Very Quick House Sale

The Office of Fair Trading (OFT) has taken action against twelve companies in the sell and rent back (SARB) market, over statements they made in their advertising.

The OFT asked the firms to substantiate claims made in their adverts or change them.

The resulting action by the OFT has now led to three companies no longer offering the service, six have removed their websites, and a further three have made amendments to their website. Two more have been reported to the FSA.

A key point of contention were claims that residents were able to live in properties for life after they have sold them under SARB, else benefit from low rent, or buy back their homes at any point.

The Sell And Rent Back market has been flooded with opportunists over the past year, resulting in threats to consumer interests and the potential to be exploited by unscrupulous businessmen.

This is especially as they seek to build up property investment portfolios during the downturn, by trying to tap into the market in Below Market Value (BMV) properties.

The result has been a situation open to abuse, with lack of controls to protect consumer interests.

The FSA has already announced that the market will become regulated from next July, a move broadly welcome by established SARB companies who already have a long-standing presence in Britain.

Accordingly to Jason Shaw at MPG Investments, “The industry in general has suffered a reputation problem, after opportunists began moving away from the buy-to-let market. Unfortunately, this meant that a number of individuals and small companies sought to exploit debt in a way that should never have been considered acceptable.”

“That’s why we’re happy that the FSA has finally stepped in, to ensure that all companies in the sale and rent back market are forced to operate at the same level of professionalism that MPG has insisted on for over five years.”

by Brian Turner

A judge has today issued a landmark ruling in the sale and rent back sector which could have a major impact in the longer term. The sale and rent back market has become more and more popular as the economy continues to struggle with many homeowners, often in arrears with their mortgages, agree to sell their homes at a discount with the opportunity to rent the property for a predetermined period.

This particular hearing saw a company by the name of Repossession Stopped acquiring the property of a couple in Shrewsbury who had lived there for over 25 years. While the couple in question had behaved impeccably and were on time with their payments, the company which acquired their home had failed to keep up with the mortgage payments and the mortgage provider sought to repossess the property.

Housing charity Shelter took the case to court on behalf of the couple involved and the judge ruled that they could either takeout a mortgage themselves and buy the property or else come to an agreement with the mortgage company to rent the property indefinitely. This is a major ruling for the sector and offers significant protection for those forced to take this controversial route.

POLICE investigating an alleged sell and rent back scam which has hit 2,000 struggling families in the Northumbria region suspect it could be the largest fraud of its kind.

Northumbria Police are probing North East Property Buyers and Newcastle Home Loans after after a referral from the Financial Services Authority.

The Gateshead firms buy homes from people across the region who are struggling to pay their mortgages and allow them to rent them back.

However, the firms have allegedly defaulted on repayments which has led to hundreds of repossession orders.

On Thursday, police made five arrests on suspicion of money laundering and conspiracy to defraud.

It is understood those arrested include Grace and David Purdie, of Darras Hall, Northumberland, each a director of one of the companies.

Grace Purdie’s business partner, Michael Foster, of Houghton-le-Spring, Wearside, is also understood to have been arrested.

The investigation is continuing into the partners of Darlingtonbased David Oliver Estate Agents, including the Purdies’ son, Craig David Purdie.

Mr Purdie is a former appointed representative of Newcastle Home Loans. His business partner, Andrew Oliver Bellwood, was arrested on suspicion of money laundering, in March, after £34,000 was found in his home in Newton Aycliffe, County Durham.

Detective Chief Inspector Jim McAll, of Northumbria Police’s economic crime unit, said: “What is alleged is a very serious and complex fraud. If proven, and if it is on the scale alleged, it will probably be one of the biggest property frauds in the country.

“It is certainly the biggest one we have ever dealt with.”

Det Chief Insp McAll said the inquiry could take years as detectives search through thousands of documents connected with the companies’ mortgage deals.

As officers continue to investigate the criminal allegations, tenants facing repossession must fight to stay in their homes through the County Courts.

Kelly Bushby, housing specialist for Clark Willis Solicitors, in Darlington, said she was dealing with 20 clients in the area, but suspects there could be more.

She is preparing to fight repossessions using an as yet untested legal argument, and plans to instruct a leading barrister.

Mrs Bushby said: “We argue that tenants have an overriding interest and should therefore be allowed to stay in their homes.

Perhaps if they had been given an assured shorthold tenancy things would be different, but, usually, they have been told they could stay for ten years or even life.

“There is also a possibility of a negligence claim against the solicitors who handled the sales which could see the ownership of the property revert to the tenants as if the house was never sold.

“In either event, it will take time and I would advise anyone who thinks they could be affected to get in touch with us.”

Clark Willis has offered to represent clients through the first stages of the proceedings free.

For details, call 01325-745687.

The Government is offering some hope for victims of ’sale and rent back’ scheme.

We revealed how tenants who sold their homes to a string of companies, includingHome Assured, North East Property Buyers and Freedom Property, have ended up forced out of their homes when their landlord is repossessed for not keeping up mortgage payments.

Margaret Beckett has announced plans to give tenants at least two months’ notice in such situations. Currently they could be forced to move within two weeks or less of a repossesssion order going through. Mrs Beckett said:

“It is not right that tenants through no fault of their own can be forced to leave their home at a moment’s notice if their landlord is repossessed, which is why we are intending to change the law. In the meantime, I hope that lenders will move as quickly as possible to safeguard tenants in their homes.”

It might not seem like much of a life-raft but it’s been broadly welcomed.

Leslie Morphy, chief exec of Crisis, said:

“Private tenants risk becoming the hidden victims of this recession and at Crisis we have been highlighting their plight for months. We are delighted that the Government has listened. We now need this legislation to come in urgently. With the recession biting and repossessions soaring, this protection can’t come soon enough.”

David Harker, chief exec of Citizens Advice, said:

“We are delighted that the Government has responded to the concerns we have raised. In the last year Citizens Advice Bureaux have seen around 1,000 cases where private tenants were facing sudden homelessness because their landlord was being repossessed. It is clearly unfair that private tenants lose their right to two months notice to quit simply because their landlord has failed to pay the mortgage. The challenge now is to ensure that the new protection is put in place without further delay to stop any more people being fast tracked to homelessness.”

By Nick Sommerland, Daily Mirror  20/05/09

This is where companies offer to buy your house at a discounted rate but promise to let you stay there as a tenant.

For those struggling to meet mortgage payments or facing repossession, this might seem attractive, particularly as these companies offer quick sales. There are many genuine sale and rent back schemes but some cowboys are taking advantage of vulnerable consumers.

They might promise that you can stay indefinitely in the property but then give you only a standard six-month tenancy agreement. They might promise that rent won’t go up but then increase it by a large amount once the initial period is up. Or they might charge you a large fee upfront, and then disappear.

What to do 

Be suspicious of companies offering you a much better deal than everyone else.

For example, promising you much lower rent or offering to pay you 95 per cent of the market value of your home when everyone else is offering 70 to 80 per cent. They could be scammers.

From July this year, the FSA will regulate sale and rent back schemes, so you’ll be able to check if companies are authorised with it. Even then, sale and rent back might not be best for everyone so seek independent advice from an organisation like the Consumer Credit Counselling Service.

If you do go ahead, make sure that you get details of future rent and the length of your tenancy in writing.

You might get as little as 70 per cent of the true value of your home. So, if your home is worth £158,000, you could lose £47,400.

The number of homes repossessed in the UK rose to 12,800 in the first three months of the year, the Council of Mortgage Lenders (CML) has said.

This was up 23% from the 10,400 in the previous three months and 50% up on the 8,500 in the same period last year.

The CML has predicted that 75,000 homes will be repossessed in 2009, almost double the 40,000 of last year.

But the group has now described this prediction as “pessimistic” and could change its view in the summer.

But figures from the Ministry of Justice show a huge drop in the number of lenders getting court permission for the early stages of repossession.

Debt Dangers

The number of home loans with arrears of more than 2.5% of the mortgage balance rose by 12% from 182,600 in the fourth quarter of 2008 to 205,300 in the first three months of this year, the CML said.

This was 62% up on the 127,000 in the first quarter of 2008.

Other Key Issues Revealed:

* There was a jump in the number of buy-to-let investors having properties repossessed in the first quarter of the year
* Fewer people faced the early stages of repossession as lenders held back from going to court
* New schemes were aimed at offering alternatives to repossession

The figures were described as “pretty ugly” by Chris Tapp, director of debt charity Credit Action.

Lenders have come under increasing pressure to help out borrowers in trouble.

There is help available for people in danger of losing their homes. Tracey Myers nearly lost her home a few years ago.

“It was awful. I wouldn’t want anyone to go through it. There is no way out – no matter how much you show people you are trying to sort things out, they just want their piece back,” she told the BBC’s Propertywatch programme.

“I resigned myself to the fact it was going to be repossessed. I waited for the knock on the door. I had everything packed – I lived in a shell so at least if they came to evict me, I could get everything out. It was just a waiting game.”

But, helped by the Scottish Mortgage Rescue Scheme – she managed to keep her home. A similar scheme in England offers people the chance to sell some or all of their home and rent it back from a social landlord.

A separate UK-wide scheme allows people who have temporarily lost their income to defer a proportion of their mortgage interest payments for up to two years.

Lender Help

In November, the large lenders agreed to a minimum three-month delay before starting repossession proceedings. Many said this was standard industry practice.

HELP FOR HOMEOWNERS
# Mortgage Rescue: allowing the owner to become a tenant in their own home
# Homeowners Mortgage Support Scheme: allows newly jobless to defer up to 70% of mortgage interest payments
# Court Protocol: demands a three-month delay and discussion of alternatives before repossession action
# Help For Tenants: minimum notice of two months for tenants to leave if their landlord’s property is repossessed

In October, lenders were told that in order to gain court permission for a repossession, they would have to show they had tried to discuss and agree alternative arrangements with borrowers. These alternatives could include a full or partial repayment holiday, changing the type of mortgage or extending the repayment term.

Figures from the Ministry of Justice (MoJ) – also released on Friday – show that the pressure on lenders to ease back on repossessions could have paid off.

The ministry’s figures – which only cover England and Wales – show that the situation earlier in the repossession process, when lenders first go to court for permission to take back a mortgaged property.

There were 17,054 repossession orders granted in the courts in the first three months of the year. That was 39% lower than in the same period a year earlier and 43% lower than in the last three months of 2008.

However, it is not clear whether lenders have cancelled plans to make repossessions, or simply delayed them.

Lenders are keen to assist anyone who got into difficulties with repaying their mortgage, Michael Coogan, the CML’s director general said.

“Lenders are acutely conscious that behind the statistics are real people, many of whom are affected by the economic downturn and its impacts on unemployment, changes in circumstances and inability to refinance,” he said.

Rental Sector

Separate figures released by the CML showed a leap in the number of homes repossessed that were owned by buy-to-let investors.

There were 1,700 buy-to-let repossessions in the first quarter of the year, up from 1,300 during the previous three months.

A receiver of rent was appointed to a further 2,400 buy-to-let properties during the period – up from 1,800 in the the previous quarter. This enabled tenants to stay in their home but with their rent paid to the lender rather than the landlord.

“The figures also prove that government announcements this week to help tenants of repossessed landlords must be implemented as fast as possible,” said Sam Younger, chief executive of housing charity Shelter.

These proposals included a minimum notice of two months for tenants to leave if their landlord’s property is repossessed. There have been some cases of people being given less than two weeks to find somewhere new to live.

With interest rates falling, the CML said that the proportion of buy-to let investors in arrears on their mortgages had fallen slightly.

There are many ways available today to get money to deal with your specific needs. Payday loan is an option to get money in your bank account in not more than few hours. But, these types of loans come with a lot of interest which is the reason why some people don’t like this particular option. Also, it is not possible to use this option if you need a lot of money. That’s exactly the situation when you can actually make use of an option, called “sell and rent back” your home.

What is sell and rent back?

Although lots of people now use this option and its widespread use have helped this industry to grow in an amazing way but there are people who still no nothing about it. If you are also one of those persons, it is enough to know that it is an option where you sell your home to an investor and start living as a tenant in the same home. What it means it that you get the money you need without saying goodbye to your home sweet home.

Sell and rent back is a very good option to consider in all situations but there are few situations when it is hard to find an option better than this. For instance, in today’s housing crisis it is not uncommon to find yourself dealing with repossessions. In fact, when you will delve more into the details pertaining to housing crisis in America, you will find that almost all of the states are facing certain foreclosure and repossession problems. California is one of the states where you can find a lot of homes listed into the foreclosures.

Now, in this very situation it is essential for you to make sure that you don’t lose your home and that’s when you can consider the option of selling and renting back your home. This is the ideal situation to use the idea of sell and rent back as it can help you to be back on the road of your fiscal freedom.

It is also crucial to mention that foreclosures are one of the reasons behind the housing crisis in America. Actually, when people don’t become able to cope with their mortgage payments, there remains no other choice for them but to face the problem of foreclosure. After the foreclosure, people have to leave their home but that’s the primary reason of devaluation of homes in that entire area. It often contributes towards strengthening the housing crisis.

Actually, people don’t like to buy homes in areas with lots of foreclosed properties and value of home goes down in the entire area. But, in case of sell and buy back schemes you don’t have to leave your home and the value of homes in the entire area stays at the right level.

The bottom line is that the option of sell and rent back your home is good not only for you but for economy as a whole. So, don’t forget to consider this vehicle to stay away from repossessions and foreclosures.

As the number of repossessions goes up, the innumerable options on how to end it are also being introduced to the homeowners. These alternative ways are relevant to each home owner’s situation and you can practice even more than one of these options.

However, there are some of these options that really need to be done together with other ways.

If you think, it is impossible to stop repossession (foreclosure) because of your current financial instability, then, you should be able to go through these options:

1. One thing you can do is to save up for your monthly mortgage payment. It is not a hard thing to do. You just need to know your priority and home should be given a great precedence. This way you can pay back the missed payments. Homeowner must be aware that defaults make it even harder for them to pay due to thousand of dollars of added charges.
    
2. Negotiate with the lender and have a plan for repayment. It can be worked out through the lender’s loss mitigation department. In here, the homeowner pays almost twice as much per month as the regular mortgage payment. This way, the homeowners are able to overcome the defaults and at the same time they are able to pay the regular monthly dues.
    
3. Communicate with the bank or creditor and request for loan modifications. You can request for the extended terms of payment, lower interest rate and more. However, it will not be feasible if you applied a loan from mortgage servicing companies who do not have the papers to modify your loan. These companies only service their loans and collect payments.
    
4. Apply for a refinancing. It can be helpful also if you ask help from the banks who are willing to refinance or grant you a loan so as to help you from foreclosure. But you need to have a good credit record, and a stable source of income. It is a great advantage if you tell the bank about your present financial situation.
    
5. You can also sell the house to your acquaintance, such as friends or family member and rent the property back from them. This way, it helped you stop foreclosure and it helps in using someone else’s good credit to apply for a new loan, at the same time, you can still stay in your home.
    
6. You can also file for a bankruptcy if you desperately want to end the foreclosure. However, it is somewhat expensive due to the attorney fees, trustee fees and court costs and these cause the bankruptcy to fail.
    
7. Short sales can also be a better alternative. It is advisable if you owe more than your house is currently worth. You can sell your house at a lower price and by accepting the lower amount; you do not need to worry for the monthly payments at all.
    
8. Another option is to sell the home to a potential buyer if it is worth enough. You can request for a real estate broker to help you or you may also post the house as a “For Sale by Owner” or FSBO.
    
9. If the above options did not work out, you can have a Deed in Lieu of foreclosure. You may now voluntarily surrender your property to the bank. The bank thereby agrees that you already have paid the mortgage loan by giving back the house to it. However, you should leave the house, but without the worries of foreclosure.

These are among the many options for the homeowners. Some other options which were not mentioned are expensive and therefore not quite advisable.

You really need to find ways to stop foreclosure by evaluating the above options and select what is or are the best thing/s you can do.

Stop repossession  now and you will still have a good credit record and a better life.