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Thread: Who signed for our mortgage?

  1. #1
    SRo
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    Default Who signed for our mortgage?

    My family and I were 'assigned' a mortgage from a developer when we bought off plan near Estepona.

    Our original mortgage offer was for 129,000 euros which we increased to 138,000 euros to buy a furniture package for our apartment which we were told we had to buy as part of the deal. We have since noticed that our mortgage is actually for 180,000 euros. We DID NOT sign for this increased mortgage but think perhaps our solicitor who had power of attorney did. We have no paperwork pertaining to this bigger mortgage.

    We are struggling to keep afloat with our payments and are chasing down evidence of us agreeing to this mortgage. Can a power of attorney solicitor agree a figure if it has not been approved by the owners and the owners be liable for this loan?

    The owner of the mortgage company from where our original offer came is being investigated in the UK by the Financial Services Authority for the fraudulent sale of mortgages. If we have been mis sold a mortgage does this also give us any grounds to dispute the greater loan amount with which we seem saddled?

  2. #2
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    Dear Sir/Madam,

    In short, yes, you will be held liable as he used a POA granted by yourselves.

    Another matter being if you have recourse against your lawyer for not following your specific mandate/instructions. You must gather evidence.

    Why do you mention 180,000€? Where do you get this figure from? Perhaps you are confusing it with the full mortgage responsibility.

    Yours faithfully,

  3. #3
    Unregistered
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    Default Who signed for our mortgage?

    Hi
    I'm sorry I don't quite understand...

    The mortgage offer paperwork shows we were offered a mortgage of €138,000 and this is the figure we understood to be paying off over 15 years, this is the figure we understood out POA to be signing off. As we look at our mortgage statement it is clear that a mortgage was arranged for €180,000 WITHOUT our knowledge or approval and it is this figure we are paying off over 20 years. Both figure and year terms are different to those we have agreed to. Surely we cannot be held responsible for a solicitor who has not made us aware of a higher mortgage being arranged without our sign off going ahead without letting us knowing of the increase from €138,000 to €180,000.

    We believe the developer/mortgage advisor (now being inspected for fraudulent mis-selling of mortgages) had the apartment revalued in order to remove the equity before we completed, which resulted in us BEING ALLOCATED (not offered and agreed to) a larger mortgage.

    What do you mean by full mortgage responsibility?

  4. #4
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    Dear Sir/Madam,

    Quote Originally Posted by Unregistered View Post
    Surely we cannot be held responsible for a solicitor who has not made us aware of a higher mortgage being arranged without our sign off going ahead without letting us knowing of the increase from €138,000 to €180,000.
    Regrettably, as per my reply above, you will be held personally liable before your lender.

    Another matter being, again as per my reply above, any recourse you may have against your solicitor for not having followed your mandate. Which will require you gathering evidence, as you yourself write.


    Quote Originally Posted by Unregistered View Post
    What do you mean by full mortgage responsibility?
    Besides the principal you must tag on the additional fees and expenses (legal interest added on top, delay interests, court related expenses etc.). This is what's known as the full mortgage responsibility. It's a legal concept.

    The principal is what you actually borrowed from the bank. I was asking you if you were confusing perhaps the principal (138,000€) with your full mortgage responsibility.

  5. #5
    Unregistered
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    Default Who signed for our mortgage?

    Oh dear this is very disappointing and worrying to hear. So our POA could have signed for ANY mortgage amount and we would be liable?

    I have asked the bank to supply paperwork pertaining to this mortgage as we have never received any copies and we wondered against what authority they were operating this mortgage. If they are unable to uncover any paper work what would the outcome be? They hold our deeds presumably, so could they hold them to ransom for whatever they deem the mortgage value to be?

    I will try and check whether the total 180,000 incorporated the taxes, fees etc

  6. #6
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    Quote Originally Posted by Unregistered View Post
    Oh dear this is very disappointing and worrying to hear. So our POA could have signed for ANY mortgage amount and we would be liable?
    Yes, that's exactly the purpose of a POA, unless you restrict it.

    But in practice a lender will only loan a given amount.

    Bottom line, they will be held personally liable, yes.

    Lenders always hold the original Mortgage deed, they will only handout a copy. You can always request a copy from the Notary where it was signed.

    I trust you do have their Binding Offer specifying the loan's terms...

  7. #7
    Unregistered
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    Default Who signed for our mortgage?

    We have no paperwork at all! Binding offer, completion papers ...nothing etc Our contract when we bought the property has no dates on it either. The whole process looking back now is very suspect.

    All we have is an early mortgage offer (which we agreed to two years before our completion actually went ahead) from the original mortgage lender. We're hoping the solicitor or bank will uncover some papers we can actually check and form a paper trail as to what has happened.

    Thank you for your thoughts, I will see what I can find out and maybe come back to you if I have further questions.

  8. #8
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    You're welcome. Do come back.

    Regards,

  9. #9
    Unregistered
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    Default who signed for our mortgage?

    Hi
    We have been trying to trace our paperwork for our mortgage via the bank and our solicitor. We have had no response from our bank (with whom we are trying to negotiate an interest only mortgage to reduce our payments) and our solicitor has since gone bust, and we think has even since died, leaving no trail for who now holds our case notes/file.

    So we find ourselves in this position:
    1) No completion paperwork, binding offer in our possession, therefore unable to sell the property
    2) Negotiations with the bank to reduce our payments by way of an interest only mortgage appear to have halted despite our repeated emails and phone calls asking for urgent response
    3) No tenant in our property as of yesterday so no money coming in at all (tenant was in arrears and left owing us money).

    Therefore we are unable to pay the bank any mortgage payments and have told them this was the likely outcome if we were unable to complete our move to interest only by September.

    What is the best action to take in your opinion in order to extract ourselves legally from this grim financial loop?

    Can we be pursued for any outstanding monies owed on the property in Spain, in the UK?

  10. #10
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    Quote Originally Posted by Unregistered View Post
    Hi
    We have been trying to trace our paperwork for our mortgage via the bank and our solicitor. We have had no response from our bank (with whom we are trying to negotiate an interest only mortgage to reduce our payments) and our solicitor has since gone bust, and we think has even since died, leaving no trail for who now holds our case notes/file.

    So we find ourselves in this position:
    1) No completion paperwork, binding offer in our possession, therefore unable to sell the property
    You can sell your property whenever you please. You can always request an authorised copy before the Notary in which the property was purchased. what matters is that the proeprty is lodged under your name at the Land Registry.

    You don't need an original Title deed to sell on a property in Spain. It is highly advisable of course albeit its lack can be overcome easily.

    Quote Originally Posted by Unregistered View Post
    2) Negotiations with the bank to reduce our payments by way of an interest only mortgage appear to have halted despite our repeated emails and phone calls asking for urgent response
    Only some banks are now open to paying interest-only and that will be only for 2 years maximum nowadays post credit-crunch. You cannot force a bank to accept interest-only payments if you did not agree it with them on signing the Mortgage deed.

    In any case do shop around for other lenders terms.

    Quote Originally Posted by Unregistered View Post
    3) No tenant in our property as of yesterday so no money coming in at all (tenant was in arrears and left owing us money).

    Therefore we are unable to pay the bank any mortgage payments and have told them this was the likely outcome if we were unable to complete our move to interest only by September.

    What is the best action to take in your opinion in order to extract ourselves legally from this grim financial loop?

    Can we be pursued for any outstanding monies owed on the property in Spain, in the UK?
    Yes of course you can be pursued in the UK for the outstanding debt on defaulting a Spanish mortgage loan. There's this myth created on forums and blogs that you will not be pursued abroad when it's already hapenning everyday. You have quite a few queries on this very website with borrowers who are being pursued in the R.O.I. and in the U.K.

    I can only recommend you to follow a procedure that is known as "dación en pago". This is baisically handing over the keys to your lender in a formal manner before a Notary public signing a deed. You relinquish the ownership and in excahange your lender will discharge in full all mortgage liability and will not pursue you abroad for any shortfall. Please read my article on Bank Repossessions in Spain:

    Bank Repossessions in Spain: A Legal Perspective - 25th of June 2008

    Please read as well my article on dación en pago which explains the procedure in great detail:

    The Dación en Pago Explained - 28th of March 2009

    A dación en pago should only be followed always as a last resort. Sometimes it works magic just mentioning the name to your lender; some of them balk away before the grim prospect of having to place yet another a provision for default before the Bank of Spain and may lead the way to open up new options, such as them allowing you to pay interest-only whilst you weather off the financial storm in the nest years or find a buyer. So at times you can use this strategy to "ease up" protracted negotiations.

    The drawback the dación en pago has is that the lender, should you have significant equity locked away in the property, will not pay you a penny and you will lose all this equity.

    As I explain in my article above, retaining a lawyer is optional for a dación en pago. However be warned that if you do not hire a lawyer the following may happen to you:

    Can we be chased by the bank after arranging a Dacion en Pago?
    Unregistered

    Handing over keys - Mortgage arrears
    Unregistered

    Yours faithfully,
    Raymundo Larraín Nesbitt

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