Repurchase / repossession - advice needed

Good to know in the main that we are on the same page so to speak Roberto.

Where you make mention of "old news"perhaps it's worth mentioning the delayed impact on mortgagees as maturity nears and  the need to remain aware via this ongoing educative process of options available, depending on individual circumstance, and the fact that Supreme Court rulings are slowly making banks accountable for their malpractices and failures.

But here's where I wish that the legal fraternity would also seek to look at the impact they could make if they would consistently use reporting mechanisms to effect change and review of loopholes in the existing system to the benefit of all. But also for individuals to request that their legal representatives follow this through. Unfortunately those who continue to dismiss this as "unrealistic" do a disservice to structures intended to protect.

I don't see this case as so much the banks fault, the company in question ran seminars where you turned up, seems after you pay a fee,  gave you it also seems a detailed report on how to make money out of property, buying it, renting it, or selling it on after it's increased in value.

 Looks like they would lend money to a corpse providing you brought it along, pretty much like a Car Finance Company years ago...IE...If you were standing up and breathing you got the car and loan, you really don't want to know how much you paid back though, these schemes seem to be set up for people who cannot get finance anywhere else.

Believe the spill they tell you, get the money, buy the house, pay next to nothing back, hope in the long term, say 10 years the house price rises, come judgement day the original house price and loan has to be paid back if in the meantime the buyer didn't pay any of the capital back....In steps the bank probably because of some sort of banking laws, who want the loan paid back because they had to cough up the money.

The buyer had a house which they paid hardly anything back on, they believed the price would rise because this crooked company told them so, they believed they could rent it out...Like the many other thousands did also.

This company ran these seminars in the UK and many a wise person fell for them...And lost out big time.

All this is down to people with brains, how is it the banks fault?

Ads, thanks for your detailed reply (and slightly shorter sentences). It only took me three readings to fully take it all in this time! Where you are "keen to comprehend the realities from a wider perspective", I am merely "curious", but I think perhaps both mean the same thing more or less, and I happen to agree with most of what you're saying, so we're probably on much the same page. I do have a couple of points I'd like to make though.

That the "facts are often hidden sadly under highly complex structures and abusive tactics" and that "this is a highly complex scenario" may be true of the wider subject, but in the context of the OP I'm not so sure - I have a feeling that Duncan, Baz & Brian are probably closer to the mark. The investment vehicles used to disguise what was really going on may have been highly complex & sophisticated, but the basic problem of borrowing money to buy things you can't afford (and don't need), without really giving much thought to how you're going to repay the loan, isn't so hard to grasp.

Banks may well "have failed to register their repossessions..and financially compromised communities", but that's hardly relevant in this particular case - the OP's lender hasn't actually repossessed the property (yet). As for flooding the judicial system with appeals, bogging the system down - even with their undoubted influence & resources, I seriously doubt that the banks could really do much to make the Spanish justice system move any slower than it already does. No argument about the lack of adequate regulation, lack of ethics, collusion with developers & agents, corruption, failure to properly advise customers etc. etc - in short "banking failures" - but this is all old news now. It's almost 10 years since the proverbial hit the fan, so unless one has been living on another planet (or cloud cuckoo land), it's surely impossible to not be aware of the situation that arose as a result of all the above, and make some sort of contingency plans?

I remember back around about 2003, going to my bank to ask for a banker's draft to pay for a studio apartment I was buying. The manager tried, with all the charm he could muster, to persuade me to take a mortgage instead of using my own funds. I suggested that he must think I'm nuts, to which I distinctly remember him grinning, shrugging his shoulders, and with a slightly bashful look saying, "well, at least I tried, right?" I had no crystal ball; like everybody else, I had no idea of the pending catastrophe, but there was nevertheless a sense of self preservation that prevented me falling for his patter. 

To paraphrase: I for one think individuals have a lot to answer for, but of course I take your point about the banks' responsibility.

Here's the other perspective Duncan, and no I'm not affected by this scenario associated with mortgages, but I am nevertheless keen to comprehend the realities from a wider perspective, in terms of how the Banks have compromised (and continue to compromise consumers).

These facts are often hidden sadly under highly complex structures and abusive tactics, by Banks playing the legal system (loopholes and all), which need to be reviewed with open minds, instead of sometimes generalising and blaming consumers without full knowledge of the facts. The ultimate aim being to seek out solutions, to not only act as forewarning to others, but also identify where loopholes exist and are being exploited within the current system.

Apologies if my explanations have been lengthy, but this is a highly complex scenario which I have been trying to comprehend and gain explanations, which perhaps mistakenly I hoped others would benefit from.

If this has caused frustration by doing so, then I can only apologise.

The bottom line however is that Banks have not adhered to their legal responsibilities to forewarn clients from the outset of the risks associated with interest only mortgages, let alone rental guarantee schemes, as legally required (as explained by Maria when she explained in detail the problems associated with floor clauses).

They have failed to register their repossessions exploiting an existing loophole in the system and financially compromised communities in that process.

They continued to flood the justice system with their appeals (even when Supreme Court rulings went against them).

They have not been adequately regulated by the Bank of Spain, as they failed over the years to tailor their lending practices which again should have been based upon realistic and ethical criteria....,

All too many colluded with developers and agents by failing to provide Bank Guarantees for offplan purchase, as required by law,

Just a few of the ongoing Banking failures now being challenged in law.

Banks failures, using complex structures to hide their debts (and in some cases turning a blind eye to corruption, allowing some to even bet on the system to fail to offset their losses), directly led to all too many mortgagees losing their homes.

Their failures to adequately control supply of mortgage products directly compromised mortgagees (such as the OP), as during the financial crisis property values plummeted due to over supply, subsequent lowering of interest rates did not benefit those with abusive floor clauses, and plummeting property values left them struggling with negative equity at the point of mortgage maturity,

Banks then failed in that process to provide opportunities for mortgagees to reassess and discuss alternative financial solutions in a timely manner, well in advance of maturity (as required in law), with yet more being presented with little alternative to Bank reposessions ........and so it goes on.

All I ask is that posters retain an open mind to some of these uncomfortable realities, but at the end of the day we each have our own perceptions about the property market and how the Banks continue to play their part in this scenario, and draw our own conclusions.

I for one think the Banks have a lot to answer for, but of course I take your point about individual responsibility.

Each to their own.

Can't argue against that Duncan, that's the side of the fence I would drop down on too. 

Brian I fully agree, the banks were the greediest of all.

But what has the OP been thinking about for the last 10 years. Interest only, paying next to nothing, no rental income. Been living in cloud cuckoo land.

No sympathy for this case, all of their own making. Best they can do is throw in the keys.

Yes all true, but there is always another side to the way business works (anywhere in the world I guess).

just to keep some sense of even handed ness the lender has to look closely at the borrower to make sure the money they lend out can be either recovered or repaid in the time of the loan, and there should be adequate checks and balances to make sure the contract is a good one.  They are not selling magic pills in the Wild West.

maybe for every greedy borrower there is an equally greedy lender and all the paperwork must be looked at closely to make sure the 'big boys and spivs' didn't do anything wrong.

if they did do anything wrong and didn't discuss absolutely everything and every eventuality and record that they did, then a lawyer may be able to get to grips with the contract on behalf of the borrower as well.  

The trouble is, it's Spain and it's going to take for ever and cost a whole lot more in funding to challenge it, so it's always going to favour the ones with the most money in the end (which to some degree is the same in most countries anyway). 

Ouch! Bit harsh, Duncan. I was trying to be little more subtle, since I was hoping to hear more from the OP - or at the very least see some more marathon sentences from Ads on the subject (does he ever take a breath?!) but that post has probably ended the discussion for good.

Got it now

Through greed bought a property they could not afford with someone else’s money.

Thought they were Del boy (we will be millionaires this time next year).

From day one stuck head in deep sand.

Now looking for sympathy vote and someone to blame.

OK, glad I'm not the only one seeing more questions than answers, so I'll say it as I see it too.

Why did they take out an interest only mortgage? Because some spiv in a suit offered it?

How did they plan to discharge the mortgage debt at the end of the mortgage term? They didn't?

What is this mystery investment they say they were duped into? A buy-to-let property with an interest-only mortgage?

I think Baz has summed it up, and in fact you can probably sum up the entire credit crunch / financial crisis / property crash in the same way: people simply relied on property prices continuing to rise indefinitely. When they didn't, and when they in fact fell, a lot of people lost a lot of money. And those people who didn't have the money in the first place, but used other people's money to get in on the action, have ended up in the biggest trouble.

That said, I do still feel sorry for anyone facing difficulties, and am curious to know more about this "repurchase" plan. Is that just another word for repossession? Why would it be costly, as the OP has said?

I am not sure we are getting the true and full story here. The OP looks like they are trying to blame anyone but themselves for the position they are in.

Why did they take out an interest only mortgage?.

How did they plan to discharge the mortgage debt at the end of the mortgage term?.

What is this mystery investment they say they were duped into?

When was the mortgage taken out? Why has it taken until now for the penny to drop that they cannot discharge the mortgage debt?.

Probably not known at the time but the person that set up Inside Track, it seems he was only in it for the money...Other peoples money, which considering the many failures he's had that worked.

Hate to say this and the truth really does hurt...But...due to the low rate of payback folk got taken in, made no effort to pay the loan back, relied on the house price going up, had no back up for when these loans ended.

Of course they would tell you that the property would rent out for X amount of Pounds / Euro's, if they said it wont rent out who would invest.

I get the feeling that this company was to be the only one that would lend this way, to late now, but maybe this should have set the alarm bells ringing in the first place.

I know a couple of people that have done this on UK property, they also got fingers burnt.

Kath, thanks for replying, although I still feel that this thread is likely to produce more questions than answers. Surely if there was a rental guarantee scheme that failed to deliver, there's a breach of contract there somewhere? Presumably that would go nowhere though, since I'm guessing Inside Track are somewhat tricky to "track" down? But how long have you had the property, and how long has it been apparent that your original plan (which seemed sound enough) wasn't going to work out? What contingency plan did you have? Have youever tried renting it out through other channels? Or is this property in not such a good location? Would it be best just to let the lender take it back? Is this in fact what you were originally asking about? (repurchase?) As for the sudden, unexpected & huge increase in payment demands (from Sabadell?) like Brian I'm a bit surprised (although being a Sabadell customer myself, not totally) that this could have come completely out of the blue. I'm trying to tread carefully here, because I don't want to offend and I feel your pain, but I can imagine others may be following this with interest (no pun intended) and as I said before, I'm genuinely curious.

Ads, from your posts I'm thinking that maybe you've also been a victim of some sort of misselling? Unfortunately, although it appears to me that you have vast knowledge on the subject, your posts could surely win a gold medal at the Olympics for longest sentence structure known to mankind, and I can't make head nor tail of them. They don't appear to actually be adressing the OP's immediate problem (I know, neither are mine!)

I say this with more than a little trepidation, but for once, I actually find that Windtalker's posts are the only ones here that make any sense to me at all.

 Many funds were liquidated in anticipation along the crisis. The European Central Bank reduced the solvency criteria of the assets it was admitting as long as crisis get harder. 

Carmody - a few responses to the gratefully received comments and especially for Roberto.

Firstly we can count on one hand the number of weeks the property has been let - depite a rental gurantee scheme set up by Inside Track.  Our intention was to overpay using the rental income so that when the end of term was reached the capital would be minimal.

The property is seriously in negative equity if indeed there will be any interest in it.  If is only that the interest rate has been so low that we have managed to maintain our payment. 

It is the fact that the bank have increased our monthly payments to 1770 Euros per month without any discussion or notice which has started our quest for a solution - hence we contacted Costaluz lawyers to see if we would qualify for the service.

Many thanks for all of the comments

I know very little about these things, but I find it very interesting & I'm naturally curious. Clearly there are other members with a great deal of knowledge / experience in this area, so maybe they can explain some more. What a shame the OP hasn't posted again yet, or offered any additional info. A quick Google of Inside Track suggests that they went into administration around 10 years ago, so is it safe to assume that the OP's interest only mortgage dates back to then? What would the loan-to-value have been? Is there any equity in the property? Is it their principal home, or has the property been rented out? If there's any equity, and they have lived in it for €122 a month for 10 years (you couldn't rent a shoebox for that), why not sell it to pay off the principal and move on? Or if they can't sell / have no equity, just hand the keys in to the bank? If it's been rented out (weren't Inside Track in the business of encouraging buy-to-let?) is it fair to assume that with interest only payments of €122 a month, they've made a fair profit over that time? If so, again why not just sell the property or walk away? Again, not understanding anything really about these things and certainly not wanting to offend anyone - but how is it possible that it comes as a surprise to anyone that at some point the original capital loan has to be repaid? Have I missed something here? 

Many thanks Maria.

Could you please provide a more detailed example to further clarify your last point with regard to paying for a debt that does not exist anymore as I am a little confused on this.

Kind regards.

Ads: yes, you described below a very commun situation. How good is to have your clear mind in this forum!

Registration of acquisition of properties after repossession by these funds or transferees are being also obstacled by General Direction of Registrys and Notaries  as theiyare not the Land Registry holders of mortgage repossesion rights ( being these, the original lenders).

Another interesting point is that many funds have been anticipated  liquidated and therefore, you can be paying for a debt that it actually does not exist anymore.

You are quite correct Brian

But sometimes vulture funding financial institutes have to take on some of these mortgages as part of the package they buy.

I thought the financial institutions were working to the same basic consumer principles across Europe?

Just reflecting on two mortgage products we have, the closest one to this scenario would be the Northern Rock one, which was taken over by the government after a run on the bank and split into two (we were placed in NRAM).  This has since been bought by an american company, who have taken on both the risk and any equity in payments.

The other is one interest only mortgage with the Bank of Ireland.

Both have been restructered or bought out but in none of these cases were they allowed to change the product or interest rate set at the time the mortgage was taken out.

Im a bit surprised that any 'vulture funding; takes place in a regulated mortgage?

As ADS says, any changes are part ot the key facts of a mortgage and must be signposted and delivered in a fair and accurate way, otherwise whats the point?   The vulture ends up with no income and potentially a property falling into disrepair that can't easily be sold?   Seems pretty pointless to me.