Negative Equity

[Welsh Boy]

I felt the need to re-visit a subject I have raised on this forum in the past as I have come across 3 cases this week. The subject being secured loans that allow us to borrow over the value of our property. These to my way of thinking are so potentially dangerous in that all it takes is a change in circumstances i.e. loss of work , relationship breakdown , sickness etc and we are in a situation whereby we are backed into a corner with in my opinion no leverage at all. This type of lending I find frightening and in all 3 cases I have dealt with this week the clients are in a terrible situation. I appreciate that we are not forced to sign any agreement and will benefit from the monies when received but I cannot think of any situation where this would be a good idea. Maybe someone out there may have good experiences of this product, I would like to know, but please be careful.

Tony

[go_4_broke]

Hi Tony

The way I look at this type of lending is effectively as unsecured lending with a built-in charging order.

In normal circumstances it seems potty but there is a situation I can see that might render it very useful, which is to send a property into deliberate negative equity to protect it from being lost in bankruptcy.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[Storm]

Tony - were these prime lenders ?

I recieved product info updates from Welcome that show they will do 120% sub-prime ??

A neg equity product for motor has been available for some time through Open & Direct (now part of Creation better known as Extortion who provide and manage a number of store cards)- never understood that product as cars rarely go up in value !

[Welsh Boy]

Storm
Yes they were prime lenders the ones that if you switch on the tv they are there all the time. I have never seen 1 person who realised what they have done by agreeing to this product. Since I posted earlier I have had another call from someone with exactly the same scenario as the earlier people. Tony

[Welsh Boy]

Storm
Yes they were prime lenders the ones that if you switch on the tv they are there all the time. I have never seen 1 person who realised what they have done by agreeing to this product. Since I posted earlier I have had another call from someone with exactly the same scenario as the earlier people. Tony

[Adam Davies]

Hi
Am i correct in thinking that this type of loan ,in effect ,will stop you from ever being able to sell up whilst in negative equity,or will they transfer the loan to a new property ?? You can,t even sell if you want to go into rented,or do I remember reading that as long as you get a fair market price for the property then you can sell regardless of the second charge and it becomes an unsecured loan ??
regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[MelanieGiles]

Andy

A secured lender cannot stop you selling the property, and any balance will rank as an unsecured claim in any insolvency. They can, however, refuse to transfer loans from property to property - the lender that Welshboy is referring to are giving one of my clients a real hard time at the moment on this very subject, and of course we all remember Jane's recent posts.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Storm]

Not suprisingly turnover at Picture rose from £3.7 to £43m in the early part of last year with these high equity products.

There collections team are guided by Eversheds who are very proficient at applying presure.

There are two other lenders developing high equity products.

[jane.l]

I must have missed reading this post when it appeared! Yes, I know we were not forced to take out a secured loan, but this was the single biggest mistake of my life! I had no idea about IVAs when we consolidated, or we could have tried that route then. we were desperate to do anything to reduce our monthly outgoings and thought I had a job for life, unfortunately, that changed and we find ourselves in the mess we are now in.

Regarding the comment about pursuing the debts, I have not paid Picture since February but have heard nothing from them, I just wonder why? the house is now subject to repossesion proceedings and they will get nothing now from the sale, so why are they not actively chasing us for the debt?????

[Storm]

I would think they will once the extent of the short fall is identified ie after the sale of the property.

You moving on yet Jane or still in limbo........?

[jane.l]

I am hopefully moving on, we are finally going to "do the deed" in a week!

I am having a lot of trouble coping at the moment, a close relative has advanced cancer and I have just found out my best friend's husband died today so I cannot burden anyone with my problems, which, whilst major to me, are probably not signifant to them, and rightly so, after all its only money!!!!!!!!

[Storm]

Good to hear you are getting there......

Can only get better from now !!!!