyway - we need to move and have found a rental in a lovely area with a landlord who is aware of the situation and a saving of 200 a month compared to the mortgage we are currently paying. i want to let the house get repossesed but dont know the logistics of this - We are currently three months behind with the mortgage (Have been saving for the rental as I read advise on here) and will be four months behind when we move. Do I post the keys to them??? Also I am worried about anyone breaking into or damaging the property before the mortgage company take it back. This is the kind of area we live in at the moment, people are living in caravans on their parents driveways so I am worried about squatters and who would be reponsible for this. We are planning to use the rent saving to save to go bankrupt as we also have unsecured debt of approx 10,000. If anybody could shed some light on the process i would be very grateful - I have been reading the boards but cant find specific answers about damage ect. Also if i post the keys back would they re-possess sooner? Aopologies if the above seems to be a bit of a ramble, I feel better just getting it all down Thanks Dizzy

[Lea_HTH]

If you are planning on voluntarily giving up possession of the house you MUST get independent advice FIRST.

 

There is a useful information sheet provided by Shelter here: http://england.shelter.org.uk/get_advice/debt_and_arrears/mortgage_arrears/handing_back_the_keys

 

You will remain responsible for the property up to the point of possession by the mortgagee, which means that you must maintain insurance on the property, and maintain security. If you do not and there is damage and/or trespassers to the property, then you will be liable to the mortgagee for the increase in costs it takes to rectify anything damaged, and as a result any shortfall may be much larger than just the negative equity that exists now.

 

The above may not bother you if you plan to go bankrupt after the house is possessed by the mortgagee.

[dizzy81]

Hi Lea,

 

Thanks for your input - do you know if it will speed things up if I were to post the keys back rather than just let it go if you see what i mean?

 

I have looked into my current insurance and it doesnt cover me being away from the property for any significant length of time. Is there insurance that covers vacant property?

 

as you have said if im going bankrupt it doesnt really make much difference as to what the shortfall is. Im more worried about the hassle if anything happens to the house - its just that kind of neighbourhood.

 

I have had some independant advice from cccs that has basically said that my only options are bankruptcy or a very long dmp. I did ring payplan earlier in the year to find out about doing an iva but in the current climate the costs we were being given to live on were really tight and i just cant see it working for five years in reality.

 

Thanks

[Lea_HTH]

You need the mortgagee's agreement before you can hand the keys back.

 

If your insurance doesn't cover you for what you propose, then you'll need to take out alternative insurance, which will probably be at a higher level of cost as there is more risk to an empty property than an occupied one.

 

When I said you needed advice, I meant in direct relation to your proposal to hand back the keys - you should not do this without discussing your specific circumstances directly with CAB or a law centre. It is not a good option and should not be undertaken lightly. Make an appointment with CAB/Law Centre, or even contact your local authority housing options team, who will be able to talk you through other options that may be available, such as mortgage rescue or the mortgage protection fund.

[barbershop0]

My local authority housing people helped me out in resolving a repossession order, are you sure you have exhausted all possiblities.

 

If you are definately going to go bankrupt, why would you worry about your house insurance after you have moved out.

 

Kirklees & Wakfield council have a "Breathing space scheme" part of the Regional Mortgage Assistance loan scheme. Your area may run something similar.

 

Specialist advice is required.

[dizzy81]

Hi Guys,

 

I will try and get in touch with CAB.

 

I feel i have looked at all my options, I dont see a way out of this without staying put in this house which I dont want to do. Its the best thing for my family to get away from here and tbh Ive resigned myself to that fact now, its been a long road to get to this decision.

 

Redf being worried about the insurance im just not sure how it all works, im just worrying really but the top and bottom of it is we need to move for everyones sakes really - its not good to feel dread when you come home at night

 

Dizzy

[dizzy81]

Hi all, I have got an appointment with cab but not for two weeks!! In the meantime does anybody know if it actually makes the repossession process quicker if i hand the keys back instead of just letting the proceedings take their natural course?? Thanks dizzy

[dizzy81]

Anybody???

[BornThisWay]

Hi dizzy - I am very sorry for the situation you find yourselves in, but sadly sometimes there just is no option but to give up! As you say you have no quality of life living like this and home ownership is not the be all and end all of life.

 

I am not sure if there is a reason for not doing so, but why don't you tell the mortgage company what you have told us - that you can't afford to live there anymore? They probably won't try to repossess until you are six months in arrears as the Council Of Mortgage Lenders ask that this be the case and NR are members.

 

They will not be very happy as there is negatve equity, but if you can't afford it, you can't afford it, and that is the end of it. I see no reason not to fully involve them in your thought process and then if anything goes wrong they cannot say they were not told.

 

The only hold a lender has over you is the security - the house - so tell them they can take it. They will in future pursue you for the shortfall and you can say you will try and repay those in the future, but obviously if you go bankrupt they will not get it.

 

And good riddance to them. Lenders make billions out of borrowers, I am sure they can afford to write your shortfall off!!

[tonycee]

I went through this situation 2 years ago, so you have my sympathy. First thing i will say to you is, what has your mortgage provider said to you so far?

[dizzy81]

Thanks for the replies, I havent spoken to the mortgage company yet, they have been calling but I havent had the guts to answer them as yet. They have sent letters telling me im behond and to contact them to discuss it

Tony did you let a house repossessed? It would be good to hear from anyone who has been through this and come out the other side.

from what everyone has said it seems i would be better off telling them what im planning rather than just leaving.

 

looking at what you have said born, youre right the only hold they have is the house and i dont want it, we havent been happy here for such a long time now i think we are doing the right thing.

[tonycee]

Yes i let my house be repossessed. It was a conscious decision based on a multitude of circumstances. Not least the fact that i was bankrupt at the time.

 

Im not suggesting this was the right thing to do. I still have doubts 2 years later, but overall my circumstances were not going to improve enough to have a life.

 

Dont make any decisions without speaking to your mortgage provider. Despite what people may think because of the pressure they are under, your mortgage co really do want to help if possible. If you ignore them, you leave them no choice.

 

One thing you must take into consideration is the fact that life goes on, and you need a roof over your heads. Believe it or not, this economy will improve, and things will get better. I realise the now is yuk, but do consider the future as well.

 

Whatever you decide, dont just give the keys back. Voluntary repo is not a good idea. Neither is bankruptcy unless it is a last resort.

 

Make a plan. Talk to people. Worst case scenario is that they repossess. If so, you have 3 months or so before this happens.

 

I cant tell you what to do. Only give you my opinion.

 

TALK TO YOUR MORTGAGE PROVIDER. THEY WONT BITE

[tonycee]

What are the possibilities of renting out your house. Either job lot, or per room?

 

Get the agents round tomorrow.

[dizzy81]

Hi tony, I did look at renting and have had estate agents round but the rent we could get is £200 less than the mortgage is costing and we are struggling as it is. as well as that we would be responsible for all maintenance costs and We can barely afford it when anything small goes wrong. Unfortunately we bought in a very rough area, (young and stupid i guess) so things arent likely to get better anytime soon - thats why we need to move out its an awful place to live and we have put it with it for long enough. Thanks for all your advice so far everyone - helps to know we are not the only ones . Thanks

[tonycee]

PLEASE speak to the mortgage co. You might be pleasantly suprised if they say go on an interest only mortgage until things improve.

[007coot]

dizzy I feel for you, I'm in exactly the same boat and so glad I found your post. I too want to just up and leave I feel like I'm at my wits end! I had house valued yesterday and I'm £20,000 negative equity because of a secured loan I took in 2005. they lent me £46K, so far I've paid £38K back but my balance is still £43K and I just don't see any light at the end of the tunnel, I've paid £35K in interest then so far! we're basically paying two mortgages and I can't cope anymore. I'm so unhappy I hate being at home, I know exactly how you feel. I'm going to do a post myself now for some advice just to make sure I have exhauseted all my options. Good luck with yours xx

[dizzy81]

. I'm so unhappy I hate being at home, I know exactly how you feel.

me too - thats why i'm desperate to get out of here its awful to not look forward to coming home.

 

I called the mortgage co. today and they are sending me some forms to fill in for voluntary repo.

 

I at least feel much more informed than i did last week thanks to some lovely people on here

[tonycee]

I called the mortgage co. today and they are sending me some forms to fill in for voluntary repo.

 

I at least feel much more informed than i did last week

 

Wish i could help more, but voluntary repo is not a good idea. You said in post 1 that you are considering bankruptcy. If you go voluntary repo, they will make you sign a " Deed of acknowledgement " which basically means you accept liability for any shortfall until it is paid off. Even AFTER bankruptcy.

 

Do not sign if you are not sure.

 

Have a read of this >>>>>HERE

[Wintry]

Hi dizzy

 

If the house is re-possessed through the normal court procedure or if you hand back the keys then from what you have put so far you are more than likely going to end up with a huge shortfall when all the charges, continued mortgage & other costs (including sale) etc are added.

 

The post relating to any Deed of Acknowledgement is significant in all this so please make sure you understand this aspect.

 

The Shelter link another poster has put up tells you pretty much what you want to know about handing the keys etc.

 

With any housing / potential homelessness issue making sure you have alternative accommodation is obviously paramount.

 

With regard to the long term option of bankruptcy or any other appropriate solution then you would need to get full advice on all your options.

 

If you let your house go so to speak then your Financial Statement or statement (SOA) of affairs will be different when in any post alternative accommodation and this may mean that (and only may) there could be an alternative to bankruptcy.

 

If you stay in arrears with the mortgage then NRAM will more than likely set in motion the possession procedure anyway and will also probably start looking into a CCJ for the unsecured element of the together mortgage with a view to obtaining a Charging Order - you could call it the classic pincer movement I suppose.

 

You really need full independent advice on all your options as per still in your current property and then as it would be in any future rented property.

 

If you put up your Statement of Affairs as per above then there may be people on here who can help and guide you further.

 

You would not be the first to let the house go and then rent or the last and many people I know have done exactly this and have since said it was the best thing they ever did, but you have to be sure.

 

Big decisions for you at the end of the day so make sure you fully understand everything.

 

Along with what others have put taking into account you have already contacted CCCS it might also be useful to have a check through the CAB Debt Remedy & associated links below -

 

http://mymoney.nedcab.org.uk/moneyadvice/mortgagearrears.asp

 

http://mymoney.nedcab.org.uk/moneyadvice/debtremedy.asp

 

http://mymoney.nedcab.org.uk/moneyadvice/bankruptcy.asp

Edited August 2, 2012 by Wintry

[dizzy81]

Hi All, Tonycee, your post and link explains somethuing the mortgage co said to me the other day "as long as all the forms are signed and nothing is crossed out we will take possesion" I asked him why I would cross anything out and her just said "some people tend to sometimes". So it sounds like i may be better to just leave!!??? I am currently 2.9 months behind and will be 3.9 at the end of august which is when i need to move as i have found a rental with a good landlord -(My friend has been living in the house so I know she has been looked after and its the right size and area ect.) He has given me the tenancy agreement to sign but i will need to move in last weekend in auigust at the latest as she has already left and landlord needs tennants in. I am definately going that is one thing i have made my mind up about and it feels the right thing to do its just the repo process thats scaring me - Im worried about the inbetween. Will they not accept voluntary if i dont sign deed? I am fully aware that if i dont go bankrupt i would be liable for the shortfall but as i have no assets surely they could only take what i have spare every month which isnt much as im going to uni in september.Has anyone got a payment arrangement on a shortfall?Thanks Dizzy

[sillygirl1]

Whatever you do DO NOT fill in your mortgage company's 'statement of means' as this will then tie you into the alleged shortfall, which will be a LOT bigger than the 30K negative equity.

 

As for the insurance aspect, the estate agent handling the sale/auction of the property has the means to overcharge you for an insurance that does not benefit you nor them, so does the mortgage company itself.

 

Going bankrupt after the auction/sale is best as then that is included, if you do it before it may not be 'counted'

 

I was repossessed in 2005 and the mortgage sharks still are trying to get money from me - they have been told where to go as I am unemployed and have been for 18 months - partly due to a severely impaired credit rating.

 

Make sure you keep every bit of paper relating to the mortgage in a file, with dates/times and notes of telephone calls (and a copy of the recording if you can do this) as it will come in useful later on.

 

A good example of this was Virginmedia trying to milk me of a further £500 for NOT collecting their box from my old address - they were phoned up by my sister who handled my affairs for a few weeks post repo and collected the box from my dads - when given proof of this they backed down, this was some six months later when I was in a more settled position and able to rejoin them.

[sillygirl1]

You can be deemed NOT LIABLE for a shortfall so please stop thinking it is automatic that this is your future responsibility to pay, there are a lot of factors involved in this, not to mention the misselling of the original mortgage and the amount the mortgage company claim from you - remember they sell these properties on very quickly to their 'allied companies' at a huge loss just to prove a point to themselves.

 

Legally a mortgage shortfall can be completely overturned and the mortgage company can be investigated, look at what happened to GMAC and London and Scottish, and Northern Rock itself, in GMAC and London & Scottish's cases they no longer have mortgage products and both companies are in administration, GMAC were fined by the FSA.

 

I would get back on here with the CAB advice as many CAB people are not that aware of some of the developments regarding mortgage shortfalls.

[dizzy81]

Thanks for your help everyone. I have read somewhere that they still have to accept voluntary even if you dont sign the deed??? i.e just post the keys with a letter. If not i will have to let it take its normal course. I wouldnt have thought it would take them too long as Ive made them aware that we are moving out at the end of the monthDizzy

[sillygirl1]

They will try everything to get you to sign paperwork which will include something that means they can chase you for any shortfall very quickly, it is a back door way of trying to 'secure' the shortfall on any future asset you may get.

 

Just send them the keys back with a short letter stating you have left the property and are no longer liable for anything to do with it - they won't like it but there is little they can do - they will do everything to maximise their shortfall, my property was sold for £170,000 but they claim only £165,000 was realised after repossession fees, which shows how they like to 'massage' figures to create a loss.

[geoffthechef]

Dizzy81

J ust be careful with the shortfall and bankruptcy because i got repossessed but never went bankrupt and ten years later they turned up on my door asking for a eye watering amount..Get good advice is good advice..