No it has 2 bedrooms too.
he vaguely remembers the broker saying that he may get the valuer to put down "an extra few bedrooms" to help get the mortgage.
She did not see it at the time of taking out the mortgage, and was not asked to supply projections or figures for futures rents etc. If she had been, she would have realized it was un-affordable and would not have taken out the mortgage.
he believed what she was told that it would make a good investment. She trusted the broker (who also was an estate agent) who said it was a good buy....who said he and the valuer and the bank worked out figures and that it was a good buy and she could afford it. They were the experts, and she was assured she could trust them. It seems the trust was misplaced when they may have calculated her repayment ability on a 6 bedroom buy to let instead of a 2 bedroom....but even then she would not have been able to make the repayments once the interest only period expired.
That may be what you would like to believe. Its common sense that she SHOULD'nt have got the mortgage unless her income allowed her to borrow it. She did however get the mortgage even though her income was not sufficient to pay the mortgage. The bank may have calculated her repayment ability on a 6 bedroom buy to let instead of a 2 bedroom, but even then she would not have been able to make the repayments once the interest only period expired.She wouldn't have got the mortgage unless her income allowed her to borrow it.
The bank does not have the security it thought it had - it thought it had the title on a six bedroom centrally heated, double glazed property worth xxxxxx in year yyyy. It turns out two other valuers, proper valuers! -valued it at nearly half that (one that year, one a year afterwards), as it was really a 2 bedroom cottage.The bank did have proper security, they have it on this property
It is not quite in the middle of nowhere. The bank should have checked to see if the borrower could afford the mortgage or not. She was told she could, by the people who were so called property and financial experts. Would it not be normal for a bank to see if a borrower could afford a mortgage or not? Of course hindsight is a wonderful thing, she should have asked for a copy of the valuation and the projections at the time.- Borrower buys house in the middle of no where,
- Borrower never bother to run a rental projection herself ! Whose fault is this? You seem to be implying it's the banks or brokers or valuers fault?
Borrower knew the valuer was playing hocus pockus with the figures
Copy of valuation reports were sent out with loan offers, how come she is only seeing it now?
Yes, copies of valuation reports have to be sent out with loan offers, it is normal practice.
Its common sense that she SHOULD'nt have got the mortgage unless her income allowed her to borrow it. She did however get the mortgage even though her income was not sufficient to pay the mortgage.
Incorrect. As said before "the borrower vaguely remembers the broker saying that he may get the valuer to put down "an extra few bedrooms" to help get the mortgage. The borrower thought the broker was joking and was extremely surprised to see the valuation report only recently."
The valuation report is a report that values the property. It is not a structural report. The information is for the banks benefit. They are only interested to see if the house is worth the money being advanced against it.
Were all valuers proper, reputable valuers who worked as auctioneers / valuers, and who had training and experience in valuing property? Would an engineering technician / draughts-man qualification suffice to be on a bank valuation panel?Back in the day when I was arranging valuation reports
I have seen the file and the bank did not indicate what the monthly or indeed yearly interest and capital repayments were likely to be. My sister did ask the broker but she was told it would be impossible to know exactly as interest rates would fluctuate, but that she could afford it, they calculated that or they would not be lending her the money, the broker said. Leave that to the experts, he said. Should the bank not have indicated likely monthly capital and interest repayments?Its beyond belief that someone would buy an investment property & not know or ask what the full capital & interest repayment would be once the interest only period ended
On the mortgage application, which the broker filled in and my sister signed, it said it was a cottage and the address but it did not give the number of bedrooms, surprise surprise!when your sister signed the mortgage application did she state that property she was purchasing was a 2 or 6 bed property?
How then did she pay the mortgage from day one if her income wasn't enough to cover it?
Yes, copies of valuation reports have to be sent out with loan offers, it is normal practice.
So what you are saying is that the broker, completed the mortgage application form on behalf of your sister, leaving out relevant information but your sister signed it anyway
Did your sister conspire with the broker to get a loan on a supposedly 6 bedroomed house when it in fact had only two bedrooms?
Are you saying that the broker and valuer were in cahoots to get this loan for your sister and she turned a blind eye to what was going on?
No. It was a means of "getting her foot on the property ladder", the broker said. She was inexperienced and had not a business head. She did not even know a copy of the valuation report was supposed to have been to be sent out with the loan offers. There was no documentation from the bank at the time saying she should have got a valuation report. Have you ever heard of that happening, no valuation report with loan offer, but bank reluctantly releasing it after several requests years later?This was a buy to let. Had she been through a mortgage experience before?
As long as the bank is paid its interest and eventually its principal, they don't care if the valuation is wrong. If things go pear-shaped they will pursue the borrower as much as they can - all the way to a forced sale of the property if necessary; then they will continue to pursue the borrower as much as they can for any shortfall. Having crystallised a loss on a forced sale, the bank may go after the valuer if they feel they have a case and it is worth their while (no point pursuing the valuer if he has no money and/or no insurance). If the bank succeeds against the valuer and he (or his insurers) can mitigate the loss, the borrower's shortfall should be reduced by the net amount of any successful action against the valuer. But it is totally in the bank's hands - they are the ones suffering a loss as a result of the valuer's incorrect valuation so only they can pursue the valuer.(a) You wrote "The valuation report is a report that values the property. It is not a structural report. The information is for the banks benefit. They are only interested to see if the house is worth the money being advanced against it.
I wrote "Correct. That is what is supposed to happen. But what happens if the house is not worth the money being advanced against it?"
Six months after the purchase, she became aware of someone elses valuation from someone, a friend of a friend, who had an auctioneer, a proper one with a commercial office, value it prior to her purchase. She was concerned and got another valuation. She mentioned the subject to the broker / estate agent but got fobbed off. She did not know then the banks valuer had valued it as a 6 bedroom property with double glazing etc.You've stated twice that two other valuations were carried out on the property, one the year of the loan and the other the year after.
How and why were these done?
I never came across a house where extra rooms were added to the valuation report.
Two bedrooms of course, she never dreamed anyone would put anything but that on any documentation or anything else. It was always 2 bedroom-ed as far as she was concerned.When your sister arranged Fire Insurance for the property, which would have been compulsory before getting the loan, how many bedrooms did she state were in the property when completing the form?
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