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kingdragonfly

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#273243 12-Aug-2020 10:14
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I've experienced my first mortgagee sale process. I'm glad I didn't win.

Before I get into details, I have a legislation question. Should we require the mortgage holder to provide a clear title? For non-renters, homes that are owner occupied, should the mortgage holder be required to provide vacant occupancy? (I'm not talking about a rental property.)

Mortgage companies seem to be pushing all legal responsibilities onto the seller, which seem to me to be unfair.

Unless I'm mistaken, you could spend months in a legal battle to get a clear title, then another legal battle to get vacancy. Meanwhile the occupants could tear out all the copper piping / wires, and take a sledgehammer to the house with a legal recourse.

Back to my first and only experience with a mortgagee sale, I must say I was relieved I didn't actually get past the "expression of interest" stage, because there were 17 offers, and 3 were more than mine. I offered 3/4 of the QV value.

Overtime I learned the history of this sale.

The real estate agent went onto the property asking for interior shots. A burly man made it clear he should leave, and would not even let him even look in the front door.

After the ad was posted on TradeMe only from the outside, no interior shots, no open homes. There was an ancient blueprint, and 5 exterior photographs, only from the front and the road.

I saw the ad and address. The front gate was open, and there was no "no trespassing sign." I went onto the property myself. No one answered the door. I noticed piles of furniture were used to barricade the backyard, and were covered with piles of yard waste. They had obviously been barricaded some time ago.

Judging by the curtains, it looks like items were piled against the interior windows.

I won't go into the details, but I heard a rumour a notice was served in January, and the 50 year old women appeared mentally unstable.

Another rumour was the daughter had gotten power of attorney over her mother affairs, and was selling the home despite her mother's objections.

I made a second visit to the property, only the find the front gate was tied closed with medical bandages, the "for sale" sign had been removed, and a "sold" sign put up. As mentioned the house is now in the second stage, the formal offer stage. I didn't get this far.

The real estate agent said he knew about the "sold" sign, but the owner was within their legal rights. Considering there were 17 offers, obviously this ploy didn't work.

An ugly affair.

The mortgage company first asked for expressions of interest, and asked for conditions. I required a clear title and vacant possession.

Near the close date, the mortgage company sent a new version, and struck all conditions, shown below.

Again should we require the mortgage holder to provide a clear title? For non-renters, homes that are owner occupied, should the mortgage holder be required to provide vacant occupancy?



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elpenguino
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  #2539168 12-Aug-2020 10:25
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Sounds like you dodged a bullet there.

 

But as you say, even if you went to an inspection and the house was vacant, is there anything to stop squatters occupying the place after your offer goes in? How much of a pita (and expense) will it be to work through the legal process regardless of how many stray dogs the occupiers have?

 

 


Handsomedan
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  #2539170 12-Aug-2020 10:28
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Mortgagee sales are awful. 

 

I worked for a bank years ago as the guy that worked with the homeowner/customer to try and avoid the inevitable, eventually putting a few houses through the system for mortgagee sale. It was a heartbreaking job sometimes...and at others a spiteful job. Equal parts sadness and hostility.

 

 

 

People are generally not leaving by their own will and also don't always fully understand the process. 

 

Often the property is sold for less than what it's realistically worth, but there is often just enough to cover the debt and all associated fees with nothing left for the person who once owned the property. It's a sh*tty situation for everyone. 

 

 

 

Sadly, many people that end up in a mortgagee sale situation are quite hostile as they have long ago refused to talk or negotiate, they haven't considered selling the house themselves as it's their family home and they believe it belongs to them - which it often doesn't based on the level of debt that some people find themselves in. 

 

Mortgagee sales happen for a variety of reasons too - not just defaults on the mortgage payments - sometimes it's for not paying the rates or being in breach of the agreement in some other way (i.e. not paying insurance, which is a condition of a mortgage). Sometimes people won't pay, sometimes people can't pay. Some people pretend it's not happening and others know and start barricading themselves in the property. 

 

Personally I wouldn't buy from a mortgagee sale, as I'd always be worried about the previous owners exacting some kind of revenge on the property (despite the fact that they are only hurting the new owners, not the bank/financier that sold the property out from under them). 

 

 

 

I have no idea what the laws are re getting previous owners/occupiers out, but that would be a horrible situation and I wouldn't ever agree to taking a property on if there wasn't a guarantee of vacant possession. 

 

 

 

 





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Handsome Dan is currently WFH.
Handsome Dan is perplexed...and a little stir crazy.
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elpenguino
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  #2539216 12-Aug-2020 10:41
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That all sounds traumatic for the people involved, bank staff included.

 

I'd prefer not be involved in something like that but if there was a bargain to be had, who knows....


tchart
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  #2539224 12-Aug-2020 10:47
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kingdragonfly: Meanwhile the occupants could tear out all the copper piping / wires, and take a sledgehammer to the house 
 

 

I believe this happened a lot in the US when the GFC hit. Literally stipped everything out of the house - even the kitchen sink.


wellygary
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  #2539234 12-Aug-2020 11:00
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tchart:

 

kingdragonfly: Meanwhile the occupants could tear out all the copper piping / wires, and take a sledgehammer to the house 
 

 

I believe this happened a lot in the US when the GFC hit. Literally stipped everything out of the house - even the kitchen sink.

 

 

Chattels are not included in mortgagee sales, so the previous owned is within their rights to take, lights, switches, taps , basins, etc... 


Handsomedan
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  #2539235 12-Aug-2020 11:01
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tchart:

 

kingdragonfly: Meanwhile the occupants could tear out all the copper piping / wires, and take a sledgehammer to the house 
 

 

I believe this happened a lot in the US when the GFC hit. Literally stripped everything out of the house - even the kitchen sink.

 

 

There were different laws at play over there, but yeah...I remember reading about that...





Handsome Dan Has Spoken.
Handsome Dan is currently WFH.
Handsome Dan is perplexed...and a little stir crazy.
need to transfer money overseas? I use Transferwise 


mudguard
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  #2539250 12-Aug-2020 11:24
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I thought most in the US just left the keys inside and went? Interesting that you can walk away from the debt too. 

 

Edit. I think. 


 
 
 
 


elpenguino
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  #2539263 12-Aug-2020 11:38
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mudguard:

 

I thought most in the US just left the keys inside and went? Interesting that you can walk away from the debt too. 

 

Edit. I think. 

 

 

Apparently there's different types of mortgages. Many of the GFC debts were non-recourse loans where the bank can't pursue the borrower for any shortfall from the sale of the house.


Sidestep
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  #2539267 12-Aug-2020 11:41
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Handsomedan: 

 

Mortgagee sales happen for a variety of reasons too - not just defaults on the mortgage payments - sometimes it's for not paying the rates or being in breach of the agreement in some other way (i.e. not paying insurance, which is a condition of a mortgage)...

 

Personally I wouldn't buy from a mortgagee sale, as I'd always be worried about the previous owners exacting some kind of revenge on the property (despite the fact that they are only hurting the new owners, not the bank/financier that sold the property out from under them). 

 

 

This..

I knew a property owner - a friend - who was foreclosed on due to unpaid rates/fines and breach of loan conditions..

As a property owner/developer he'd upset a small group who began to file complaints with the District and Regional Councils, alleging illegal and unconsented works, resource consent breaches, diversion of watercourses, felling of Native bush and general nefarious wrongdoing.

Finally something – quite marginal, but not easily rectified - stuck, and Council assessed a fine against him, which, of course, he refused to pay, and went to court.

Before the court case/appeals were completed, with the council now having the potential to assess a large debt against the property, the Mortgage holders (Banks) sold the mortgages to an Auckland legal firm/collection agency who immediately stapled trespass/demand notices across the gates.
 
I also know the person who negotiated buying the unfinished project after it didn't sell at  auction – for cents on the dollar. Bidding was largely against the initial complainants.
I thought he'd got a hell of a deal.

But of course it was a poisoned chalice. He remediated the original issues, but ran into the same problem with the same people, finally vandalism and loss of materials making it not worth the effort to complete..

A fully lose-lose situation.  The original owner had a nervous breakdown, the new owner found himself the target of abuse and threats, and as far as I know it's still unfinished, overgrown with scrub, the plantings withered and bush being eaten by possums.


Sidestep
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  #2539271 12-Aug-2020 11:47
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mudguard:

 

I thought most in the US just left the keys inside and went? Interesting that you can walk away from the debt too. 

 

Edit. I think. 

 

 

In some US States, and Canadian Provinces (including where I live) you certainly can strategically default on your mortgage.
Here it's called Jingle Mail - being the sound of you mailing your keys back to the bank.

 

Edit: Mortgages are assumable here too.. meaning I can take over a seller's mortgage without having to qualify for it myself..


kingdragonfly

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  #2539315 12-Aug-2020 12:35
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At least this mortgagee sale hasn't yet resorted to arson

Dominion Post: Insurance company alleges remotely triggered arson of Wellington house

An insurance company alleges a Wellington man set fire to his own house remotely using a printer and a standard lamp.

IAG said Peter Allan Work had the necessary knowledge to set up remote access computer software that turned a printer in the unoccupied Woodridge, Wellington, house into a trigger for a standard lamp to start the fire.

It was alleged that a few minutes after the fire started Work logged into a webcam in the house and watched the fire until the power failed.

The insurance policy excluded cover for any loss intentionally caused by the homeowner.
...

afe66
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  #2539324 12-Aug-2020 12:52
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Before we change laws, what is the current actual law regarding this issue?

elpenguino
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  #2539353 12-Aug-2020 13:34
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kingdragonfly: At least this mortgagee sale hasn't yet resorted to arson

Dominion Post: Insurance company alleges remotely triggered arson of Wellington house

An insurance company alleges a Wellington man set fire to his own house remotely using a printer and a standard lamp.

IAG said Peter Allan Work had the necessary knowledge to set up remote access computer software that turned a printer in the unoccupied Woodridge, Wellington, house into a trigger for a standard lamp to start the fire.

It was alleged that a few minutes after the fire started Work logged into a webcam in the house and watched the fire until the power failed.

The insurance policy excluded cover for any loss intentionally caused by the homeowner.
...

 

Moral of the story - use a scheduled job instead?


Handsomedan
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  #2539409 12-Aug-2020 13:56
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elpenguino:

 

kingdragonfly: At least this mortgagee sale hasn't yet resorted to arson

Dominion Post: Insurance company alleges remotely triggered arson of Wellington house

An insurance company alleges a Wellington man set fire to his own house remotely using a printer and a standard lamp.

IAG said Peter Allan Work had the necessary knowledge to set up remote access computer software that turned a printer in the unoccupied Woodridge, Wellington, house into a trigger for a standard lamp to start the fire.

It was alleged that a few minutes after the fire started Work logged into a webcam in the house and watched the fire until the power failed.

The insurance policy excluded cover for any loss intentionally caused by the homeowner.
...

 

Moral of the story - use a scheduled job instead?

 

Or log in to the camera feed from someone else's computer? 





Handsome Dan Has Spoken.
Handsome Dan is currently WFH.
Handsome Dan is perplexed...and a little stir crazy.
need to transfer money overseas? I use Transferwise 


mattwnz
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  #2539411 12-Aug-2020 14:06
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wellygary:

 

tchart:

 

 

 

I believe this happened a lot in the US when the GFC hit. Literally stipped everything out of the house - even the kitchen sink.

 

 

Chattels are not included in mortgagee sales, so the previous owned is within their rights to take, lights, switches, taps , basins, etc... 

 

Are those things chattels? Basin, taps etc would be part of the building and I thought a house has to be sold with certain things, including an oven etc. Not to mention that to remove lights and fittings, would need an electrician to make sure it was left safe. I would have thought agents would want to avoid selling these houses altogether, as so many potential problems for them. 

 

Yes a law change is probably needed but guessing there are more important things for them at the moment.


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