I was just looking through the Internet and it came up with this.
What does it mean?
Under Instruction From The Mortgagee
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Lending Money Joint Ventures Subscription Five Star ChecklistIt means that someone hasn’t kept up with their payments and the Mortgagee (Bank) has instructed the property to be sold.
Agents love it because it makes people think that it is a distressed vendor who will accept a low price – thus getting more people to the auction.
In reality – if the market is hot – these properties can sell for even higher because of the increased attendance of hungry investors.
By all means submit a low offer but don’t expect it to be snapped up. The banks are obligated to get a fair price and will usually hold out for one.
Simon Macks
Residential and Commercial Finance Broker
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Thanks –
From the Morgagee point of view if they make any profit how does that get distributed?
The morgagee naturally and understandably need to get their money as secured and has an interest in the payout of the loan.
In the contract clause is it common that the distressed vendor be relieved with any capital made on the sale if any. And or how is it sorted when no excess profit made so therefore a lose and the client still owing the morgagee after the sale and everything?
If this is not generally the case is there steps to take when initially signing the finance contract from an Investors point of view, so that if this happens. Which inevitably does to some. That they are entitled to any extra profit after all expenses paid for in the exercise
In any case – would you like to elaborate and perhaps point out what steps a naive prospective home buyer client should ensure in the mortgage contract to best equip them for this.
It seems to me that signs like that will become more familiar in the preceding years.
I might go to the auction for interest sake.
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Learn about a current 91 Unit development near Sydney International Airport and there all Positive Cash Flow, 43M resale values, 25/06/2006.edit
If a mortgagee takes possesion of a property and sells it, and there is a shortfall, they will go after the person who borrowed or guarranteed the loan for this shortfall. They will be taken to court if necessary and a judgement may be issued.
Once they get a judgement, then they have to enforce the judgement. they can do this by getting court orders to take possession of property (cars etc), garnish wages or bank accounts. If all this doesn’t work, they can then apply to bankrupt the person.
There is not much a person can do to avoid this. No lender is going to negoitate a mortgage contract to exclude the possibility of this happening – unless maybe if you are a very big client.
Terryw
Discover Home Loans
Parramatta
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And, I should add, if there is a profit, then this would go to the owner of the property after all loans, interest and legal expenses etc had been paid.
Terryw
Discover Home Loans
Parramatta
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Just to add to Terry’s comments.
If of course the loan is mortgage insured the lender will approach the mortgage insurer and make a claim on any shortfall.
In turn the MI will take over the recovery of the debt by following the steps that Terry outlined.
In the UK at the end of the 80’s with negative equity in many properties in the SE of the Country selling as Mortgagee in Possession was common. The MI companies stepped in very early to take over the debts and recover their losses.
Thankfully many lenders introduced Negative Equity Loans so clients were able to carry on with life and still purchase a property albeit downsized. The shortfalls were treated as unsecured loans and everyone benefited from a touch of common sense.
Richard Taylor
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I think you have answered it for Mortgage Hunter.
Thanks for your replies; you guys are knowledge and strength to the forum.
Which brings me some more curious questions because I’m interested.If we we’re subjective to this guy who is being forced to sell. Then if in this case if he had Mortgage Insurance he could claim, the insurance then covers what? the amount that he might owe?
If he has none and chose not to pay can the morgagee then force the person into bank ruptcy does this then guarantee that the morgagee gets their money. Who pays it once bankruptcy is declared?
Let’s play it like the person is trying to screw it for every way he can, as he’s now broke and destitute. As this way I can see all the downside risk.
This is only for analytical purposes I’m not suggesting for a minute that this is what is happening to this vendor, as I know nothing about their reasons and their circumstances.
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LMI is a single upfront premium paid for the borrower for the sole benefit of the lender. The borrower can never make a claim on the mortgagee can do this.
In the event the lender cannot retrieve the loss after persuing it then it is normally written off.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
This block was on two titles, side by side, only the one house very run down needs re-stumping would not out rule white ants and other unknown problems. I didn’t look through it.
What would it mean as far as cost goes with two titles. As far as I’m concerned it would be suitable site for two small units and start building one out the back while still renting the existing house out the front.
Then slot a tenant in finished one at the back while selling and knocking down the old house. There would be nothing to selvage from the house this is a ratty house and ready to fall down.
I checked with council and done a few small run around.
Then five minutes after I done all this we got word that vendor has refinanced and action cancelled.
He done those 12 hours before the action, so he done that in the nick of time.
What’s your take on what might have been suitable for this site? This is assuming you picked it up for 70-80k as the agent says. I know the agent would have been saying low amounts to get people to auction and build that auction spirit up, but still if got for that.
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deal that could be 91 +CF unitsWhy do you think the action was cancelled?
Do you mean Auction?
If so, it was probably cancelled due to the owner coming up with some money at the last minuite.
Terryw
Discover Home Loans
Parramatta
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Yeah the auction.
Yep that’s exactly what happened refinanced with the lender at the last minute.
Just seeing if anyone was on the ball Terryw and you we’re right on the money.
The guy owns the pool business next door too. Maybe not many pools being installed this time of year…. and this might be causing him to get into financial troubles…don’t know the full story.
Agents sales pitch was, “Roomer has it! Owner will be selling up the business next door soon as well.” This was before he refinanced.
If the business next door came up and was suitable for a buy then it would be about six titles including the corner block probably best suited for units then.
Oh well it’s over now. Learning, learning good stuff to learn on.
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