voluntary repossession

Hi all,
For a variety of reasons, we can no longer live in a house I bought in 2001 and have been trying to sell it for three long years without any luck.

There is no longer time or money to invest in this house (it is a protected structure, 50 miles from Dublin), I am now seriously thinking about approaching my lender to discuss the idea that they will repossess it.

I've never defaulted on the loan, but now more than half the family income is being spent on renting our Dublin home as well as paying this mortgage etc. I do not want to extend or increase the mortgage because we will not live in this house again and I owe about €10k on my credit card and to family members.

Fairly extensive work would be required before it could be rented out and I need to cut my losses to be free of the millstone and it's mortgage. We don't own any other property so this is jumping off the property ladder if you like!

Has anyone done anything like this or know about doing it? I cannot find a shred of information on it and worry about broaching this subject with the lender before taking some advice.
Paulone

There is no advantage whatever to this course of action; The bank cannot sell this property more quickly or with lower transaction costs than you can do yourself. If sold by the bank instead of by you, there will therefore be either a smaller surplus or a larger shortfall. I assume it is the latter - as if there were equity in the property you would hardly be contemplating this course of action.

It is possible that the bank might take a reduced settlement figure from you, especially if you are selling at a figure which will not fully clear the mortgage, but in my opinion, they are likely to be more amenable to this if you save them the hassle of having to dispose of the property themselves.

I think you should find a buyer, then go to the bank and see if they will facilitate the sale by agreeing a settlement figure which is consistent with the expected sale proceeds. It might well be worth your while getting somebody to do your negotiating for you.

Paulone said:

For a variety of reasons, we can no longer live in a house I bought in 2001 and have been trying to sell it for three long years without any luck.

Click to expand...

Maybe the asking price is too high?

Have learned that lesson the hard way. I've cut the price by 50% in the three years - am now offering it for less than I paid for it in 01!!

It's setting - never that beautiful really - has been wrecked by serious development of large semi-d estates in and around the area.

I've found also that almost all househunters are hugely ignorant about traditional houses, presuming - for example - that they can't get home insurance. I have never - for example again - been able to get the house valued.

I know its a case of 'finding' the right buyer, but the pool of these potential buyers seems very small.
Paulone

OP, I'm a bit confused about you saying that it can't be valued. Do you mean potential purchasers are having trouble getting it valued? Wasn't it valued for the bank you took the mortgage with in the first place?

Have you thought of
a) meeting with MABS to see what the full long term financial implications of reposession are for you? (I don't know the answer myself)
b) putting the property up for auction and just take what the current market will pay and clear as much of the mortgage as you can and just chip away at whatever debt remains?

Hi PaulOne,
I have to say I really feel for you, from my understanding you are renting a place and have mortgage on a property 50 miles from Dublin.
I know this might sound a crazy solution but would you think of moving back to the house yourselves and commuting in to Dublin..

You might think that is a mad idea, but Mr. Bear has colleagues commuting from rochfortbridge to DunLaoighre...

With respect to CC's contact MABS as they can help you regarding this debt, your additional income from not renting can be allocated to pay this debt off.

You could look at this as a short term thing that would free up the rental income. There could be a possibility that you could get work locally.

Thanks to all for comments & suggestions,
I think a trip to MABS wouldn't be a bad idea, though I think it will be with a view to going to the lender to discuss the very real possibility that I can't pay this mortgage any more and need to expedite a settlement - as suggested by MOB and DelBoy.

Friends have suggested I increase my mortgage by about €50-70k to try and get the house into a more desirable condition (knocking & rebuilding the kitchen & bathroom) but I don't think I can sustain the current mortgage, never mind pay more.

Rental prices in the area are already falling short of the current mortgage and I've been warned that a shrinking market could mean there is no guarantee that such an investment will bring an equivalent return in the eventual sale price - after all, kitchens and bathrooms are usually standard fitments in houses and people don't tend to pay extra to have them!

The four estate agents involved with the house were never able to suggest an asking price. I was left to do it myself and pitched it too high at the start. To be fair, one agent did suggest it was too much, but he suggested cutting it by only 10k with a view to generating a 'bidding' situation.

I agree that the lender gave me the mortgage on the basis that it was a fair price for the house, but the price was well below the 2001 national average so they were happy to lend provided I was happy to take it on. I borrowed 90% and have sunk all available spare cash into the place.

The 'protected' status and the limited size of the site means the house and its garden are not of interest to developers who are buying up large parts of the area. One told me it was too much hassle for too small a return. If they think it's worthless, I don't know who'd bid so I've not considered an auction. None of the agents ever suggested it either.

It's logical to suggest moving back there, but it can't happen for those 'variety of reasons' - the commute being one of them. I never found a job in my line of work locally or even within a reasonable distance.

Agreed that this situation is pretty unique and will probably require some very inventive thinking!

can you tell us what attracted you to buy the property in the first instance. What did you see in it that no other buyer now can

Good luck with going to MABS, hopefully they'll be able to help you get the financial side of things straight in your head.

On the property side of the issue - has it been well advertised? I know a person trying to sell 15 houses in a small estate he is building and has had no interest BUT he hasn't advertised on Myhome or DAFT or any other well known website....

How low are you prepared to go, below
a) your purchase price?
b) the amount you still owe?

You could have the loan down to 90% of what it was and with the fact it was a 90% loan in the first place you might be able to absorb a 20% drop in the house price to break even on your mortgage....

Good luck either way.

Hi Capall,
Good question! Without saying too much, I bought it for all the right reasons but those reasons are no longer in place.

The house could loosely be described as what many people call 'their dream cottage'. It seems that in reality, very few people are prepared to take on that adventure.

Concerns about the long commute and the amount of work to be done to the place were not paramount at the time of purchase, and weren't problematic until more recently when life's focus shifted back to Dublin. Some unexpected and rapid deterioration took place in the house too.

Also, the commuter belt caught up with the village since I bought there and large-scale development has taken place.

This changed the local property market. Firstly, there is now ample supply of cheaper new houses and apartments in the area, meaning a huge amount more choice and the pick of semis, detached etc., all attractively priced and with the convenience of property less than five years old.

Secondly, the area is now flooded with young FTBs and working families who have all the usual concerns like long commutes, childcare, getting ahead at work and their families. These people can't afford the luxury of buying character over the convenience and value of a new place - I don't think character is very high on their list of 'must-haves'.

My house is quite appealing but it's not 'roses-round-the-door' gorgeous like some of those places you might see nestled in the rolling countryside.

These things have counted against finding that particular buyer who can see the potential and who actually wants it.

Thanks Delboy,
I'd take €3k less than I bought it for in 2001. If I go lower, then I'm left with debt.

Technically I could absorb that, and may have to if I end up in a settlement situation.

The place is not listed with an agent right now - I'm afraid I've found working with agents very unsatisfactory and stressful. There have been four and I don't feel any of them did a great job or gave me good advice.

Place is currently advertised in freebie locations. I'm getting pictures done and it'll go back on DAFT - it was there before and I didn't get a single call.

You need some unbiased professional advice. Maybe try and chat to an auctioneer or something and see what they think.

What kind of price range is it in and what general area. I'd be glad of a nice cottage so as not to put up with my noisy new neighbours and their incessant barking dogs.