Default on Spanish Mortgage

Stating the obvious really but, shouldn't you be talking to a Spanish solicitor (or equivalent) about this? Seems like a pretty important point if it applies to you.

Agree you need professional advice but it is highly unlikely unless the Spanish bank took security against your family home in order to give you a mortgage for the spanish apartment.

To jog your memory:
* did the spanish bank get you to give them a valuation of your family home, when you took out the mortgage? Did they ask to look at the deeds of your family home? If no, then highly unlikely.
* or did they just get a valuation on the Spanish apartment when you got the mortgage?
* where are all the documents related to the purchase? is there any that show the spanish mortgage connected with your Irish family home?

Your assets in Ireland may not be linked to your apartment in Spain, your question should probably be if you default on a loan in Spain will the Spanish Bank come after your assets in Ireland. Don't see why they can't, you've probably given them your Irish address, passport number/identity etc. They could hire an Irish solicitor to take a case against you. Maybe if it's a small amount of money they won't bother.

Surely if one takes out a mortgage full stop in any country and the bank has that property as sole security the bank cannot do anything other than sell the property to recover its monies.
Now supposing the mortgage was 100k and you threw it up and left the bank to sell it and it sold for say 125k what happens to the excess. Are the bank obliged to return some of the excess to the mortgagee ?

When you took out the foreign loan, did the Spanish bank look for your payslip/P60 or proof of earnings?

Why would they want these items if not to satisfy themselves that you could afford to repay the loan in the event of things not working out as you planned.

I used to think that if you took out mortgage indemnity, that you were covered in the event of you defaulting on the loan, and that the insurance company had to take the hit, but the attached link seems to suggest otherwise.

[broken link removed]

The article refers to the UK, but I am sure that it will equally apply throught Europe. Basically, if you default on a loan, the insurance company will pay it off, but they will be entitled to come after you for the amount owed. They may get a judgement mortgage against your home for the money owed.

I would also imagine that they would not pursue you themselves, they would instead sell your loan on to a specialist collection agency.

Murt

Have you not got an equity built up ?

You need to take legal advice on this. If you are in a negative equity situation and the bank takes possession of the property and sells it then you owe the bank the difference between the sales procedes and the outstanding mortgage. It is not clear if the bank can sue you in Ireland but I would assume that there is a good chance they they could - this is the point that you need to take legal advice on.

In the UK in the early 90s many people posted the house keys back to the bank hoping that that would be the end of their problems. However, the banks tracked these people down, sometimes years later using private investigators, and held them liable for the balance outstanding at the time they handed the keys back + all the accrued interest that had built up since then.

What advice did you take when you purchased the property? How much did you pay for it? What is it worth now and how much is the mortgage?

As I said earlier it surprised me that I was so naive in thinking that if you have an overseas mortgage - secured solely on the foreign property - that in the event of defaulting and a shortfall arises on the bank disposing of the property - that the bank can come gunning for the difference.

I have been contemplating taking out an overseas mortgage but this thread has put me off the idea for now and i think i'll stick with the equity release
product I have. Yes the bank I have been in touch with wants to see bank statements, pay slips etc.,

For what the bank are prepared to give me being approx 60% of the cost I would have thought they were amply guarded if I walked away in a few years citing that I can no longer afford to meet repayments ( in the event of the property say losing more than 40% of it's value)

Would'nt like to be getting a knock on the door from someone hired by a foreign bank.

I will ask my overseas solicitor who handled the purchase for me though on what rights the overseas bank has in coming after me if I just reneged or handed back the keys.

I don't think when getting into the serious business of buying a property abroad (or anywhere for that matter) and getting a mortgage one should have the view that 'sure if it all goes pear shaped I'll hand back the keys.' This is not like buying a TV or couch on hire purchase. I did wonder when lots of Irish people bought property off plan in expositions for (Dubai/Spain/Bulgaria) whether there was some kind of madness like the phramid schemes but based on the OP/Daddy and other posters I can see a whole lot of trouble ahead.

Daddy do you really think you should buy a foreign property with an equity release on your current property if you think it may lose 40% of it's value- whether a foreign or Irish bank comes after you will make no difference. Furthermore some 'Irish' banks are foreign.

As I said earlier it surprised me that I was so naive in thinking that if you have an overseas mortgage - secured solely on the foreign property - that in the event of defaulting and a shortfall arises on the bank disposing of the property - that the bank can come gunning for the difference.

Where did you say that earlier?

Daddy said:

For what the bank are prepared to give me being approx 60% of the cost I would have thought they were amply guarded if I walked away in a few years citing that I can no longer afford to meet repayments ( in the event of the property say losing more than 40% of it's value)

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I would think that if you bought up one on those overhyped properties, in Blugaria for example, and taking everything into account, you would be extremely lucky to walk away with anywhere near 40% of what you paid for it in a few years.


Murt

Daddy said:

Surely if one takes out a mortgage full stop in any country and the bank has that property as sole security the bank cannot do anything other than sell the property to recover its monies. Not anymore!!

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If you default you still maybe able to keep your apartment if your mortgage was part of an SIV [Structured Investment Vehicle] or CDO [Collaterised Debt Obligation] see here for details. It would be good to have sweet revenge on the banks for their own ineptitude and greed.

To quote from 2 weeks ago -

Deutsche Bank got a hard shock a few days ago when a judge in the state of Ohio in the USA made a ruling that the bank had no legal right to foreclose on 14 homes whose owners had failed to keep current in their monthly mortgage payments. Now this might sound like small beer for Deutsche Bank, one of the world’s largest banks with over €1.1 trillion (Billionen) in assets worldwide. As Hilmar Kopper used to say, “peanuts.” It’s not at all peanuts, however, for the Anglo-Saxon banking world and its European allies like Deutsche Bank, BNP Paribas, Barclays Bank, HSBC or others. Why?


A US Federal Judge, C.A. Boyko in Federal District Court in Cleveland Ohio ruled to dismiss a claim by Deutsche Bank National Trust Company. DB’s US subsidiary was seeking to take possession of 14 homes from Cleveland residents living in them, in order to claim the assets.

Here comes the hair in the soup. The Judge asked DB to show documents proving legal title to the 14 homes. DB could not. All DB attorneys could show was a document showing only an “intent to convey the rights in the mortgages.” They could not produce the actual mortgage, the heart of Western property rights since the Magna Charta of not longer.

Again why could Deutsche Bank not show the 14 mortgages on the 14 homes? Because they live in the exotic new world of “global securitization”, where banks like DB or Citigroup buy tens of thousands of mortgages from small local lending banks, “bundle” them into Jumbo new securities which then are rated by Moody’s or Standard & Poors or Fitch, and sell them as bonds to pension funds or other banks or private investors who naively believed they were buying bonds rated AAA, the highest, and never realized that their “bundle” of say 1,000 different home mortgages, contained maybe 20% or 200 mortgages rated “sub-prime,” i.e. of dubious credit quality.


If this decision sticks in the US Supreme court ,it is expected to have immediate ramifications on a global scale for all default mortgage holders. That is, if the bank who now owns your debt does not have your original paperwork. If the bank only has the intent to transfer debt from one organisation to another, then the apartment could be yours to keep. Only though if you took the loan out in Spain will it likely to fall into this remit, if mortgaged in Ireland you'll have no joy.

Wow! That's really frightening.

I cannot see the US Supreme Court allowing these findings to stand. It would completely wreck both the American and the global economy. It would devastate banks everwhere. Peoples savings and pensions would be very badly hit and a major worldwide depression would follow.

I'm sure that all sorts of pressure will be brought to bear on the members of the Court to ensure that they come up with the correct findings.

The US isn't too worried about the legality of things when it comes to looking after it's own self interest (in this case Thank God), as it is not only the Americans that will suffer, if this result is allowed to be repeated on a wide scale.


Murt

Murt10 said:

Wow! That's really frightening. I cannot see the US Supreme Court allowing these findings to stand. It would completely wreck both the American and the global economy. Murt

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Chris Taylor, investment director and head of research at Neptune Investment Management, in a Moneyweek article reckons the normal annual run rate of bank write-offs is about $500bn-$600bn a year, which the system can handle. Over the next 18 months there will be the best part of another trillion coming. Therefore, if bad debt write-offs are on average twice as much as normal for the next 12-24 months, it will be a very bad time for the banks and financial institutions but surely this would simply be a recessionary time for the banks? It appears the losses would be just too small for it to go into meltdown but if it came to it, the banks could stand the heat, but it would be tough medicine to swallow...In regards this case, 40% of paperwork is reckoned to be missing within the $1.2trillion CDO subprime market, or $480bn, or 3.2m properties valued at $150,000.

Spanish banks issued many AAA rated CDO's that are now attracting junk status - Ger2's maybe one of them. Most Irish and European loans are still AAA and will continue to be so within many pension funds. . Bush's recent rate freeze on subprime maybe a response to this ruling - I've a feeling the decision will stick as the right of appeal is very strong. Solicitors will have a field day counter suing each other, for their clients dim witted, pass the parcel charade.

Murt:

The bank have valued my apartment at a discount of 30% to my overall all in cost and are willing to give me a 75% mortgage based on that valuation which works out at about 52% of my overall cost. This valuation included a 7% discount for a quick sale.

You cannot predict with certainty any property market in a few years time.

I would rather have my overseas property than an Irish investment property at the moment that I could have purchased two years ago. How many Irish purchasers of property in the last 2 years are now in negative equity.

Yes based on the bank valuation I too am in negative equity with my overseas property to the tune of 25k that's if I had to sell right now.

What would the negative equity be I wonder on a house that I could have purchased for 350k in Ireland 2 years ago - at least 50k I believe and likely to fall further. If it falls by another 50k then I will be more than justified in choosing my overseas property as an investment property as the most I can lose is 100% being 85k. How likely is that scenario even in Bulgaria ?