Chasing mortgage debt in the UK

I´m yet to hear why anyone complaining that they can´t afford their 2nd, 3rd, 4th home feels that they should be treated differently to a Spanish family that can´t afford the mortgage on their ONLY place of residence?

I have read this thread with interest.

I bought my apartment in 2006. The bank valued it at a ridiculous 140,000 Euros.

Norman Sands is absolutely correct.

The Navarra judge is absolutely correct.

The bank tried their very best to get me to borrow the full 140,000 Euros abd were quite disappointed when I refused their offer.

I have no doubt the banks have done this to the other people in this thread.

I have no sympathy for the banks who got very very greedy through the affluent years.

If a person/family come across hard times, the banks have that same old attitude - repossess!

For an organisation that is meant to know about finance, this makes no sense.

They have a legal charge against a mortgaged property, so it is partly 'owned' by them.

Why then do they not accept half the mortgage amount over a longer period, or let the mortgagee go onto interest only for a period of time, until things improve.  This way they, the banks, are not losing out.

They are getting what they deserve for being greedy.

As for the comment about owning a second, third or fourth home, the village my apartment is in has improved one hundredfold with new pavements and better facilities for the residents (mainly Spanish).

We have piled  a lot of cash into Spain, only for the Government to now try and force the arm of the independent judiciary.

Instead of giving the bank's bosses very big bonuses, use the money to pay off the outstanding mortgages, thereby putting the money back into the economy.

Don't worry, the Labour government got it wrong by bailing out our banks and the ConDems have lost the plot !!

I am sorry this sounds like a rant, but the whole world is in crisis through greed of the banks.

Well said penno !  Thanks for your comments.

Anyone thinking they can leave unpaid debt in Spain may be in for a shock when they receive a knock on the door of their UK family home from a Spanish Bank representaticve clutching a European Enforement Order (EEO).

Spanish banks are notorious for chasing debt and will use every available resource to force people into liquidating their assets to meet payment in full.   Simply throwing your Spanish house keys into the Spanish bank will not work - unless you have covered your tracks very well and nobody knows where you live - computers and inter country exchange of information can track you down. 

If you declare yourself bankrupt make sure you are otherwise it may be viewed as fraud...   unless you live in a mobile home or a barge and even then...

 Penno, the banks are businesses, not charities. Their sole aim is to make a profit. Yes they were greedy, the developers were greedy, and thousands of Brits got greedy, attracted by a good exchange rate and low interest rates. Buying one house in your home country is an enormous commitment, and yet people were buying 2 or 3 here, without even speaking the language, without even asking about redundancy cover, basically without having a clue.

Most of the people having houses repossessed in Spain are Spanish. The house is probably the only asset they own. So whether the bank can go for further assets is probably moot.

From what little I've read on the subject, Spain doesn't have the facility for individuals to declare bankruptcy. Or if they have a facility is is so complex that nobody can access it. Bankruptcy is the only sensible option if you've run out of money and are unlikely to be able to pay more. You can't get blood out of a stone. But in Spain they would seem to try.

Recently I've been reading about the phenomenon of Irish and German  bankruptcy tourism in the UK. UK has the easiest bankruptcy laws. It's cheap, easy & your bankruptcy is generally cleared in one year. Whereas in Ireland and Germany it's expensive, difficult and you can stay a bankrupt for up to 12 years.

If you declare bankruptcy anywhere in the EU the bankruptcy is valid everywhere in the EU. Which is why Irish people in particular are coming to the UK in droves.

In order to file for bankruptcy in UK you only have do declare UK as being your "centre of interest" - whatever that might mean. So, if you are a Brit expat resident in Spain it involved visiting your granny in UK and laying down a few markers, ie signing on for dole, getting on the elecoral roll, so that you can say yes I've had enough of Spain and am moving back.

Once the Spanish twig how easy this is, I reckon they'll be joining the irish & Germans. Fill out the forms and the Spanish creditor bank will get a notice, (not even in Spanish - do they write to you in English?) - informing them that so and so is declared bankrupt and if they want to get their house back will they please fill in the enclosed form and get it back within 30 days. They will also be told that if they even think of harassing the bankrupt they will be breaking the law and subject to a large fine.

So, I would suggest that anyone who is in over their heads in Spain should sound out a UK bankruptcy practitioner  and see what plan can be made to fireproof any UK assets against seizure. It oughtn't to be hard.

This message was last edited by GuyT on 02/03/2011.

I came a cross this paragraph below online.

Extent of liability

Following article 1911 of the Spanish Civil Code on signing a mortgage deed you will be held liable with all your current and future assets. The mortgage is only a guarantee subject to the financial loan acting the property or underlying asset as collateral.

The above has huge legal implications which borrowers ought to understand fully on signing a Spanish mortgage deed. This would mean that if you default on servicing your Spanish mortgage, the bank can actually seize the property acting as collateral. If you fall into negative equity it, the bank is entitled to pursue you for the outstanding debt even in your home country.

It's all in that famous old small print when you sign. If you cannot keep up with your repayments your home can be repossessed. It's the risk we all take. The one thing we all have to remember. The banks are not our friends, they are there to make money out of us, using our money ( savings etc ).  If you take out a loan for 250,000 over 30 years at 5% you end up paying 233,000 in interest alone before taking inflation into account. That's how they make their billions. They were packaging up bonds, with mortgages brokers selling mortgages in th US to people that didn't even have jobs just so they could hit their bonus targets. Where is all of that bonus money now. I suspect, tucked away in their big bank accounts while the millions of genuine home owners suffer as the property market crashed in the US. Those bonuses should be taken back off of them, and put in a pot to help people like some of those on here on the verge of losing their properties, but that will never happen. My only advice to those in a bad position, would be to maybe go interest only on their UK mortgage even if they can afford the UK one, and use that extra money to clear any credit card debt, then pay the Spanish mortgage. Try to go interest only on the Spanish mortgage. Maybe get a family member to buy out a part share of the property with you having a buyback option when your circumstances improve. This lump sum could get you through the bad times. Maybe rent the property, even if the rent seems low, something is better than nothing and get the tenant to pay the utility bills, maybe even the community fees. If you still have equity in your UK property, maybe remortgage to release cash. Go to citizens advice. Look on the internet for advice.

I hope some of these ideas help some of you.

Let´s say I bought a house for 200,000€ in 2005. The property bubble subsequently burst and in 2011 the house next door to me, identical in all respects to my own, is on the market for 100,000€.

I just pop into Caja Madrid, drop off my keys with a note explaining I don´t want the place anymore, and buy the house next door for half the price with a mortgage from La Caixa.

That is what people are advocating is it?  Nobody can see the problem with that?

Depending on Banks ( and also on the quality of your legal representation) the dation in payment process can be more or less difficult or lenghty. That is our experience in the law firm.

If you cannot keep the payments. It is always good to send a dation in payment notice to the Bank before they start the repossession. It adds if you alsi send proof of your financial status somehow.

Dation as payment is actually a right  (http://www.eyeonspain.com/blogs/costaluz/1094/legal-tip-27-dation-in-payment-a-right.aspx and specially if you bought a product whose price was inflated by the lender to its own benefit.

In my opinion it is in some extent, a good way to somehow " punish" the excesses of Banks during the boom. We, as plain citizens, need to play the arms we have, and this is, in my opinion, a good one. 

Regarding chasing the debt against Uk assets, I think I have heard this happening in one just occassion, in the media, and the legal information contained there did not seem accurate to me.

For this to happen, a repossession procedure needs to be followed up in Spain first and then the Bank needs to enforce the debt against UK assets. Initially Uk Courts will be quite reluctant to authorise this type of enforcements and of course will pay a good attention to the defense you have displayed, the procedure being correct and yourt rights in the UK.

It is important though that you attend any notification sent to the address the Bank have for you as if not, the Bank could try to us the European Enforcement Order for unconstested claims. Again, this is not a one-shot-procedure and requires respect to procedural and substantive Law both in Spain and in the UK. ( related post here)

Again and first of all, and before the Bank repossess, I would encourage you to send a good notification for dation in payment to the Bank with accurate legal grounds and a show of your financial conditions.

This message was last edited by mariadecastro on 03/03/2011.

Dear All,

so now we have it again, we are once again back to the arch villain, the lawyer, our trusted servant who neglected to explain that the standard reasonable, normal view of a secured loan is nothing of the sort in Spain particularly, but perhaps elsewhere also.

In Spain it is in fact a personal loan on one's whole self, anywhere in the universe.

The unfortunate borrower is wholly responsible, all the ridiculously expensive professional expertise he has paid through the nose for has no responsibility at all - zero - zilch - nothing.

Yet our humble tradesman purchaser, when fitting gas or what have you, carries every life risk for failure that officialdom can heap upon him.

A humble landlord has to carry responsibility for all the tricks malign tenants can perform to evade the rules, whilst being protected by law to "quiet enjoyment", whatever mischief they are up to is legally OK as long as they are quiet about it..

Oh to have been a carefree professional with tax avoidance and zero responsibility, or perhaps an EU politician, too late for me but all youngsters take note.

Regards

Norman

Norman, take a few minutes to read this article from 2009 concerning negative equity in the UK. Pay particular attention to the section entitled "Can´t I just hand the property back to the lender?". 

http://www.guardian.co.uk/money/2009/jun/23/negative-equity-mortgages

Now explain why you expect banks in Spain to accept the keys as full payment for monies borrowed.

 I know for a fact that a lender in the UK wll chase you for the difference between selling price and any arrears owed. In the 80's, I was pressured into buying my first house at 18 by my parents as an "investment that could never go wrong". Obviously, interest rates then rose to the heady heights of 15% and my mortgage paymentsw became more than my nett monthly wage. Lenders back then didn't want to negotiate and repossessed within 4 months. The house finally sold 18 months later andI was presented with a £35,000 bill from the lender for arrears and shortfall. They did negotiate and I paid back a smaller amount. I was also presented with a back dated council tax bill for the 18 months that the lender took selling, apparently under UK law you arestill liable, not the lender!

I can also confirm that if you are the holder of a Barclays Spain mortgage, they have a department in the UK specifically for mortgage arrears and problems where they will attempt to help you.

Mark

In this weeks Round Town News, page 37 of issue dated 4-10th March, there's an interesting piece ..

Interesting in as much as it says exactly the same as Gill556´s post at the start of this thread?

The estate agent put a price on the property agreed by the seller, you  accept the value then you ask the bank for the loan saying you can pay the monthly morgage. The bank agrees to lend you the money because you can pay it back at an agreed rate.Who's the one that was wrong? The bank????

 I had not followed the total thread, Orinoco. That's not like me but I don't pop into the forum much these days. My husband thought he was doing a service by alerting me to the piece in the newspaper after I told him others were discussing the subject. With it being this weeks newspaper I never thought details would've already been posted here. Not to worry.

It was in the Spanish press months ago:

http://www.elmundo.es/elmundo/2011/01/26/suvivienda/1296040278.html?a=268752055b69e1d27454ebaca721f818&t=1299436781

It´s worth noting that BBVA are planning an appeal - It´ll be a brave judge that ignores Salgado´s comments and upholds.

I don´t think anybody should glean false hope from this case. 

Dear All,

as usual there is the normal confusion encouraged relentlessly by lawyers determined to ensure their future livelihoods.

the law is never certain until it is tested in court and in this case it has been tested in Spain, which is appropriate since Spain is where a 30% deposit is required to buy, so default is unlikely, unless there has been major unforeseen difficulties.

All contracts are at risk of such major unforeseen factors on both sides.

When in court all circumstances should be weighed with the emphasis on what a "reasonable man" would think.

My reasonable view is that a secured loan is spelt out in the contract as to what that security is, whether it be house car equipment or what have you. Having been spelt out then that is the limit of liability.

A personal loan is not in my view a mortgage on a house and should not be confused as such.

If it is being so confused then it is once again a failure of the lawyers drafting and agreeing the contract, not the applicant's fault.

Markfish's example is clearly in that category and he should have claimed against his solicitor, if that is how he was misled.

The problems come when someone seeks to default without unforeseen difficulties if their loan is personal.

As usual we are short of detail perhaps Markfish will disclose what legal advice he received.

Perhaps I should look at my mortgage document or perhaps a lawyer will give us the benefit of an opinion?

Regards

Norman