Mortgage default (again!) and the bank taking legal action

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daver
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Mortgage default (again!) and the bank taking legal action

#1 Post by daver » 26 Jul 2011 17:41

We will soon be forced to default on the mortgage for our apartment in Kapparis and I’d like to clarify just what happens if and when our bank decides to take legal action against us (we live in the UK). In another thread Louise was quoted as listing four ways the bank could try to get its money back: warrant of execution (so bailiffs can come and remove things), attachment of earnings order, third party debt order (on savings) and charging order (on property).

Who makes the decision as to which of these are used - the bank, the court in Cyprus or the UK courts? How do they get the information to decide and, e.g. in the case of an earnings order, how do they work out how much to deduct? If the decision is made in Cyprus then what happens if the method is inappropriate?

Our Cyprus mortgage is in the names of my wife and a colleague of hers. Neither of them earn a lot or have any savings, the colleague lives in a council flat, our house is in my name only, not my wife’s. So what would happen e.g. if the court in Cyprus issued a charging order on our house – this couldn’t happen under UK law (possibly EU law too?) as my wife’s name isn’t listed on it at the UK Land Registry but is it possible for them to make a mistake and then a UK court have to enforce it?

Finally, if/when the bank goes to the court in Cyprus we’re not sure we can afford to be legally represented. Is it possible for us to write a statement setting out our position and giving our financial status, have it translated and send it to the court?

Many thanks,
Dave.



Nigel Howarth
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Re: Mortgage default (again!) and the bank taking legal action

#2 Post by Nigel Howarth » 28 Jul 2011 14:08

Hello Dave and welcome to the forum.

Louise is kept very busy these days and rarely has the opportunity of visiting and answering questions. (You can contact Louise directly through her website).

I'll try to answer your questions:

Firstly, the bank would have to bring an action against you in a Cypriot court. If that action was unopposed and the bank was successful in getting a judgement against you, it could apply to a UK court to have that judgement enforced.

(You would not be given an opportunity to defend the application to the UK court - if you wanted to mount a defence, that would have to be done in the Cyprus court).

The bank would decide on the action it wanted to take - if the Cyprus court considers that action inappropriate, it will reject the bank's case.

As the mortgage is in your wife's name and that of a friend, both would be liable. And the bank could seize any assets to recover the debt. The UK court doesn't have a say in the matter - it only has to confirm the enforcement of the Cyprus court's judgement.

I suggest that you contact Louise directly - or speak with your family lawyer in the UK or your local Citizens Advice Bureau who will be able to advise you of your options and their implications.

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
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daver
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Joined: 06 Oct 2008 16:01

Re: Mortgage default (again!) and the bank taking legal action

#3 Post by daver » 28 Jul 2011 15:22

Hello Nigel, many thanks for your reply.

We have consulted Louise previously, primarily to make an initial approach to our bank and to confirm that I had not acted as a guarantor on the mortgage (which I have not). I have no complaint whatsoever about her service but we are somewhat short of funds now which is why I haven’t gone back to her directly :-)... and why I asked whether it’s possible for us to send our own ‘defence’ to the Cyprus court.

I'm fairly certain now that what’s left of our savings, and our house, in the UK are safe, as they are in my name alone. What we need to work out is the best way to convince the bank that it’s not worth their while pursuing us in the court. I’m certain that it isn’t because my wife and her colleague literally have next to nothing for them to take but we don’t really want them being made bankrupt (because, e.g. it could affect the colleague’s right to stay in his council flat). I also wanted to calm my fears about the Cyprus court making a mistake in awarding a judgement against us, e.g. the charging order or an attachment of earnings which they couldn’t afford.

In my opinion our bank should never have granted the mortgage but this was 2006 and they were hardly alone in having a reckless lending policy. It’s obvious from looking at our original application that my wife and her colleague could never have afforded the mortgage repayments beyond the initial guaranteed rental period, even with a tenant in the property. We were naïve in being persuaded to buy the apartment, the bank were stupid to let us.

Regards,
Dave



Pantheman
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Re: Mortgage default (again!) and the bank taking legal action

#4 Post by Pantheman » 28 Jul 2011 16:22

Hello Daver,

Have you tried to sell the apartment to pay back the loan???

Maybe you already have it up for sale??

if you can't afford to keep it, you have to do something different than you are currently doing to make a change.

let me know about the apartment, maybe I can help in a sale, up to you.

Cheers

Pan


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daver
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Re: Mortgage default (again!) and the bank taking legal action

#5 Post by daver » 29 Jul 2011 09:42

Hello Pan,

Unfortunately we are in serious negative equity and our bank will not allow us to sell it (well, actually they have recently said that they might, depending on how much less the sale price is than the amount owing on the mortgage - we are trying to get some clarification on this).

Regards,
Dave



Pantheman
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Re: Mortgage default (again!) and the bank taking legal action

#6 Post by Pantheman » 29 Jul 2011 11:52

daver wrote:Hello Pan,

Unfortunately we are in serious negative equity and our bank will not allow us to sell it (well, actually they have recently said that they might, depending on how much less the sale price is than the amount owing on the mortgage - we are trying to get some clarification on this).

Regards,
Dave
A bank would not normally say you cannot sell, as they don't know what you could get for it.

Unless you had an offer and it was rejected, the banks will not normally give you a bottom line figure unless you get some offer.

Did you pay the 20% DEPOSIT WHEN YOU BOUGHT IT??

If you prefer you can pm me.


Pan


For all your property needs, we offer Trust, Integrity, Honesty.
FSB Properties Ltd
Registered and Licensed Real Estate Company Co. Reg. No. 795, Lic. No. 250/E
http://www.fsbproperties.com

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Re: Mortgage default (again!) and the bank taking legal action

#7 Post by Nigel Howarth » 29 Jul 2011 12:06

Pantheman wrote:A bank would not normally say you cannot sell,
I have heard of a similar situation in which a bank told a lawyer that they could not take legal action against a developer.

The problem (I believe) is that the contract of sale is assigned to the bank, which gives the bank a great deal of say in what & what cannot be done.

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news

daver
Posts: 4
Joined: 06 Oct 2008 16:01

Re: Mortgage default (again!) and the bank taking legal action

#8 Post by daver » 29 Jul 2011 17:13

Pan,
Apparently the bank can stop a sale. The sale agreement (between ourselves and the developer) is lodged at the Land Registry with the bank as an interested party and the bank can refuse to allow it to be re-assigned to a new buyer (we don't have title deeds yet).

Our bank has told us they will not allow a sale unless the sale price is close to what is owed on the mortgage. They won't tell us just how close it has to be though, as you say, they said they need to see a specific example - which means we need to find a buyer.

Yes we did pay a 20% deposit and we've lost that. The property has dropped in value so much (and we were sold it at an inflated price) that the likely sale value is somewhere between 40.000 and 70.000 euros below what is owed on the mortgage). On top of all this, a sale will be difficult without title deeds anyway but we are trying.

Regards,
Dave




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