Selling at a loss

Branoic

I have a property which was bought in the mid 2000s (the only property we own). Haven't lived in it for a few years. Trying to rent it out but the rental income is less than half the mortgage and its causing us all sorts of grief and stress.

We could hold on to it for the next two decades and hope that its value increases to something remotely close to what we paid before we try to sell it. But to be honest it'll probably give me a heart attack before then.

I'd seriously consider trying to sell it at a dramatic loss just to be rid of the place. What would happen then RE mortgage repayments? Suppose the property sells for half the mortgage cost (optimisitic!). So I've halved my debt but have no property left.

Is this even possible to do? What would happen if, a couple years later, I was unable to continue repaying the mortgage? My home could hardly be at risk if I did not keep up my repayments - i would no longer own it.

whippet

you need to talk to the bank first.

more than likely the bank will not allow you to sell until the mortgage is cleared.

think of it from their side, why would they allow you to sell at a fraction of the price and leave you with an unsecured debt.

it's a pain in the ass but it's the reality.

Duckjob

Branoic wrote: »

I have a property which was bought in the mid 2000s (the only property we own). Haven't lived in it for a few years. Trying to rent it out but the rental income is less than half the mortgage and its causing us all sorts of grief and stress.

We could hold on to it for the next two decades and hope that its value increases to something remotely close to what we paid before we try to sell it. But to be honest it'll probably give me a heart attack before then.

I'd seriously consider trying to sell it at a dramatic loss just to be rid of the place. What would happen then RE mortgage repayments? Suppose the property sells for half the mortgage cost (optimisitic!). So I've halved my debt but have no property left.

Is this even possible to do? What would happen if, a couple years later, I was unable to continue repaying the mortgage? My home could hardly be at risk if I did not keep up my repayments - i would no longer own it.

Your lender will not normally allow you to sell unless the sale would allow you to pay off the mortgage in its entirety.

Branoic

Well that's that, then! Kinda figured as much. Thanks.

daltonmd

Branoic wrote: »

Well that's that, then! Kinda figured as much. Thanks.

Well, firstly what kind of mortgage do you have? Did you get a tracker, if you did then you have a bit of leverage to go to the bank and see will they give you some kind of a discount - it's happening I have heard.

The balance could be turned into a personal loan, best bet is to go and talk to the bank and see can you work something out with them or wait for changes in the bankruptcy laws to come in - it's not a great situation I know but it might be worth a shot.

Idbatterim

how big would the shortfall be roughly op?

Diddler1977

The bank would probably only allow you to sell if you were going to cover the shortfall in sale price versus mortgage with personal savings.

What is the shortfall?

mickmcl09

The idea that a bank cannot allow you sell is not only ludicrous, it's not true.
Talk to the bank, tell them you want to sell and that you will be discharging yourself from any outstanding liability. They'll jump up and down etc etc. Get yourself a good property solicitor to draft the letter.
If they're unwilling to accept your proposal, return them the keys and put it on them to sell it, don't forget to discharge yourself from anything that may be outstanding as a result.

Besides the banks are doing lots of deals in this regard behind closed doors. You just have to be very definite with your intentions here.

Sell it, the bank will torment you for a year or so for the balance. If it's anything less than 100k it won't justify going after you.

Worse case scenario, you can't borrow for 12 yrs. Highly unlightly though with Europe increased influence, bankruptcy laws will have to fall into line with mainland Europe, putting you out of action for 3 years rather than 12. I'd expect this legislation to be passed within 2/3 years.
When it happens it will bring many people back into the loop immediately as they will have already 'served' 3 years +.

Have courage and talk to your solicitor.

Milk & Honey

mickmcl09 wrote: »

The idea that a bank cannot allow you sell is not only ludicrous, it's not true.
Talk to the bank, tell them you want to sell and that you will be discharging yourself from any outstanding liability.

That is fantasy. The bank has a charge registered on the property. Nobody will buy the property unless the charge is removed. Only the bank can do that. The o/p can't sell unless the bank remove the charge.

Handing back the keys for the bank to sell means the bank takes the keys and sues for the whole sum outstanding. This can mean bankruptcy, visits from the sheriff, garnishee proceedings, examination proceedings and an awful lot of other hassle.

There are situations where borrowers have found a purchaser and approached the bank and done a deal. Anything of this nature is on a case by case basis. There is no such thing as discharging yourself from liability for a loan, other than by repaying it.

Even if the bankruptcy laws change it does not mean defaulters wil obtain credit easily when discharged.

Being bankrupt does not just mean no borrowing for 12 years. Every cent earned or acquired by the bankrupt must go to the Official Assignee who will make a living allowance to the bankrupt. There are also travel restrictions.

TwoShedsJackson

Talk to the bank, tell them you want to sell and that you will be discharging yourself from any outstanding liability. They'll jump up and down etc etc. Get yourself a good property solicitor to draft the letter.
If they're unwilling to accept your proposal, return them the keys and put it on them to sell it, don't forget to discharge yourself from anything that may be outstanding as a result.

If that worked why wouldn't they just go in, give the bank another tenner and say 'I discharge myself from this loan!! Jinx, no comebacks!!!!!' It's not that easy.

Duckjob

mickmcl09 wrote: »

The idea that a bank cannot allow you sell is not only ludicrous, it's not true.
Talk to the bank, tell them you want to sell and that you will be discharging yourself from any outstanding liability. They'll jump up and down etc etc. Get yourself a good property solicitor to draft the letter.
If they're unwilling to accept your proposal, return them the keys and put it on them to sell it, don't forget to discharge yourself from anything that may be outstanding as a result.

Besides the banks are doing lots of deals in this regard behind closed doors. You just have to be very definite with your intentions here.

Sell it, the bank will torment you for a year or so for the balance. If it's anything less than 100k it won't justify going after you.

Worse case scenario, you can't borrow for 12 yrs. Highly unlightly though with Europe increased influence, bankruptcy laws will have to fall into line with mainland Europe, putting you out of action for 3 years rather than 12. I'd expect this legislation to be passed within 2/3 years.
When it happens it will bring many people back into the loop immediately as they will have already 'served' 3 years +.

Have courage and talk to your solicitor.

All sounds wonderful, but you can't sell a property without the deeds, which the lender will normally keep until end of the mortgage.

daltonmd

mickmcl09 wrote: »

The idea that a bank cannot allow you sell is not only ludicrous, it's not true.
Talk to the bank, tell them you want to sell and that you will be discharging yourself from any outstanding liability. They'll jump up and down etc etc. Get yourself a good property solicitor to draft the letter.
If they're unwilling to accept your proposal, return them the keys and put it on them to sell it, don't forget to discharge yourself from anything that may be outstanding as a result.

.

Like the balance of the mortgage?

Treehouse72

mickmcl09 wrote: »

The idea that a bank cannot allow you sell is not only ludicrous, it's not true.
Talk to the bank, tell them you want to sell and that you will be discharging yourself from any outstanding liability. They'll jump up and down etc etc. Get yourself a good property solicitor to draft the letter.
If they're unwilling to accept your proposal, return them the keys and put it on them to sell it, don't forget to discharge yourself from anything that may be outstanding as a result.

Sorry Mick, but that is terrible advice. It's the equivalent of sticking your head in the sand. OP needs to play it straight, communicate with all parties involved and be as rational as possible. Just returning the keys and getting grumpy with the bank won't do the trick.

mickmcl09

I kind of figured such a reaction to my last post.
A few points:
If you haven't tried it, how do you know it is not possible.
The banks have to release the deeds to the mortgage provider of the new purchaser or to the purchaser outright if they do not take out a mortgage to purchase the property.
Banks jump up and down when things don't go their way, are you going to lie down for then to walk on you.
In case any of you haven't noticed, there's lots of things happening in Ireland in the area of finance etc. that we have been alien to, up to now.
Look at the Quinns and the €3million loan case in court yesterday.
Look at this http://www.boards.ie/vbulletin/showthread.php?t=2056475870
Makes your blood boil, doesn't it! Anything us possible in Ireland right now!

It's time to look after no. 1 because the govt and the banks will look after themselves.
I'd be forgiven for thinking some of the posters are bankers, and I apologise in advance to those of you who are not.

My initial post might seem far fetched, but unless any of you haven't tried it or looked into it fully, don't say it can't be done. I'm in the middle of watching a person go through the process at the moment. The chaps stress levels have been dramatically reduced and he's got kids to boot. I'm seriously considering it myself. We are far too sentimental about property in ireland.

Marcusm

Mick

Have fun with your approach. Most of the banks are not set up to deal with repossessions and the resale Market is not exactlyiquid. Therefore they are better off with you in situ rather than kicking you out. If you simply hand the keys back, you'll find that it will take a long time for them to legally secure possession which will be necessary to effect a sale. The property will deteriorate over this period and you will probably think "why should I care?". Well ultimately they will continue accumulating the interest and coats and any shortfall will still be due from you. As the UK experience of 88-93 has shown, the banks will come looking for this from you later when you are getting back on your feet. Outcome - their claim against you will be higher and you won't have had the benefit of living in the house. If you want out of the mortgage, try proving that they'll never recover the money and settling with them. Walking away won't benefit you unless you're leaving the country never to come back.

Milk & Honey

mickmcl09 wrote: »

I kind of figured such a reaction to my last post.


The banks have to release the deeds to the mortgage provider of the new purchaser or to the purchaser outright if they do not take out a mortgage to purchase the property.
.

No they don't. The bank has a charge registered against the property. there is no obligation on the bank to remove it until the last penny is paid. Nobody will buy with a charge on a property.

The temperature of anyone's blood is irrelevant.

I have seen people try all kinds of things that they learned from the freeman movement. Some of them ended up in jail.

phormium

The bank will release the deeds prior to a sale to a solicitor but on 'accountable receipt', the solicitor will have to undertake to either discharge the debt fully (normally in the past from the sale proceeds) or return the deeds to the bank. So basically not possible to sell for less than mortgage amount without the ok from the bank.