Hi

I have been referred to a man whose home is on the verge of being repossessed after being made redundant. This is his circumstances and I would welcome any advice on helping him:

3 bed end terraced in Bolton, bought about 2 years ago for £119k

Mortgage with C&G £54289 + £7538 arrears = £61 828.61

2ND charge with Paragon, owes £23 187.27 includes £1875.44 of arrears

Total owed = £85 015.88

Needs £5 000 refurb = £90 000, probably then worth in todays market, £95k - 100k,

C&G rate is 0.99% var on £46500 and the remainder on 2.5%, repayment £311.91 + £50 to arrears = £361.91

Paragon is 9.068%, £227.88 + £25 arrrears = £262.88

Rental is about £475pm

My initial thought was to pay off Paragon and try to do a deal with C&G.

C&G have rejected my offer of the mortgage without the arrears as a full and final settlement, and also my offer of capitalising the arrears.

Paragon have as yet responded to my offer of £5k as full and final settlement

The owner has today received a letter from C&G stating that a warrant of possession has been granted and that the possession order will be enforced on the 19/1/11. This may help with doing a deal wioth Paragon.

The house is currently in poor condition, hole in kitchen ceiling caused by bathroom leak, and needs decorating and new carpets and so will probably end up being auctioned and I dont think Paragon will get anything at that point.

The owner is happy to walk away with £1000 if we can come to a deal, however I am also mindful that he is currently asking for social housing if he gets evicted, that if he sells or delayed completion or option, how this will affect his claim.

Thanks and all the best for Christmas

__________________
MARK BARRETT 07970 079700

Below RICS valuation properties bought and sold in Bolton - finders fee paid

Whatever the mind can conceive and believe, the mind can achieve

Hi Mark

Not looking like a very attractive deal at all, as it stands unfortunately. I can see why you have posted for some advice. I assume that the Vendor is still out of work and therefore there is no possibility of filing a N244 with the court and him paying arrears over time allowing him to remain in his home which would be the best scenario for him? Further if he has other debts he could seek financial advice and get them reduced in order to give him extra funds to pay his mortgage? I also have had experience of second charge lenders who will happily reduce the monthly payments, on one occasion by two thirds which can sometimes give people some time to keep payments up until they can sell on the open market (although of course left this way in the long term could be a very costly option).

I wouldn't see this as a viable LO either as no equity, and negative cashflow on the figures as they stand and in order to get the property in rental condition you are going to have to put money in. Additionally with a EDC/LO Paragon are unlikely to give up the second charge, certainly not just for 5K although I can see why this would be a way forward if they were prepared to do so, so at least it would cashflow but with the investment for the refurb you wouldn't see a return for a while. Notwithstanding any other repairs that may fall due.

As regards the social housing question a Vendor of mine was in a similar situation and was told that as long as she could prove that she became homeless because of imminent repossession resulting in a quick sale at a price which only serves to clear the outstanding debt on the property, that would be sufficient to still qualify although I would suggest your Vendor makes sure he checks this thoroughly with the local council before making any decisions.

Seems like CXG are being a bit stuffy about negotiating. I also heard recently of a lender who negotiated with a distressed Vendor, who had also been made redundant and fallen behind with payments. Upon finding another job she, only having 7 years left on her mortgage, asked to extend the period of the mortgage on a repayment basis with the added arrears, which made her payments considerably lower although she had a good and consistent credit rating (which I guess is unusual in these circumstances). I mention it just in case it is something you can consider asking.

I don't mean to be negative and am not sure if any of that helps but I find looking beyond the property related figures at the wider picture can sometimes help to find a more creative solution.

I hope you manage to find a solution for the Vendor. Keep me posted.

Anne

Hi Mark

Try Johnny debt / JD Law both are linked, I have tried to use them in the past to try to reduce the secured debt during a purchase.

Johnnydebt(johnnydebt@ridingtherhino.co.uk)
JDLaw(info@jdlaw.co.uk)
Johnny Debt - About Us

Thanks Anne and Steve, I will let you know if anything comes of it,

All the best

Mark

__________________
MARK BARRETT 07970 079700

Below RICS valuation properties bought and sold in Bolton - finders fee paid

Whatever the mind can conceive and believe, the mind can achieve

Hi Mark

From what you say, the repossession hearing has already taken place but the effective date of 19/01/11 is a long way off so maybe this is the first time the vendor has been to court? First question - did they attend or not? If they did not, this will be why the possession order has been granted as the judge would not have any other argument.I would try and get a re-hearing with the judge on the grounds that a reasonable offer has been made to the lenders to clear the arrears and they have refused - the courts will look favourable on the fact that an offer has been made. You can also attend with the vendor as their "Mackenzie Friend" and assist in the hearing. Who knows, might be worth a shot.

Good Luck

Mark Lloyd
07703 189658