Repossessed Homes UK

A new article by Real Estate expert Andy West, helps to clear some common myths regarding the purchase of repossessed homes. Read the full article here.

When it comes to purchasing a home, especially in this economy, you need to make sure that you’re getting the best deal for your money. One of the greatest opportunities available to home buyers, particularly new home buyers, are bank owned homes. However, popular thought often has a negative view on bank owned homes that prevents many buyers from considering them as options for their purchase. This negative social attitude is the result of myth and stereotypes that are not just untrue but positively ludicrous. Some of the most pervasive myths about buying a lender owned home are examined below along with what the real story on these affordable homes truly is.

Myth one: repossessed homes are run down. This may be the most common myth about bank owned homes. The unfortunate assumption is that if the home is owned by the bank then the person who couldn’t pay the mortgage also wasn’t able to pay to maintain the property. Even if this were to occur, which most of the time it doesn’t, the homes are open for inspection by potential buyers and maintenance of any run down or damaged items can be incorporated into the contract for the bank to fix them before closing. Just because you purchase of bank owned home doesn’t mean you’re purchasing a lemon or fixer upper!

Myth two: repossessed homes are undesirable or in bad neighborhoods. The assumption behind this myth is that successful rich people don’t default on their mortgages, so the only homes for sale for the bank are junky little trailer places. Yet nothing could be further from the truth. Unfortunately, the recession has reached all levels of society from the poor to the rich. A person defaulting on their mortgage has little to do with their socioeconomic position and more to do with a series of financial catastrophes that can happen to anyone. Bank on homes are available across the spectrum from small one bedroom units to large mansions.

Myth three: it’s a longer process to purchase a bank owned home. If you think that the bank is not a motivated seller, then you better think again. From the bank’s perspective, any property they have to repossess and resell is not just a source of unearned money, but is actually a drain on their resources. Every quarter the bank doesn’t have a buyer that home, they are responsible for taxes on the property as well as the maintenance to keep it looking desirable for any potential buyers. Banks want to get rid of their inventory of vacant homes fast to make a profit and also start up a new lending relationship that will be financially beneficial to them. This is why they are often willing to make huge concessions in the contract, from a ridiculously low price to the payment of the home owner’s association fees to making substantial renovations on the interior just to get you to close.

As you can see from these three myths above, there’s a lot of misinformation out there on repossessed homes. And in a situation like this, what you don’t know can hurt you, the least in the wallet. Bank owned homes are wonderful options for people who are looking to invest in property, purchase their first home, or pick up a vacation home somewhere. You wouldn’t believe the number of homes in your own town that are for sale by the bank, and the quality and location of many of these homes would probably shock you. If you’re searching for new home, be sure to check out the bank owned homes in your desired area. Chances are you’ll be pleasantly surprised!

Property repossession and the number of repossessed homes is on the increase in this time of recession. This guide is intended to help you understand the stages of repossession, why it takes place and the things that you can do if you are faced with this issue.

If you are currently paying a mortgage on your property and are falling into arrears, your lender has the right to start repossession proceedings. The terms of your mortgage contract will state this. Normally a lender has the right to start repossession after 2 months of arrears, but most lending organisatons will work with you to try and clear the arrears and thereby avoid legal action against you. The best thing is to keep talking to your lender and update them on your current situation. If you are unable to keep up repayments or your lender is not satisfied with your proposals then the lender will take legal action by going through the local county court. This is done so that they can take control of the property and gives them the right to sell the property and recover the outstanding balance on the mortgage.

In the first instance you will receive letters from your lending organisations debt collections department as well as telephone calls to try to collect missed payments. As stated above always keep the lender informed of circumstances and attempt to come to a mutual agreement to clear the debt over time. If your account remains unpaid for 4-6 months or more, the your account will be referred for legal action to a firm of solicitors. They will probably write to you demanding that you pay the arrears in full or warning you that you will face repossession of your property if the arrears are not cleared and the account is not brought up to date. Always contact the solicitors and propose a mutual contract agreement or arrangement to clear the arrears.

Proceedings to start repossession will typically begin after 6 or more months of arrears and with the solicitors representing the lending organisation issuing repossession proceedings through the local county court. A hearing date will be set by the court and its advisable that you attend. It is important that you have all your documentation concerning your mortgage account and your account history as part of your preparation for the hearing.

At the court the person presiding over the hearing (usually a judge) can decide whether to do a number of things:
1)Adjourn the hearing – You will receive a new hearing at this stage and this usually happens in the case of absence or the requirement of more information.
2)Indefinite Adjournment or Dismissal – this normally occurs if full payment of the arrears have been made.
3)Order for Possession – This order will give the lender the right to possess your property after a period of 28 days. Even at this stage there are options for you to take in order to sell your house quickly.
4)Suspended Possession Order– in this case the order is suspended following the payment of the current installment and a mutually agreed amount towards the arrears.

The final option is a favourable position for all parties as it gives you a further chance to clear the arrears and gives the lender some security that payments will be made. However, if you default on the payment or the agreement the lender has the right to seek possession of the property by way of a possession warrant or notice of eviction.

A notice of eviction or possession warrant is occurs if you fail to meet the criteria of the suspended possession order or if you are still occupying your property after the time frame for order of possession has lapsed. In this case the lender will apply to the courts to have you formally evicted. The court will send you a date and time at which you must leave the property. A bailiff of the court will attend your property accompanied by a representative of the lender as well as a locksmith. They will come with the intention of taking formal possession of the property. Even at this stage avoiding property repossession is not too late.

Protecting your Property From Repossession
If you’ve failed to make your loan payments, a crediitor may have the power to repossess the property which is attached to the loan. There are 2 kinds of loans – secured and unsecured. Secured loans, such as for a house or a car require that the property purchase by used as a collateral for the loan. If you fall behind on the payments for a secured loan, the creditor can take back the property and sell it to pay off your remaining debt – this is property repossession. The creditor may also be able to get a hold of other property you own and force its sale to pay the debt owed. If you are worried about a repossession or other debt, consulting our site will provide you with advice on where to get help. There are many places you can find free advice with regards to repossession.

How Badly Does Repossession Affect Your Credit?
In the UK, repossessions generally stay on your credit report for a minimum of 5 years, and for citizens of the US, around 10 years. It will hav ea real impact on your ability to buy another home. You can expect a repossession on your name to affect your credit score quite a bit, but how much depends on the rest of your financial situation. However, a property repossession won’t affect you forever and you will be able to buy another home in the future. Before taking the course of repossession, evaluate whether there are any alternatives and don’t just assume that repossession is the only option. Our help and advice section will provide you with info on organistaions you can provide free information on how to avoid repossession and what options are available to you.

Creditor Rights
Credit Rights arise in different contexts. In some cases they are determined by the underlying agreement signed between the lender and you that provide specific remedies in the event of obligations not being met. In other cases creditor rights may depend on whether the loan is secured or unsecured. A secured debt contains a pledge of property or other valuables that can be attached in court in the event of a default. An unsecured debt does not have this advantage.