Repurchase / repossession - advice needed

Great idea ads, perhaps when you become Governor of the Bank of Spain. Send of your CV now.

How about stopping interest-only mortgages as a start point?

Don't they in essence encourage unrealistic debt and increase the risks given the current economic climate and growing unpredictability of future house values, interest rates, inflation, etc. Where's the sense in that?

Either that, or regulate the Banks to issue comparable statements prior to issuance (and annual statements thereafter), with compulsory provision of other fully itemised alternative mortgage options (standard repayment) to demonstrate the longer term value of more consumer-orientated less risky products?

The intention being to provide far more transparency, FULLY itemised in terms of accrued interest at varying points in the term, with sufficient comparable detail (in an easy to understand format I hasten to add), to provide the mortgagee with enough information to make a far more informed/educated choice.

Surely there must be a better way than the current system which almost encourages "head in sand" mentatlity on the part of the interest-only mortgagee, and abusive greedy mentality on the part of the financial provider or agent who may have little interest in ethical considerations or the impact on the wider economy.

Forgive me for trying to simpify things guys!

I said earlier the issue of the OP and others is made up of the greed and salesmanship (or conmanship!!) of the first two parties, but then supported by the offer to lend by the bank.

I am just saying the bank, being the last in the process and facilitating the whole 'deal' have the power to make these purchases possible and must do so in accordance with the law and have to be regulated accordingly.

The greed and salesmanship are age old problems which come and go with the ages, these factors have to be in place for the lender to become involved.  All three 'symptoms' are involved in catching a cold, if you can nail down the conman, your well on the way to stopping the other two acting improper.

Ha ha!!!!

I am no politician and want them to be made more accountable for their false promises too!

We all have a role to play in making our world a better place and understand these horrible complex products that all too often are not fully understood ( or have hidden clauses).

By the way, thanks Maria for your support. 

I give up! I ran out of breath around about "potential to cause immense damage". Ads, are / were you a politician?! How is it possible to use so many words in one sentence?

I think Roberto is correct. The OPs seem to be suffering from long term mental illness.

I agree the financial institutes and those who are supposed to control them are deceitful and corrupt due to self interest, but not guilty in this particular case.

Totally with you ads!

I think where the misunderstanding is arising is that I refer to the worldwide banking crisis caused by Banks lack of regulatory stuctures to control the prevelance of doubtful products that have already demonstrated the potential to cause immense damage to economies, but beyond that the need for country's banks ( Bank of England, Bank of Spain etc) to demonstrate sufficient responsibility via their regulatory structures to effectively monitor and take swift action against abuse and malpractice ( demanding compliance via enforcement measures) but also control the use of products such as interest only mortgages that in times of economic instability, if not properly administered and controlled, can lead to the proliferation of reposessions and citizen financial hardship.

It does rather seem, Ads, that although you admit that there is an element of shared responsibility, you keep coming back to your "uncomfortable truths" and appear to want to lay the blame entirely at the banks' doors. Even the statement of the "BANKS FAILURES THAT LED TO PROPERTY VALUES COLLAPSING" is debatable: one could equally say that property values only "collapsed" because they had already artificially inflated, due to the enormous numbers of inexperienced speculators flooding the market. Sure, the banks aided and abetted by funding the boom, but they didn't exactly create it in isolation.

A few years from now, perhaps, many people who are buying brand new cars that they can't afford using financial products that they probably don't understand, will be bleating on about how they were tricked into borrowing money they shouldn't have. But it's already all over the press like a rash, so who will be to blame then? I could try using an anology again, but a simple proverb should probably suffice, as it has done since Biblical times - if you play with fire, your fingers will get burned. 

You can regulate industries to your heart's content, but history has shown that if individuals act irresponsibly, there'll always be someone waiting to take advantage of them. Sad but true. Perhaps we should try to regulate individuals' behaviour too? Perhaps personal finance should be part of the national curriculum?

Baz,

It's the fact that there are instances you describe of people unwilling ( or in many cases unknowing of the true risks involved with these products due to the lack of adequate assessment and forewarning mechanisms in place)  having to face the realistic longer term consequences, that you and others have rightly identified, exactly why you need sound and effective regulatory structures in place to curtail such products and where necessary control their issuance.

Especially when as recent history has identified, encouragement to use these financial products during periods of economic instability or within countries where  the justice system struggles to cope, or loopholes exist that are open to abuse etc, that problems have arisen in the first place. 

Perhaps the conclusion to this is to prove how good regulation within the real estate and financial sectors with Banks being made to demonstrate responsible behaviour, together with an effective functioning justice system are all interlinked and become essential prerequisites to curtail longer term problems. 

Ads, it must be me because I fail to see how it can be any banks fault when someone, anyone, borrows money on an interest only loan, paying back minimum monthly amounts, knowing that the full amount of the loan would need to be paid back sooner or later, not paying back any of the capital in the agreed loan term, buying the property on a promise of renting it out, which sounds like all this information came via the company lending the money, who ran seminars on telling people how get into the massive renting property market.

Jeepers when people buy a car and the dealer tells them it will do 50 to the gallon they soon say 'Year right, sure it will' borrow many thousands and what your told is..'The price will rise, you will rent it out 12 months of the year'....And thats okay then.

How on earth can you make a bank 'Accountable' for it's actions if people are going to act like this.

This week I have met two people who took out, because they had to,  these 'Life time Mortgages' both wouldn't have it that the loan might double in ten years time, both were not bothered about paying any of the loan back, both have family which had they sold the house would have left the kids something, but at the rate these things work nothing is the final figure for a lifetime of buying your home.

Agreed in part Briando, all  ( and more) play their part, but  in more general terms looking at this wider perspective,  as opposed to this one incident,  the starting point to this compromising scenario has to be taken in context with the facts leading up to these failures and abuses, so as to analyse the uncomfortable realities and find realistic and workable solutions to act as you and others rightly say as deterrents for the future.

Without doubt history has demonstrated to date many failures, including those who expected a real estate and legal system to be in place to protect, where regulation and adherence to the rule of law ( with regard to timely justice) has proved to be so compromising.

It's a highly complex scenario and has sadly left all too many struggling to gain justice where applicable, or come to terms with the status quo and how best to move forward. 

It takes time, immense patience, funding, and as previously discussed, courage, to take on the financial institutions to make progress and gain accountability.

Likewise, to identify how under resourcing of the justice system, inconsistent judicial rulings based upon regional differences and the time taken to obtain supportive Supreme Court rulings with Bar Associations "on board" to gain reform have also played their part. 

Progress is being made but there are still many factors that buyers, mortgagees and owners alike need to be adequately forewarned about, not least the overstretched and under resourced justice system. 

IMHO, the area all too often underestimated to gain reform , greater accountability,  good regulatory practice with effective deterrents and enforcement structures in place, is in the monitoring and reporting mechanisms supposedly in place to protect. But this requires the legal profession to recognise and consistently use such mechanisms to  identify the underlying problems ( including loopholes in the existing system) that leave citizens at continuing risk.

This message was last edited by ads on 02/10/2017.

So in broader terms then, I reckon we all agree that a 'unholy trinity' is needed to create the circumstances the OP is involved in.

The Spiv who sells a property with false pretences of how good it is as an investment.

The Gullible who listens and thinks a fast buck is available, and buys a property without any broader social interest.

The Shark who lends money with small print that stitches the buyer up if anything at all becomes difficult.

So in this 'coming together' of the trinity, probably the only one who comes out with any easy money will be the Spiv, who takes the money at the point of sale and heads for the hills.  

Ads, don't you think the regulation your thinking of is only covering one part of the issue here though?   While ever there is greed and Spiv, the way is open for lenders to make offers.

To regulate with any 'teeth' the courts have to be able to act quickly and decisively to enforce regulations in a way that actually scares all these people into changing behaviour.  

The Banks have an obligation to accept that lack of regulation led to the collapse of property values upon which these products relied, and the ongoing regulation and controls of these products should have come from the Bank of Spain.

The deterrents you make mention of Roberto are an obligation by the Bank of Spain to have regulatory structures in place to minimise the risks when such extraordinary circumstances occur, to swiftly take control and deter Banks from issuing these products ( and certainly not allow proliferation to occur) and where applicable to ensure that mortgagees are given timely opportunity to reassess and make realistic provision ( if possible) and not leave them struggling to pay the consequences FOR BANKS FAILURES THAT LED TO PROPERTY VALUES COLLAPSING.

The sad aspect is that Banks have not learned the lessons and even as we speak are not sufficiently regulated to control their malpractices in Spain, to honour their financial obligations without obstructing at every opportunity.

Banks should never be allowed to encourage such risky product uptake without having a duty of care to correctly assess and forewarn well in advance when economic circumstances ( born from their own negligences) have the potential to impact mortgagees with such dire consequences.

Thank you to the EOS moderators for cleaning the thread up, and apologies for getting dragged into the silliness. Getting back to the serious discussion:

"Did the Bank of Spain instruct Banks to responsibly forewarn interest-only mortgagees following the sudden increasing risks from the Banking crisis?" No, obviously not. But since the crisis you refer to started around 2008 - nearly ten years ago - it's surely inconceivable that anybody with a pulse couldn't know what has happened since - let alone anyone who had actually "invested" in the property market?

"...to deny that the Banks have any responsible role in this ongoing scenario....is to turn blind eyes to many uncomfortable truths." I don't think anyone here actually denies that the banks have a significant responsibility. But there is another uncomfortable truth that has to be faced. As you say yourself, "the Banks and interest- only mortgagees  BOTH  had responsibilities..." but the continued insistence that "the banks had the ultimate responsibility" almost sounds like it absolves the borrowers of their part in the whole mess. I know it may sound very harsh, but if there are (ultimately) never any consequences for individuals' bad choices, where's the deterrent to making equally bad choices again in the future? So my question again for the OP and others in similar situations: why, if they've had the place for 10 years, have they waited until now to start worrying about it ? It must have been pretty clear many years ago that the numbers didn't stack up. 

Looking at a wider perspective it's important to consider the following when drawing conclusions about Banks and how their behaviour during this last decade has impinged upon interest-only mortgagees.

All buyers were encouraged to purchase property in Spain with the option to rent out their property to assist with outgoings if they so chose.

This option to rent relied upon a relatively stable rental market being in place with adequate legal protection to protect against rental abuse.

For communities, it relied upon a system of management fees with legal protection in place to ensure all owners pay their rightful contributions so as not to financially compromise owners.

It relied upon a stable and responsible banking system to ensure that interest-only mortgagees were properly assessed from the outset, not only in terms of their ability to pay for the full length of their term, but also the requirement to fully comprehend their financial obligations to either

a) sell at point of maturity to pay off the loan, or

b) make financial provision during the term to pay off the loan ( savings) or

c) renogotiate the loan, realistically bearing in mind the age of the mortgagee at point of maturity and relative restrictions that would apply thereafter.

All were led to believe that the option for interest-only mortgages were intended for those who by the nature of the product depended upon either an increase in property value to acquire adequate funds to pay off the mortgage at point of maturity, or were in a position to make adequate savings provision in the interim years, or were of a salaried age to be allowed to renogotiate the loan at point of maturity ( i.e. be of an age with sufficient income to afford the new negotiated term). BUT ALL WITHIN A RELATIVELY STABLE ECONOMIC ENVIRONMENT.

The Banks and interest- only mortgagees  BOTH  had responsibilities therefore to  address these risks at point of maturity, but the banks had the ultimate responsibility to ensure that the mortgagee FROM THE OUTSET was correctly assessed and was made fully aware of these risks in the interim periods.

Also it could be argued that Banks had a further responsible role (where relevant) to provide adequate forewarning mechanisms in place to respond to sudden compromising changes in the economic climate, ( such as occurred in the Banking crisis), so that mortgagees were adequately forewarned of the need to reassess and recognise the heightened risks from the sudden downturn in property values.

The conclusion given all of the above, together with the fact that Banks lack of regulatory controls and compliance caused the worldwide Banking crisis in the first place, which directly impacted property values and heightened the risks for interest-only mortgagees,  now begs several questions….

Did the Bank of Spain monitor and regulate its Banks to ensure that adequate mortgagee assessment and forewarning processes were in place from the outset?

Did the Bank of Spain instruct Banks to responsibly forewarn interest-only mortgagees following the sudden increasing risks from the Banking crisis?

Did the Bank of Spain act responsibly and reassess their provision of interest-only mortgages with a view to restrict or withdraw this product from use and thereby better manage/ minimise  the ongoing risk?

IMHO, to deny that the Banks have any responsible role in this ongoing scenario relating to interest-only  mortgage products, and their need to NOW act legally and responsibly and in an ethical manner is to turn blind eyes to many uncomfortable truths.

And then we come to the regulatory structures in place ( or lack of) to control rental guarantee schemes with a view to ensuring clients are made fully aware of the risks from the outset with no hidden print or abusive clauses…..

** EDITED - Against forum rules **

** EDITED - Against forum rules **

From the Original Poster: "we can count on one hand the number of weeks the property has been let - depite a rental gurantee scheme set up by Inside Track.  Our intention was to overpay using the rental income so that when the end of term was reached the capital would be minimal."

Unless you can quote where they said they had lived in the property themselves, do please stop twittering on (cheep cheep).

** EDITED - Against forum rules **

Windy,** EDITED **, the OP (Original Poster) never said they lived in the property. They had a guaranteed rental agreement with a now defunct company. In fact, I would not be surprised if they have never even seen the property themselves. It was never intended to be a home for them (as you rightly said). They were sold this as a buy-to-let "investment", like many others who believed the hype, helped by a plethora of washed up old cricketers and golfers trying to squeeze the last few bucks out of their fading celebrity. As I posted many, many times during the "boom" time, most of these fantastic investment opportunities were built on out-of-the-way urbanisations with next to no infrastructure, and then, as now, were/are totally unfit for anything. That is why the OP by their own admission "can count on one hand" the number of weeks the place has been rented out. Of course, not all properties are equal - there do exist some lovely villas in great locations with all the necessary facilities nearby, that may well be worth €2,000 per month in winter - we don't know without further details. But it's clear from what we do know, that the OP's place is either unrentable (and almost certainly therefore unsellable too) or that they have simply not bothered trying to rent it. The big question, therefore, really is - why, if they've had the place for 10 years, have they waited until now to start worrying about it ????????