I would appreciate some advice/comments about the following situation: Myself and my Wife had a mortgage on our house with the Bradford & Bingley Building Society which we obtained in the late 1980's for our three bedroomed mid-terraced house.(posted 8811 days ago)In 1991-1992 we got into difficulties due to a fall in personal income and fell into arrears. We tried to keep up with the repayments but because of our financial situation couldn't keep up with the demands on our finances. There was a period of discussion with the building society about finding a way to right the situation as far as our mortgage arrears were concerned. After failing to come to a reasonable agreement which we could afford, the Bradford & Bingley presented to us the option of a `Mortgage Rescue' scheme.
Basically the package consisted of repossessing the house and selling it on to a housing association. We would then be able to rent the property thus keeping the same roof over our heads. The rent was a sum that we could afford.
On the face of it this seemed to be the answer to our problems and we went ahead with it in 1993. We didn't really feel that we had much option - people all over the country were losing their houses at the time. The property market had finally crashed after the eighties boom, and if we had sold we would have been into a negative equity situation and we didn't want to be homeless.
Seven years on we are still renting our house. We are in a position now where we want to own our own home again. But because of the (very restrictive) agreement that we signed for the Mortgage Rescue, we are facing the prospect of having to start from scratch on the house buying ladder. The reasons for this are as follows:
When the building society sold the house to the housing association there was a shortfall of some #11,755 (which included #2303 of morgage indemnity insurance). Signing the contract committed us to paying this sum back whatever happens. We are still paying now.
Even if we raise a mortgage we have no right to any of the equity that has since accrued in the property. If we bought the house back now we would have to pay the full market value, the profit would be split 85% to the Bradford & Bingley and 15% to the Housing Association. (We have this in writing from the society). Even though based on the current value of the house, the society would cover their original losses (and then some), we would also still owe the shortfall money. We would be in a worse position than many first-time buyers.
A document that we have states that the sale of the property to the housing association would be financed by a loan from the building society at an interest rate less than the commercial rate. The question we have asked ourselves is why couldn't the society have extended such a generous offer to ourselves at the time of the rescue, at least as a short term measure? The bottom line is that we have been financing the purchase of this property for the last seven years but will receive no benefit from increases in property prices.
I have taken legal advice on this but the solicitors I have spoken to seem to think that there is nothing we can do as we signed to the agreement and all its terms. I feel that we were taken advantage of by the society at a time when we were pretty desperate. They even added all the solicitors costs for conveyancing etc to our bill!
I would be very interested to hear from anyone else who has gone down the Mortgage Rescue route. It would be helpful to know of any other's experience in similar situations, especially if they have been dealing with the Bradford & Bingley.