Voluntary sale, Vulture Fund won't agree to write off shortfall

Discussion in 'Mortgage arrears & negative equity case studies' started by Beeceeb, Dec 6, 2016.

  1. Beeceeb

    Beeceeb New Member

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    Hi guys, I'm trying to work out what our options are and looking for opinion from anyone with experience. Long story short, family home in serious arrears, no income coming in, have accepted we have lost the house. Bank sold mortgage to vulture fund and we are dealing with their SPV.
    There is currently €200k o/s. We received offer of €140k in March 16 and we offered this to them in full and final (F&F) settlement and they declined as valuation is for €150k. We then offered the sale of €140k, plus €10k cash as f&F and they declined. The cash was made up of donations from friends and family on basis that we were led to believe by the SPV that the VF would accept €150k. We were devastated they then said no. It took a lot to even ask some of those we asked. The SVP then asked us to use an estate agent of their choice which we were not happy about as existing estate agent has been on this for over 3 years (4 sales fallen through) and did alot of the work for us for free, but we felt we had no choice and did as they asked.
    The same purchasers made offer to new agent of €150k, as they said VF would not accept anything less. So with that, we went back to SVP and offered this as f&f. We were told verbally a month or so ago by the SPV that this offer had been accepted. I later got an email from SVP saying that the Vulture Fund had consented to the sale. Solicitor has been trying since then to get everything in writing. The SVP advised the estate agent at that time that everything was good to go-who then advised the purchasers who are obviously keen to get moving in as this is ongoing for them since March this year.
    Two weeks ago, the SPV verbally advised our solicitor that the VF were only consenting to sale and that the o/s debt once sale cleared would still be outstanding and for her to let us know. We had been dealing with SPV on our own up until we were told we the VF had given go ahead as we couldnt afford legal rep. SPV did this I believe because he knew we were under impression it was sale in full and final settlement. We were shocked to say the least and so upset-we really thought finally we were near the end of this horrible experience and might be able to avoid insolvency.
    SVP now just not getting back to anyone. What if anything can we do here? I can't even tell if we are still under MARP or not. Buyer ready to pull out-that will be the 5th and final one at this stage as we will just have to go bankrupt and end this. Any advice?
     
  2. Brendan Burgess

    Brendan Burgess Founder

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    Where will you live when you sell the house?

    When did you last make a mortgage payment?

    Why not just continue staying in the house, paying nothing, if you have nothing. If they agree to a sale and write off, then you agree.

    If they don't agree to write off the shortfall, then you don't agree.

    You will have free accommodation. They will take you to court, eventually. It will take them some years to get an order for possession. You will tell the court how you tried to deal with them, but they were impossible to deal with.

    In the meantime, maybe the value of the house will rise and you could have a much lower shortfall.

    Your financial position may improve and you could resume repayments in which case they would find it virtually impossible to repossess.

    You could go to Abhaile which would pay for the bankruptcy. But I don't see any reason to go bankrupt now, unless you actually want to leave the house and have somewhere to go. If you do have somewhere to go free of charge, then let the house and use the rent to pay the mortgage.

    Brendan
     
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  3. Beeceeb

    Beeceeb New Member

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    We moved out some time ago when original bank had consented to sale and a rented house became available that we could afford. It was then discovered that the house had serious structural issues and roof could collapse st any time so we could not move back in and sale fell through.
    With help from a homelessness agency, we are in receipt of rent allowance and have accepted that the house is gone.
    We wanted to be in control of sale as it is beside family and we would achieve more for it than if sold by bank. It is not an area that has seen any increase in house prices unfortunately.
    I want to know if there is any way to try convince VF to accept offer? They want another €20k more in cash. We barely have €500 to rub together and we can't ask for help from family again as they have the €150k they say they wanted for the house. They bought sexy for a song, we have cooperated with them all the way, they have SFS and know we do not have affordability and we were prepared to sell the family home to get out of this situation. We got a sale despite the problems with the roof (quote says about €60k to fix)But none if that is enough and instead they just keep changing the goal posts.
     
  4. TLO

    TLO Frequent Poster

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    Okay, so it looks like the SPV is consenting to the sale but is not agreeing to it being a Full and Final Settlement. Normally the possibility of you petitioning for your own bankruptcy would make them see sense but you are a bit constrained because you also want to keep control of the sale. A possible approach would be to let the sale go through, and deal with the shortfall afterwards by petitioning for your own bankruptcy (you probably don't have enough income to support a Debt Settlement Arrangement (DSA).
     
  5. Brendan Burgess

    Brendan Burgess Founder

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    Why not tell us all that from the start?

    Your family wants to buy the house because it's close to them or built on their land.

    I think that the vulture fund may well be right not to sell it to them under the circumstances.

    Brendan
     
  6. cremeegg

    cremeegg Frequent Poster

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    Brendan,

    I think you misunderstood the point.

    "we can't ask for help from family again as they have the €150k they say they wanted for the house."

    I understood this to mean that when the OP asked his family for €10k to top up the offer he had at that point, he thought that the bank would accept €150k in full settlement. Now that the purchaser has offered €150k and the bank is still looking for the shortfall, the OP cannot now ask his family for money under those circumstances.

    OP,

    Brendan's advice in post 2 is still excellent, even though you cannot live in the house. The only thing I would add, is that you should not take any money from your family to pay the bank. If they want to give you money for yourself, great, there is no reason why they should give money to the bank.
     
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  7. Bronte

    Bronte Frequent Poster

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    Last edited: Dec 7, 2016
    Totally agree the OP should not ask any family for any money for the bank. The fact the OP offered 10K is why a bank would look for more. The bank's negotiatior thinks more can be sqeezed from the OP. Because of this fact. That's how they think.

    The very fact the OP is on rent allowance means they are broke. No point sending good money after bad.

    Also the OP should do the money makeover thread as it sounds like they could do with some financial advice. It's not even clear if they need to go bankrupt. And they are not a mark for the bank to go after. But what they do need is to stop this torture and begin a new life with a clean sheet.

    OP have you been to Mabs?
     
    Last edited: Dec 7, 2016
  8. Brendan Burgess

    Brendan Burgess Founder

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    Hi Beeceeb

    Could you clarify who the offer is from at the moment? Is it a family member who made the offer to buy the house or someone completely unknown to you?

    Brendan
     
  9. Beeceeb

    Beeceeb New Member

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    Apologies, I didn't make myself clear. We are not selling the house to family-it is a couple we do not know who have made an offer.
    When we got original offer of €140k the VF declined and the SPV said it was because valuation was for €150k and if we got €150k they would probably take it. So family offered to help us come up with the €10k that was required to push it over the line. This was on basis of full and final settlement and it would mean we could close this chapter and move on and avoid bankruptcy. Family felt it was worth it to pay. However, this offer too was rejected.
    The offer that is in now with the estate agent that the VF wanted us to use, is for €150k.
    Yes we have been to Mabs and so many other agencies at this point. If I am being honest, they were not that helpful. They really are of little help to anyone who has accepted that they wont keep their house and just want to move on. I know it is an unusual situation but it seems to me staying put and sticking the head back in the sand, wouldn't get us far. We are both back in college and have NO intention of ever being in this situation ever again. Not that we'll ever own our own home again but renting is frightening, that I can assure you. No stability and rents just rocketing.
    I am very upset because we were verbally told VF had accepted offer in full and final settlement and they led everyone to believe that for weeks. Now they want €20k that I don't have. And I have The purchasers are about ready to jack in and I can't blame them. I still cannot believe we managed to find a buyer given the state the roof is in.
    The bottom line is that we are insolvent and dealing with a VF that I do not think has full facts in front of them when decisions are being made. Our main fear is that if this sale falls through, we will have to walk away and let them deal with it but the debt will end up being far more than they just accepted this latest offer. It seems unfair to me and if it transpires when this does eventually get settled, that we owe alot more, I don't see how its fair that we be imposed with excess debt that could have been avoided if they had just stopped messing around.
     
  10. cremeegg

    cremeegg Frequent Poster

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    How do you know that the roof could collapse at any time. That is not a normal state of affairs. When you bought the house was there an engineers report.
    How old is the house, is it covered by home bond.

    What would the house fetch if the roof was ok.

    If you cannot keep the house, you should move on and forget it, but the whole thing doesn't seem to stack up.
    If you accept that the house is gone, you should also accept that all the other things don't matter. Who buys it, how much they pay for it, etc. If the house is gone these are not your problem, stop worrying about them.

    You will have a shortfall, you are not in a position to pay that. The bank will have to write it off eventually. Don't loose sleep over it.
     
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  11. Beeceeb

    Beeceeb New Member

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    We accept the house is gone but I disagree-other things do matter while we still technically own the house for reasons explained above-we want to achieve best price possible to limit our shortfall. I am well aware that we will have a shortfall whatever happens here. But surely there has to be some responsibility had by the lender to ensure our shortfall is for as little as possible? Again, advice would be great on this question.
    The VF has made it quite plain that they will continue to pursue us for the outstanding debt. And our solicitor has had bad experiences in past with VFs saying they could sort outstanding debt out after the sale has gone through, then failing to engage and just pursuing the debt despite saying they would come to an agreement.
     
  12. TLO

    TLO Frequent Poster

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    Assuming you have no other assets, and income below Reasonable Living Expenses (RLEs), post sale bankruptcy is an option worth considering. It lasts for a year, won't make any difference to your day to day living, and most importantly, it is a unilateral action; you do not seek agreement with the SPV. You just do it, and the SPV has to deal with the Official Assignee from then on. The SPV isn't allowed to even contact you.

    As an aside, how did you end up with such a dangerous and house to begin with? And whose fault is it? The builders? Your own engineer? The valuer for the mortgage company who loaned you at least €200k? With such serious structural deficiencies it looks like the ball was dropped multiple times and this has contributed to putting you in an insolvent position.
     
  13. Beeceeb

    Beeceeb New Member

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    Yes we would be eligible for bankruptcy but we wanted to avoid it which is why we have allowed this go on for two years longer than it needed to. The VF gave us the impression a deal would be done on the shortfall all the way through. Now they are reneging on that. The original lender had also promised to write off the o/s debt if we sold the family home. Just feels like we have completely wasted the past 2 years. If that is what we have to do then so be it but we really were hoping it wouldn't come to that.

    As for the house, as I have already explained, it was a self-build. We employed a builder and an architect who signed off on work for each stage payment of our self-build mortgage. We are not experts and we trusted them to do the job right. It wasn't done. Fault lies with both of them. I would assume this can and does happen frequently. We can't afford to sue.
    However, it certainly wouldn't be fair to suggest they contributed to our insolvency position. They contributed to people pulling out of a sale that was already agreed and days away from all parties signing contracts, yes. They are definitely at fault that the house is now much more difficult to sell. But we were already in an insolvent position before ever we knew about the roof issues. House was still in NE. So I am not going to be unreasonable and suggest they are to blame for that.
     
  14. Beeceeb

    Beeceeb New Member

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    So this is what I actually need advice on.

    1. Are we still under MARP?
    We received a letter from VF to say mortgage unsustainable some time ago. We then made two offers to them which they declined but refused to give in writing.
    Last offer of €150k, we got a verbal ok for consent of sale a month ago, but still nothing in writing. Who can we complain to? Are we still under MARP process? Do we or can we go to the FR? Surely they are obliged to accept or decline offers put to them and reasons why they have declined etc-even if that's for selling house? Or are all bets off now?

    2. Are lenders under any obligation to achieve max sale price for house to ensure o/s debt isn't more than it should be?
    The VF now using own estate agent but still want another €20k despite their own agent saying they are lucky to be getting what they have. At this rate, the sale will fall through and we will have to go insolvency route.

    Just seems so unfair, unnecessary and so utterly greedy of them.
     
  15. Bronte

    Bronte Frequent Poster

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    Apart from the fact that I don't understand why you seem to be so emotionally involved in this transaction why is the bankruptcy option not an excellent solution for you. And end to the mattter.

    Also, what exactly have you got to do with the sale of this house? What does the VF need from you?

    And of course the VF wants the best sale price, why would they want less than they can get.

    And I don't see why it matters to you which estate agent they use. Like so what.

    And so what if the sale falls thru. You're broke, you have no assets, you have no income for the bank to come after, so who cares how much it's sold for. You might as well owe 200K as 50K.

    I'm not trying to attack you, but you're definitely too mentally caught up in this.

    Also neither you nor anybody else should rely on anything from anybody unless it is in writing.

    Why do you have a solicitor? For what reason?
     
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  16. Beeceeb

    Beeceeb New Member

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    Last edited: Dec 8, 2016
    I will stop trying to be emotionally involved with the forced sale of our family home in future. In fact I think I would be better off not posting here full stop. But I will answer this last post. Thank you to those who messaged me privately and we really appreciate the good advice we received.

    Bankruptcy is the option we most likely will now have to take. My point, and I am clearly not making it well, is that we could have done that two years ago. But we were advised by the lender that if we sold it ourselves, the bank would write off the shortfall. So that is what we have tried to do. I'm unsure why some cannot understand why we would be upset over this.

    I don't understand the question about what have we go to do with the sale of this house? The VF wanted us to sell rather than them. This way a higher price could be achieved. So we used an estate agent for the past few years who had gotten four offers, three of which fell through because the bank took too long to decide. Another fell through because of the roof issue. He then got an offer which the VF said no to. The VF then decided we had to use their guy. So the people who made that offer switched to their guy who did none of the work and who will receive the fee. The original estate agent will get nothing. I just think that is a shoddy way to treat anyone with a small business and a family of their own to support. And if that happened to any one of you, I think you would be upset by that.

    The VF wants another €20k cash from us, which we do not have or to give them the house.

    The VF in my opinion, is not one bit interested in maximizing the sale price. They have already lost 3 higher offers because they took too long to decide. Now they have a very fair offer in, it has been been recommended by their sale agent and their SPV and they are still saying no. If this falls through, they will have to sell it and I have no doubt they will achieve much less for it.

    It does matter to me what I owe. I'm sorry but I do care that I have been unable to pay back my debts as they fall due. But I also know the bank refused to ever offer us a long term option. I do know that government took away the mortgage interest supplement which was the nail in the coffin for us.

    "I'm not trying to attack you but...." I am going to assume you have never lost your family home and future.

    And as for not relying on anything in writing. Yes that is very true. But they refuse to write anything down. Ever. It is policy and is rampant. And there is no legislation or policy there to protect borrowers in these situations. On that basis, there is little more you can do but trust what they say and hope for the best.

    We have a solicitor now because the VF instructed their estate agent and us that they were consenting to sale. We were told to get a solicitor. This is standard practice when selling a house is it not? Part of her work was ensuring that she has everything in writing from them. They are refusing to engage with her.

    I had asked for some advice. I wasn't expecting tea and sympathy but I did think most people would understand that losing your home isn't easy. I certainly wasn't expecting to be put on trial and judged as harshly as I have.
     
    Last edited: Dec 8, 2016
  17. Bronte

    Bronte Frequent Poster

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    Last edited: Dec 8, 2016
    Actually you are wrong about my family, not me personally, I have two that lost properties, one that is barely in a property and another tied financially to one of those etc and people from my previous working life I know in jail, and another on the way to jail, a third bankrupt, another depressed etc etc etc. This is a money website. It's no help to you us getting involved in the rights and wrongs of what is happening.

    What I'm trying to do is give you advice. You don't have to take it.

    If not for you I will say this, and I did say it on here before. EA should not be hired unless it is clear who is going to pay them, ditto goes for hiring a solicitor. I would want it in writing as part of any negotiation that the VF/solicitor signs off on who will pay from the sale proceeds. Otherwise if I were broke i would not hire anybody or do anything really. I imagine Beeceep both your old EA and solicitor know this, but you need to be sure you're not going to be left on the hook for those bills too.

    I'm sorry you lost your home. To me this has to be now left behind. You walked away from it. And it's unliveable in anyway.

    I've no idea what you are getting by PM. Has any of them given you advice on how to deal with the VF? Advice that is useful and might be useful to others in similar situations.

    To be honest I'd ignore the VF and let them do all the chasing, so far you doing their bidding hasn't helped you one bit.

    And it's not their fault you had to leave the house. And I agree totally that your builder and engineer, who are both probably in Australia are at fault.

    I'd also be interested in what your solicitor adviced in dealing with the VF?
     
    Last edited: Dec 8, 2016
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  18. Beeceeb

    Beeceeb New Member

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    Our solicitor is quite frankly, flabbergasted by their behaviour. They do appear to be a law onto themselves. It would also seem quite apparent that there are very few professionals or otherwise who actually know what the rights and obligations for parties are at this stage of the proceedings. That is what I came here for advice for. But it would seem that no one has the answers to the questions I posed. There is plenty of good advice about what we should do in the event that this deal goes belly up, which we will follow, as that is most likely where this is headed and we have no way to compel the VF to act in what seems everyone's best interests.
    Thank you everyone who took the time to answer. I appreciate this is a money site. I will bear that in mind in future.
     
  19. Marc Kennedy

    Marc Kennedy New Member

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    VF's are not obliged to enter, what you consider to be a good deal, other issues may be going on in the background that you are not aware of, for example the vulture fund may be considering selling on your mortgage again ( churning ) as part of it's strategy.
     
  20. Lone Star

    Lone Star Frequent Poster

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    Contact The-Hub Ireland :)