Negative equity – are the banks responsible?

Negative equity – are the banks responsible?

9:04 AM, 12th December 2018, About 3 years ago 55

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A few of my houses are coming to their end of term and the lenders want their money back.

They knew my exit strategy was refinance or sale, but now they don’t seem to recognise any responsibility for the negative equity.

When the banking crisis occurred it followed naturally that house prices dropped dramatically as lenders either folded (albeit bailed out by the government) or sold their book to others. (Not necessarily even lenders).

The banking crisis was caused by reckless lending and the banks ran out of money and were unable to continue their business. The bankers have apologised unreservedly for their error of judgement. Great! But now when some areas are still struggling with negative equity they should (in my opinion) extend the mortgage for a lifetime. Or if they want to recoup their capital reduce the amount owing to an amount that would enable refinancing.

The FCA do not regulate buy to let mortgages, however, the mortgage is a contract. In contract “every contract has an implied contract term that the lender will perform the contract with care and skill”. Surely lending recklessly and being unable to sustain your business, which then has the knock on effect of destroying the value of my investment, is lacking in the performance of care and skill?

There is so much more I can add to this argument but would like to hear a reasonable response that says I’m wrong. I just cannot see it any other way.

But would appreciate your comments.

Gwen



Comments

by H B

17:51 PM, 15th December 2018, About 3 years ago

Reply to the comment left by Gwen Davies at 12/12/2018 - 17:44
Hello Gwen
I'm very sorry to hear of your negative equity. Hopefully you've been saving up over the years to pay down the loan.

But with regards your point:
"Hi seething landlord the lenders did not complete their side of the contract by lending. The law states in the cca section 49 “it is an implied contract term in EVERY contract that the lender will perform the contract with care and skill”."

I'm scratching my head a little. You are arguing that they have breached their contractual obligations by lending to you, whereas that was almost certainly fulfilling their contractual obligation. In fact, had they signed the contract and then not handed over the money, you could have sued them.
In fact, I expect that you could go through the entire clause line by line and see that they met the terms of the contract.
What you ate doing is arguing that they should not have entered into a contract at all, bit that is unrelated to how they performed the contract.

Unless you can demonstrate that the contact was ultra vires in some way, there does not seem to be a clear easy forward.
Although if you do, it would not just revolutionise mortgage contact law, but 200 years of established contract law.

by Seething Landlord

21:36 PM, 15th December 2018, About 3 years ago

Because 1: there has been no breach of contract by the lender.2: they owed you no duty beyond lending you the money and managing your account efficiently 3: even if you were able to establish breach of an implied term, you could never prove that your losses were a direct consequence of the breach because there are so many other causes intervening. I am sure that their lawyers would also find plenty more grounds on which to defend any claim.

by Gwen Davies

21:45 PM, 15th December 2018, About 3 years ago

Reply to the comment left by Seething Landlord at 15/12/2018 - 21:36
Thank you seething landlord for your time. I find it extremely unjust but I bow to your superior knowledge.
Thank you again

by AA

9:30 AM, 16th December 2018, About 3 years ago

Reply to the comment left by Gwen Davies at 15/12/2018 - 21:45
Morality and legality - not happy bed fellows.

by Gwen Davies

9:42 AM, 16th December 2018, About 3 years ago

Reply to the comment left by AA at 16/12/2018 - 09:30
Thanks aa so do you think it’s morally wrong?

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