Repossessed houses

[Coldicote]

We are hearing a lot in the news about houses being repossessed by mortgage lenders because people cannot keep up their mortgage payments. Are the occupants actually being turned out and made homeless? If so where are they going and what happens to the houses? Can anyone throw light on the subject please?

[Richard1966]

Hi

Yes they are actually turned out of the property.

Some, but by no means all, will be considered homeless by the local council and rehoused, others, the majority, will have to look for private rented accommodation.

The property which is now owned by the mortgage lender who took the possession action will be made secure and sold. These properties rarely make their actual market value.

If the person who previously owned is lucky and there is equity in the property then after the sale, the mortgage will be repaid and any costs linked to the possession action and the sale of the property are deducted they may get something back. This process can take several months and with the current state of the housings market could take a very long time.

If their is insufficient to cover the mortgage and all the costs then the person who lost their home will eventually be chased by a debt collector for the shortfall.

[Lakitu]

I've wondered the same thing. I'm a bit confused as to why people are not making their mortgage payments too. I pay an insurance on top of my mortgage to make sure I'm not going to be in trouble if I lost my job, isn't this strandard? If one hasn't lost their job, then how are they not being able to make their mortgage payments all of a sudden?

[Coldicote]

Interesting answers, thank you. It looks as though local authorities will need to buy up some of these houses to accommodate the homeless. Someone must be buying them, probably at less than market value.

[Richard1966]

Your right, a lot sit empty slowly deteriorating untie their value is next to nothing. They are then picked up cheap by builders who do them up and sell them.

The payment protection insurance is optional and often the first thing people stop when they begin to get into trouble.

Local authorities don't have the money to buy empty properties, some work with housing association who might lease a property for a fixed period, often 2 years, to house those who pass the stringent eligibility tests for council assistance.

[sandmaster]

As the local authority very often has to provide accomodation why don't they get together with the banks? Keep the families in the house and charge them rent until they find work again? Then repyaments can recommence and the accrued interest added to the mortgage would add a few years onto the end of mortgage.
If they fail to pay the rent as well - then there is no hope for them.
This would prevent properties being empty until they are sold for a fraction of their true value. Obviously it depends on how much equity there is in the house.