Is this conspiracy to commit fraud?

Is this conspiracy to commit fraud?

10:04 AM, 22nd June 2017, About 6 years ago 29

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I used a sourcing company to source me a newbuild flat. I was given assurances by the sourcing company that the property would be “mortgagable” before I exchanged contracts. The properties have now been built, however, we have been unable to obtain finance. We have used the in-house mortgage broker, as recommended by the sourcing company, however several lenders/surveyors have refused to lend on the properties.

The developer has now proposed that they issue notice to complete within two weeks, and if we are unable to complete within two weeks, we are given a further six months to obtain finance. This is completely unacceptable – we only exchanged because we were told by the sourcing company that we would be able to mortgage these properties (we have email proof of this). We cannot afford to complete with cash.

We are now in a difficult situation. We have obviously put down 10% as an exchange deposit, and also paid a fairly large fee to the sourcing company. The sourcing company initially suggested that the properties would be remarketed as cash only, and we would be refunded both our exchange deposits, as well as the sourcing fees, but this was never formalised.

The sourcer and broker have acted poorly throughout, repeated broken promises and poor communication. They claim to be acting in our best interests, but at the moment seem only to be be interested in protecting their own fees.

I also received the below email from someone at the sourcing company-

“Please note that the developer contributions being offered can affect the lending (the value of the contributions would be seen as cash incentives and as such would be taken off the purchase price) so we would have to ensure they weren’t made known to the valuer. I’ve made (broker at sourcing company) aware of this, so that he is up to speed and we would ensure that the developer didn’t disclose this on his paperwork too.”

There were a number of incentives offered, such as free legals, stamp duty paid, free property management for six months. This in my mind amounts to conspiracy to commit fraud, which is a criminal office, and can carry very heavy fines.

I made a complaint about the broker because he was so bad at communicating with me, he never replied to emails, never answered the phone, and did not seem to be taking this seriously at all. We have been told several times that the next mortgage lender was very likely to lend, only for them to decline. Four separate surveryors have visited so far, all have declined to lend. Since then, the broker has not communicated with me at all for a period of one month.

I am really at a loss as to what to do now.


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christian kemp

10:56 AM, 23rd June 2017, About 6 years ago

The incentives have nothing to do with the lenders refusing to lend. And cashflow is not this issue.

I mentioned the incentives just to highlight the conduct of the sourcing company/broker, which has been extremely poor from start to finish.

John Constant

10:59 AM, 23rd June 2017, About 6 years ago

Would you be willing to give the address of the property? I would like to take a look at the area/building.

Dylan Morris

11:09 AM, 23rd June 2017, About 6 years ago

I think you'll be lucky to find a lender that will go to 90% on a new build flat in normal circumstances but you also have the added complication of the property being over a shop.
Hindsight is a wonderful thing I know, but you really should have had a mortgage offer in place (obviously a valuation would have been carried out beforehand) prior to exchanging contracts.
I don't think your question around the incentives (not really sure why you brought this up) is conspiracy to commit fraud. It's fairly normal practice for a developer to offer incentives.

christian kemp

11:22 AM, 23rd June 2017, About 6 years ago

Dylan - Where has the 90% figure come from? I wanted to borrow 75%, but would be happy with 60% even. One further issue is that a lot of the limited company lenders have a minimum loan of £75k. The flats are roughly £100k each. Is it possible to have a mortgage offer in place on a newbuild, before the building is built? The developer repeatedly refused my attempts to get a valuation done based on the plans.

I think you have massively misunderstood the point about the incentives. I know this is normal practice. It is not normal practice though for brokers to ask you to conceal these from lenders and valuers. If you read my first post, you will note that I brought this up in the hope that this gives me leverage to get out of the deal.

John - I would be happy to email you the name of the development, I dont want to make it public at the moment.

John Constant

11:27 AM, 23rd June 2017, About 6 years ago

Reply to the comment left by "christian kemp" at "23/06/2017 - 11:22":

Hi Christian,
please contact me through my profile

John Constant

11:32 AM, 23rd June 2017, About 6 years ago

Reply to the comment left by "christian kemp" at "23/06/2017 - 11:22":

Don't know why a broker would want to conceal the fact that it is a new build other than a pointless attempt to hoodwink the lender into thinking it's not a new build. They obviously didn't think that one through as it would be mentioned on the valuation. No excuse for the broker to do this.

Dylan Morris

11:33 AM, 23rd June 2017, About 6 years ago

Reply to the comment left by "christian kemp" at "23/06/2017 - 11:22":

Hope you don't mind me saying so but your original post wasn't very clear at all. Other readers thought this was an issue around the incentives as you made no mention about the property being the problem or provided any details of the property.
You made no mention that you required a 75% mortgage only that you had put down a 10% deposit leading me to think you needed a 90% mortgage.
Yes it is very common to have a mortgage offer in place before a property is built.

christian kemp

11:35 AM, 23rd June 2017, About 6 years ago

Reply to the comment left by "John Constant" at "23/06/2017 - 11:32":

They have not attempted to conceal that. They have only attempted to conceal the incentives that have been offerred.

John Constant

11:44 AM, 23rd June 2017, About 6 years ago

Reply to the comment left by "christian kemp" at "23/06/2017 - 11:35":

I appreciate that Christian, but from the statement issued by the Sourcing company, it looks as if they are clumsily trying to conceal the fact that it is a new build. Anything with incentives is a sure sign of a new build or new development of an existing building. The sourcing company are obviously colluding with the broker on this too. They have admitted that it would affect the mortgage availability, so they know what they are doing in making that statement.

Dylan Morris

11:44 AM, 23rd June 2017, About 6 years ago

The nub of your problem is your solicitor is at fault here. As you say you only had "an agreement in principle" in place which isn't worth the paper it's written on. Any solicitor worth his salt would have insisted on seeing a mortgage offer before exchange. I find it very strange that he was happy to proceed. Did you put pressure on him to proceed without it ?

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