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Banks and negative equity

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Like all banks, the TSB are absolutely ruthless

Our correspondent writes ...

When I met my husband 15 years ago, his flat was in negative equity. Then he was made redundant and had no funds to pay his mortgage at the TSB. The flat was repossessed and the resulting sale left a £10,000 shortfall towards the value of the outstanding mortgage.

My fiancée,  as he was at that time, was financially blacklisted and went back to university where he studied for four years to become a mathematics school teacher. It was at this stage that we married and we decided to renovate the house that owned solely by me. We re-mortgaged the house and it was then re-registered in our joint names.

Shortly afterwards, we decided to live in South Africa for a couple of years and the property was rented out.

Ten years later, we sold the house and that was when we discovered that the TSB had obtained a county court judgment for the £10,000 that was owed by my husband before we were married. This judgment had been registered against my property yet they never contacted us or sent any letters to the house. The first we knew about it was when the solicitor started the conveyance process.

After contacting them and explaining that this property was not his but mine from before we got married and that my husband had never contributed towards this property, I was told that as the house was registered in joint names his old debt from before we married became mine. TSB also demanded that I should pay the £10,000 immediately because it was incurring interest daily.

I have since learned that these debt collection companies examine the land registry list daily on the internet and match the names up with outstanding debts from years back. Most people who had their homes repossessed during the Thatcher years have just about managed to rebuild their lives but now the banks have now found a new stick to beat us with. The Collection Agencies, who work for a percentage of the recovered debt, have no mercy. In order to complete the sale of my house, I had to pay the £10,000

Has any one else heard about this sort of case and is there anything we can do?

HT, Portsmouth

Editorial Comment:

The brutal truth is that banks and insurance companies no longer take any risks except for the occasions when they take risks that will make them richer. In a win-lose situation, they invariably win and they will go to any lengths to make sure they do. With the Finance Act totally loaded against the debtor, and with the assistance of unscrupulous collection agencies, they cannot lose. And you can't rely on the County Courts for justice or sympathy. They don't understand the meaning of justice and they have no sympathy.

The current economic crunch is a classic example of the reasoning behind people's perception that the law is an ass. Record numbers of house owners are now having their homes repossessed as they discover they cannot repay the ridiculously high mortgages they were granted when the economic climate was healthier. Yet this is a situation that was caused entirely by the sheer greed of banks and mortgage lenders.

When a repossession application goes to court, the victims invariably lose their homes. It is not the last resort that the government would try to have us believe. It is the first resort. Naturally, the government wheel out their paid liar, in this case the dumb effigy of a housing minister, Caroline Flint, who spouts on about the current rate of repossessions being nothing like the recession of the early 1990s. Then she makes the inane statement that 'the government are making sure the right advice and support is available for the minority of borrowers who might need it because of the current economic downturn caused by global pressures'.

The advice and support? To expand free legal representation in county courts for households at risk of repossession, more free debt advice, and working closely with lenders to ensure that repossession is only ever a last resort. What crap!!

Either she forget to mention it to the banks and mortgage lenders or they totally ignored her, as they naturally would since they virtually dictate how the country is run.

But what does repossession actually achieve? Well, firstly it creates losers as families are forced out of the homes they have worked hard to buy. They usually have to find rented property where, very suddenly, rents have increased as families can no longer obtain mortgages. So landlords become the first winners.

When a repossessed house is sold at knock-down prices the next winner is the rich property developer  looking to make a quick buck. The original money lender recoups most of the debt and obtains a county court order to ensure he has first call should the victim's lot improve in the future. He then becomes the third winner. And, of course, the other winners are the ruthless debt collection agencies who make their money by increasing the misery of their victims.

Yet the equitable solution would be so simple if courts actually dispensed justice; if judges turned on banks and mortgage lenders and said, "The sole blame rests squarely on your shoulders for being greedy bastards in the first place. Now you must pay the penalty. This family will remain in the house and you will reduce the repayments to an amount they can afford. Any loss will come out of your profits and your shareholders dividends will suffer as a result."

Unfortunately, Judge John Deed is merely a fictional television character. Real-life judges bear no resemblance!

Visitors' Comments

JL, Londonderry writes:

Whilst I have every sympathy with the writer and little with the banks, I can see that they had an obligation to their shareholders to seek the £10,000 owed.

Did the writer not realise that the banks would pursue her husband for the debt? She should not have entered into joint ownership with him on that basis. They could have entered into a formal agreement with respect to the property without actually registering it in joint names.

A little info. It is common practice in many countries to attach debts to real estate by means of an embargo , the theory being that it is the first thing to be repaid on the sale of a property. This system seems to work well as there are usually funds available on the sale of a property.

An important feature of this system, however, is the need to inform the property owner of the embargo from the outset. Your writer states that neither she nor her husband were advised of the County Court judgment against him. Can they be sure of this because tenants tend to dispose of mail not addressed to them.

Unfortunate occurrence but that is life!

Donna of Buxton writes:

I agree with the editor....well done!!! Wish there more people with that voice!

"Many men stumble across the truth ... but most manage to pick themselves up and continue as if nothing had happened."

Winston S Churchill

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