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Bank repossess house, is debt gone?

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  • 05-08-2013 8:36pm
    #1
    [Deleted User]
    Posts: 18,749 ✭✭✭✭


    quick question, i always believed that if you cant pay the mortgage and the bank repossess the house thats the end of it.

    a friend told me thats not true, if the bank reposses the house owner still owes the mortgage.
    is this true? and how could it possibly be right?


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    #2
    L1011
    Registered Users Posts: 68,818 ✭✭✭✭L1011


    The mortgage holder still owes the residual amount (if any) after the sale of the house.

    What you are thinking of is the situation in some other countries (notably the US) of non-recourse mortgages.


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    #3
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    MYOB wrote: »
    The mortgage holder still owes the residual amount (if any) after the sale of the house.

    What you are thinking of is the situation in some other countries (notably the US) of non-recourse mortgages.

    Correct yes but new insolvency legislation should help people genuinely in trouble get the debt monkey off their backs.


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    #4
    Duckjob
    Registered Users Posts: 2,859 ✭✭✭Duckjob


    bubblypop wrote: »
    quick question, i always believed that if you cant pay the mortgage and the bank repossess the house thats the end of it.

    a friend told me thats not true, if the bank reposses the house owner still owes the mortgage.
    is this true? and how could it possibly be right?


    What you're describing there are non-recourse mortgages. I believe they're the norm in the US, but they don't exist here.


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    #5
    pippip
    Registered Users Posts: 2,249 ✭✭✭pippip


    You end up having to negotiate a personal loan with the bank to cover the balance.

    That's if the bank lets you. They can stop the sale if they think you can afford the repayments by withholding the deeds.


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    #6
    camphor
    Banned (with Prison Access) Posts: 202 ✭✭camphor


    bubblypop wrote: »
    quick question, i always believed that if you cant pay the mortgage and the bank repossess the house thats the end of it.

    a friend told me thats not true, if the bank reposses the house owner still owes the mortgage.
    is this true? and how could it possibly be right?

    The borrower owes the full sum. The house is just security.


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    #7
    Shoomac
    Registered Users Posts: 5 ✭Shoomac


    If the house is security and that's in negative equity; isn't the loan then unsecured?


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    #8
    djimi
    Registered Users Posts: 13,237 ✭✭✭✭djimi


    Yes, which I think is the reason why banks are so reluctant to repossess unless they really are left with no other choice. Repossessing a house means that it is only going to be worth to them what it is worth at that moment in time. Until it is sold there is always the chance that their security will increase in value. Thats how I see it anyway.


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    #9
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Shoomac wrote: »
    If the house is security and that's in negative equity; isn't the loan then unsecured?

    Nope and don't believe anyone who tries to tell you that.


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    #10
    djimi
    Registered Users Posts: 13,237 ✭✭✭✭djimi


    gaius c wrote: »
    Nope and don't believe anyone who tries to tell you that.

    Assuming we are talking about a repossession, what becomes the security once the house is repossessed and sold? Or are you just talking about negative equity in general?


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    #11
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    djimi wrote: »
    Assuming we are talking about a repossession, what becomes the security once the house is repossessed and sold? Or are you just talking about negative equity in general?

    The poster I replied to did not specify repossession in their post.


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    #12
    djimi
    Registered Users Posts: 13,237 ✭✭✭✭djimi


    gaius c wrote: »
    The poster I replied to did not specify repossession in their post.

    Its a thread about bank repossessions; I took the poster to mean in the case of a repossession.


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    #13
    Shoomac
    Registered Users Posts: 5 ✭Shoomac


    Yep, I was talking about repossession :)


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