Property Investing

I have always thought that I was pretty ‘property investment’ savvy when it comes to rules and regulations, but even I wasn’t aware of the legal loophole that enables mortgage lenders to repossess your property without going to court.

Fortunately I have never had to go through this process myself, but I have had many close friends who through lack of tenants have lost their properties because they have not been able to afford their mortgages. Yet even they have never been subjected to the process where their property was repossessed without the interjection of the courts.

It is startling to think that lenders would go to such extremes to protect their finances when simple negotiations could easily help homeowners to begin making payments again. But according to an article I was recently reading this malpractice by lenders is more common than you imagine…

Currently is it within a lenders legal right to repossess and sell your property – without seeking either your agreement or the courts – should you fall into arrears of over 2 months.

Now you could arguably say ‘fair enough, you didn’t pay so you deserve to lose your property’, but under current rulings lenders are meant to seek all other routes possible before turning to repossession. MEANING repossession is only meant to be used as a last resort.

Yet, rogue lenders such as GMAX-RFC have supposedly repossessed borrower’s properties using this legal loophole time and time again.

In one legal case against them, a judge ruled in favour of GMAX-RFC after they sold the property of a borrower who had fallen into arrears – without telling them – before letting them get evicted by the new owner on the grounds of trespassing. Now I don’t know about you, but that is not only harsh, it is also extremely underhanded.

Thankfully, the government is now seeking to abolish this legal loophole to help protect homeowners. However what concerns me is how this loophole was ever allowed to happen in the first place?

Surely when creating the law, someone should have been able to spot the dangerous potential of this loophole when harnessed by the wrong lenders and write in clauses to prevent it happening. It scary to think how many poor homeowners may have lost their homes due to this loophole, when it could have easily been prevented by a court intervention.

Only time will tell whether or not more homeowners will come forward against these rogue lenders, but it definitely puts into perspective the need for greater awareness by homeowners of the laws which can work against them.

Wendy xx