Repossession vs. Foreclosure In The UK – The Big Myths

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Everybody, at a Property Networking event, they are "interested in foreclosures."

This typically indicates to one thing – that they have been reading American books on property investment.

Nothing wrong with that, but In the UK, the law is quite different, and notably more on the side of "looking at the average person who falls behind on their mortgage" and less on the side of "whatever the contract said."

The first thing to be aware of is that repossessions and foreclosures are different things.

  • In a UK repossession, the mortgage company "take back" the house, sell it, use the proceeds to pay the amounts owed to them, and then send the balance to the borrower. Socrates Act 1997 to "take reasonable precautions to obtain the true market value of the mortgaged property normal, though NOT needed, for the mortgage company to get a court order to get a repossession.
  • In a foreclosure, by comparison, the mortgage company "take back" the house, sell it, and keep the entire proceedings. This is only possible as the result of a court order, and it sighs on unheard of for granting these days – normally they are only ever grant repossession orders.

The second is the big "hand the keys back myth" is just a myth.

  • If you are on the back of your mortgage payments, you just can not "hand back the keys" and have the clock stop on the interest payments.
  • A mate of mine was once a branch manager at a building society – on the day he took over the branch, he was showing a drawer containing about half-a-dozen would stop interest accruing. I've no idea why this myth still abounds!

In the US, it is very unusual to find a good deal simply by finding out which properties have been repossessed, and then buying them hand.

MIGHT be repossessed, and negotiating deals better than they might have been the repossession went through.

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Source by Mark P Harrison

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