All Topics / Help Needed! / trying to beat the bank reposession process

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  • Profile photo of hoping2doitrighthoping2doitright
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    @hoping2doitright
    Join Date: 2007
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    guys i need some advise with regards to a current situation i am in. Basically, I'm interested in BUYING a property from someone who is in alot of debt to their bank for (I know they owe their bank more then the offer they've accepted from me) but my question now is…

    I have been told by my lawyer that i must go through the whole process of getting house inspection, ordering of governmental searches, local council and water rates, land tax searches, stamping of contract etc as well as legal fees … before the bank can say yes or no to my offer… which means i can loose well over $3000 in fees along the way only to find the bank says no to my offer…

    i just fail to see why i cant some how get a rough yes or no from the bank as to if they'll accept my offer… can anyone shed some light on how i can get the offer accepted or declined from the bank before going threw the whole process?

    this is not a mortagee reposession but the step just before that.

    has anyone been through this?

    Profile photo of LinarLinar
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    @linar
    Join Date: 2004
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    I don't understand why the bank would require all those things.  What would the bank do with a house inspection?

    I would ask your lawyer why you are required to get that information before the bank will approve a loan.  I'd be interested to find out why.

    Cheers

    K

    Profile photo of hoping2doitrighthoping2doitright
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    @hoping2doitright
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    sorry what i meant was that i need some advise in regards to a current situation i am in. Basically, I'm interested in BUYING a property from someone who is behind on his mortgage repayments and is about to loose his house to his bank, (I know they owe their bank more then the offer they've accepted from me)
     
    My concern is that if I go ahead with the purchase I risk his bank stepping in during settlement to claim a shortfall, thus loosing over $3000 in fees (house inspection, ordering of governmental searches, local council rates, water rates, land tax searches, stamping of contract etc as well as legal fees)

    My solicitor has stated that there is no way to avoid this risk. Id like to know if anyone thinks otherwise and knows of a way to avoid the loss of $3000 in fees, or if anyone has been through a similar circumstance and what their experience was.

    NOTE: This is not a mortgagee repossession but a step just before that.

    Profile photo of Skip101Skip101
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    @skip101
    Join Date: 2005
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    If you are purchasing the home for less than is owed on the mortgage to the bank, it's highly unlikely the bank will accept the offer.  The bank in the process of taking posession of the property, will have it independently valued. Unless your offer clears the mortgage, don't bother, wait for the auction.

    Profile photo of hoping2doitrighthoping2doitright
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    @hoping2doitright
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    this is the quick easy obvious solution, but has any got more insite on this topic other then the obvious

    Profile photo of Skip101Skip101
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    @skip101
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    Obvious huh?  Well what is also obvious is your freind cannot sell you the property for less than it owes, because it simply cannot settle unless the mortgage is discharged.  If you don't like that answer you're living in fairyland.

    Profile photo of hoping2doitrighthoping2doitright
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    @hoping2doitright
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    okay fair enough, your point is well taken however several lawyers have seen this happen several times without an issue, and my relative has gotten a property less then what was owed to the bank, sorry but its not fairy land its just thinking outside the box…

    what id like to know, is how i could get the bank attention, how do i get their YES or NO without having the main contract written up…. i can't simply call them, but how else can i get their attention? maybe some form of a pre-contract contract?

    come on people think outside the box

    Profile photo of Paul DobsonPaul Dobson
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    Hi hoping2doitright

    Yes it is possible to secure the property a quite a late stage of the default process but, if the loan has been moved onto the banks lawyers and a Writ of Possession has been issued or is about to be issued, then it is probably best to hold off until the mortgagee auction.

    However, if the loan is not with the banks lawyers yet, it is possible to take control of the property, in the first instance and then purchase it at your liesure.  However, there are so many variables in each particular case, it's just not possible to  go  through it all here.

    Please feel free to give us a call at the number below or 0447 973 235, after about 3.00pm tomorrow (Tuesday).  I get back into the country at 2.30pm ;-)

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
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    An alternative way to finance your home.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    As has been mentioned then is absolutely no way Title will be transferred to you and the mortgage discharged if the debt to the current mortgagee is greater than than the purchase price.

    It is very simple the Bank will refuse to sign the Transfer document with complete repayment.

    The only way this would happen if the vendor has other security that the Bank hold and they are prepared to accept a partial release on repayment of the net proceeds.

    Dont waste your time unless you discuss this implication with the seller.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of hoping2doitrighthoping2doitright
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    @hoping2doitright
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    okay now we seem to be moving somwhere, firstly, thank you greatly for your replies….

    Yes it is possible to secure the property a quite a late stage of the default process but, if the loan has been moved onto the banks lawyers and a Writ of Possession has been issued or is about to be issued, then it is probably best to hold off until the mortgagee auction.
    The banks lawyers do not know the property is for sale yet, however im almost certain they will find out once the contract is signed, however the problem as mentioned earlier, is the fees that will already be paid (settlement fees etc) by that point..

    However, if the loan is not with the banks lawyers yet, it is possible to take control of the property, in the first instance and then purchase it at your liesure.  However, there are so many variables in each particular case, it's just not possible to  go  through it all here.
    The house is not with the banks lawyers as far as im aware, however could you kindly explain what you mean by take control of the property in the first instance? you sound very promising with this…

    Please feel free to give us a call at the number below or 0447 973 235, after about 3.00pm tomorrow (Tuesday).  I get back into the country at 2.30pm ;-)
    will do , just need a little more info if possible…



    As has been mentioned then is absolutely no way Title will be transferred to you and the mortgage discharged if the debt to the current mortgagee is greater than than the purchase price.
    thats pretty much what im worried about, how do i get the banks yes or no, instead of writting it off to a simple NO, or incurring any fees before their agreement.

    The only way this would happen if the vendor has other security that the Bank hold and they are prepared to accept a partial release on repayment of the net proceeds.
    How do we find this information as …

    Dont waste your time unless you discuss this implication with the seller.
    The owner/seller of this property is not someone we can just contact nor trust his/her information…

    Profile photo of ScampScamp
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    @scamp
    Join Date: 2008
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    Hi,

    Don't talk to your friend , talk to the bank directly. Your friend ( at this point ) has nothing to say about the house since the bank owns more of it than he does. ( it's called SubPrime loan ( this is what started the whole crap in USA and is what will drive house prices down in Australia too ) ).

    Go to the bank. Tell them that they can get 80% of their mortgage back in cash by you. If you can't pay cash, they won't settle for sure, since they will just have the same problem with you later. Your job is to tell the bank that you want the house for cash ( either from a loan / mortgage at another bank or whatever ).

    The bank will save a lot of costs this way. But your friend needs to call himself bankrupt in most cases. If the bank understands his financial position ( I expect them to ) then you could go 'around' the whole legal eviction process which is very very costly for a bank. If the bank thinks they will get more money on auction, then you will not get a deal. Simply because otherwise we'll see LOADS of bankruptcies of people selling their houses for 1 dollar to their 'friends' and then buying it back for 2 dollars :D

    Don't mention you know the guy, just say you saw a 'for sale' sign or whatever. If you tell the bank that you know him, the deal is over.

    Profile photo of RobLRobL
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    @robl
    Join Date: 2007
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    A chinese puzzle :-) (nothing in that comment aside from the general title ascribed to complexity :-) )

    You wont get a title transfer with the bank caveat (tis wot it is) in place – and so no settlement in any event (for the doubter – am going through an identical process – since August 07 – and we're only JUST settling this one now).

    The crucial bit in this – is it not – is the assumption that the mortagage discharge on the part of the seller resides only in the funds arising from the sale itself.

    One might sell ones car, furnishings, or even borrow from the family and so on to fund the gap – and BEFORE the usual crowd say something like "we'll they'd just bring the mortgage up to date" … consider that in doing so the potential to escape debt free disappears if that simple move was made. 

    The short term wipeout may be better than the last gasp before certain destruction.

    The solution may well be in the mind of the vendor.  Yes, yes, cant trust the info and so on … hehehe .. yes been there too with this one.  Suprising just how many $ can be about when they need to be.

    Ask 'em.  Or move on.  There will be many many more :-)

    Profile photo of RobLRobL
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    @robl
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    Or .. you could take the Scamp chicken little "the sky is falling, the sky is falling" approach.

    Go to the bank .. tell em that one of their clients owes them more than they'd take from you for their house (which in the absence of any inspections, could be a termite ridden shell held together by paint; in the absence of a title search, may not actually belong to them – and YOU are actually being scammed; or is in the circumstances outlined above – for all you know, they got a Babcock and Brown margin call and figure the long term for B&B is better than holding the house).

    Going down that route – you'de best be 101% certain you know all there is to know of your prospective vendor – or perhaps he'll have the two houses, and you'll be renting.

    Ask the guy.  In a game of smoke and mirror – dont be the one with the glass cuts.

    :-)

    Profile photo of hoping2doitrighthoping2doitright
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    @hoping2doitright
    Join Date: 2007
    Post Count: 17

    sounds good so far, seems like everyone is leaning towards me speaking to the bank and this seems like the best idea, however my lawyer has mentioned that the bank wont even listen to a "no body" like a interested buyer, without having a contract written up which brings me back to square 1, how do i get the banks attention without going through the contractual and settlement fees etc.

    by the way I don't know the seller of this house, i don't know why people are referring to him as a friend :/

    Its not as simple as calling the bank unfortunately, how do i get to the right people

    Profile photo of ScampScamp
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    @scamp
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    hoping2doitright wrote:
    Its not as simple as calling the bank unfortunately, how do i get to the right people

    It really is that simple. Just call the local bank in the town ( or close to it ) where your house is, then ask them where the mortgage-guy of the bank is. Usually they are in the local office ( 1 or 2 guys specializing in mortgages ) and sometimes they're in a big office in a bigger city.
    Banks are made up of people. These people are easily accessibly, they love to help you , because that in turn helps them to earn money on you. Having a good relationship with your bank ( I have good relationships with 3 banks here in Europe, when I call them they recognize me, ask how things are going etc.. ) really helps in getting things done without the hassle of paperwork. If you are considered a serious investor, the banks will treat you real well, with open doors and few hassles. Ofcourse, if they think you're just a hassler or someone without money, then it gets harder.
    Banks ( unlike individuals ) have more money than time, hence, you need to have money for them to give you some of their time. If you have no money, it can be hard to persuade them to give you their time.

    What you should always do when you go to a bank meeting :
    – wear a suit ( silly, but it's needed. It's like courtesy )
    – be prepared, have all the papers ready, have your disposable income all set out on paper, ( this is what they are really after )
    – In general don't waste their time. Time is money.

    Profile photo of Skip101Skip101
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    @skip101
    Join Date: 2005
    Post Count: 33
    Scamp wrote:
    hoping2doitright wrote:
    Its not as simple as calling the bank unfortunately, how do i get to the right people

    It really is that simple. Just call the local bank in the town ( or close to it ) where your house is, then ask them where the mortgage-guy of the bank is. Usually they are in the local office ( 1 or 2 guys specializing in mortgages ) and sometimes they're in a big office in a bigger city.
    Banks are made up of people. These people are easily accessibly, they love to help you ,

    hoping2doitright has no legal interest in the property at this point. The bank cannot provide information to hoping2doitright due to privacy laws, so any approach to the bank would have to be in conjunction with the owner. They will not discuss an 80 cents in the dollar offer, let alone any offer until they have arranged a valuation of their own to access the maximum return they can achieve. Even at that point, the banks Mortgage insurance company will have a strong point of view on the process to be undertaken.

    I have been involved in dozens of mortgagee sales (yes I know it's not at this stage yet). The only times I have seen property deals done with tha bank, are when the purchaser acts in conjunction with the vendor, and when the mortgage is covered by the offer, or an arrangement of payment for the balance is made. Yes, the bank does not always recover 100%, however if they believe they can achieve $10,000 or more extra by repossessing and going to market, which way do you think they are going to go?

    Profile photo of Chris WhiteChris White
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    @chris-white
    Join Date: 2006
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    Having also purchased mortgagee properties, I think you will find that your lawyer is correct (and you would hope so!).

    The bank will not negotiate with yourself and certainly not at a loss. They will have to go through their mortgagee in possesion process first.

    Also, if the bank has not moved in on your friend (yet), they certainly will after you have this conversation with them.

    Has your friend tried all possible avenues to refinance their way out of this? (even shared equity loans etc)?

    Chris White | Pillar Property
    http://www.pillarproperty.com.au/
    Email Me | Phone Me

    The Property Investment Specialists

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