Vendor has finance issues....

[monalisa]

Hi all

I signed a contract for one of our recent purchases five weeks ago - the property came on the market one evening, and I put a deposit the following day, and signed the contract a few days later.

The agent had advised at the time that the property is a potential mortgagee in possession. The vendor's bank wanted to arrange for their own valuation.

There has been no progress. Last I heard was the bank was going to make a call re whether they want to sell or hold on to the property, or auction it. Since then, the vendor's solicitor has not returned any of my solicitor's phone calls over the last week.

I am not holding my breath, and have started looking for potential purchases. I haven't asked for my 0.25% back, as, if the bank comes back, I think I have secured the place at a good price - even if I have to negotiate a bit - I am happy to pay a little more.

Has anyone previously experienced it?

Apparently the vendor owes $100K on top of the sale price - leads me to believe they cross collateralised their properties.

Thanks!

 

[Rolf Latham]

Hi all

I signed a contract for one of our recent purchases five weeks ago - the property came on the market one evening, and I put a deposit the following day, and signed the contract a few days later.

The agent had advised at the time that the property is a potential mortgagee in possession. The vendor's bank wanted to arrange for their own valuation.

There has been no progress. Last I heard was the bank was going to make a call re whether they want to sell or hold on to the property, or auction it. Since then, the vendor's solicitor has not returned any of my solicitor's phone calls over the last week.

I am not holding my breath, and have started looking for potential purchases. I haven't asked for my 0.25% back, as, if the bank comes back, I think I have secured the place at a good price - even if I have to negotiate a bit - I am happy to pay a little more.

Has anyone previously experienced it?

Apparently the vendor owes $100K on top of the sale price - leads me to believe they cross collateralised their properties.

Thanks!

got a client in that position right now

not common, but not rare either

ta
rolf

 

[monalisa]

got a client in that position right now

not common, but not rare either

ta
rolf

Wondering how long the bank would take to sign off? Surely 5 weeks is plenty!

 

[Peter_Tersteeg]

The property is obviously crossed to another, the result is the bank is valuing other properties in their portfolio to ensure they've got the equity to pay down or secure the remaining loans.

It would take a bit longer than normal to get their stuff together, but I've rarely seen this run for more than a fortnight.

If you're ever looking for a reason to avoid cross collateralising your loans, this is a good one.

 

[Rolf Latham]

If you're ever looking for a reason to avoid cross collateralising your loans, this is a good one.

been in a long term stoush with a lender to release 3 of 6 securities, t 3 diff lenders.

The undertone of the lender is that the delays to process is due to the cross coll............ and in a roundabout way trying to blame the borrower for the nutso structure.


The Bank's requirements is that the transaction for:
Release of 3 properties and Pay out of 4 loans has to happen at the same time.

Rolf &/or Solicitors need to coordinate things and liaise with the Bank's Booking Hotline to arrange for all settlements to happen together.

The four facilities were solely or partially secured by the above properties.


Pretty sad really, but thats what happens if you dont control who provides your credit advice and structures.

The above mess is taking 3 to 4 mths to sort at 800 a week lost to the borrower and the bank takes no responseability for their structuring.

The usual answer when pressing the "legalities" is that "the client knew what they were signing"............um no, if you fully (or even partially) disclosed what you were doing to your borrower and the REAL possible implications very few would agree to such one sided arrangements

Non-disclosure and misrepresentation of this type of material data are very very common both at a retail bank and broker level, and will one day be deemed as illegal. Proper independent analysis at "a distance" from the transaction would already regard this as highly unethical.

Currently it is perfectly acceptable to structure a client with a direct and undisclosed bias to the lender, most would not even argue it is unethical to do so. Id guess many banking/broking manuals probably talk of "maximum contribution", minimising "split" banking and maximising surveillance, all of course to limit potential loss to the lender.

My next hobby horse is CRAA files /..........................


ta
rolf





ta
rolf

 

[monalisa]

Sounds like a mess Rolf!

3 to 4 months is ages!!!

The property's value would have moved a fair bit by that time - doubt they would agree to the price I signed up with this sort of time frame.

 

[pinkboy]

been in a long term stoush with a lender to release 3 of 6 securities, t 3 diff lenders.

The undertone of the lender is that the delays to process is due to the cross coll............ and in a roundabout way trying to blame the borrower for the nutso structure.


The Bank's requirements is that the transaction for:
Release of 3 properties and Pay out of 4 loans has to happen at the same time.

Rolf &/or Solicitors need to coordinate things and liaise with the Bank's Booking Hotline to arrange for all settlements to happen together.

The four facilities were solely or partially secured by the above properties.


Pretty sad really, but thats what happens if you dont control who provides your credit advice and structures.

The above mess is taking 3 to 4 mths to sort at 800 a week lost to the borrower and the bank takes no responseability for their structuring.

The usual answer when pressing the "legalities" is that "the client knew what they were signing"............um no, if you fully (or even partially) disclosed what you were doing to your borrower and the REAL possible implications very few would agree to such one sided arrangements

Non-disclosure and misrepresentation of this type of material data are very very common both at a retail bank and broker level, and will one day be deemed as illegal. Proper independent analysis at "a distance" from the transaction would already regard this as highly unethical.

Currently it is perfectly acceptable to structure a client with a direct and undisclosed bias to the lender, most would not even argue it is unethical to do so. Id guess many banking/broking manuals probably talk of "maximum contribution", minimising "split" banking and maximising surveillance, all of course to limit potential loss to the lender.

My next hobby horse is CRAA files /..........................


ta
rolf





ta
rolf

Douchebags!

pinkboy