Mortgagee Sales on Negative Equity Property
Apr 10th 2008, 9:40 am
#1
Thread Starter
Joined: Nov 2006
Posts: 2,225
Mortgagee Sales on Negative Equity Property
I was chatting to someone from Auckland earlier today who's working over here for a few weeks. She was saying that some lenders in NZ have started to call in loans on properties purchased with 100% mortgages.
Apparently the banks are requiring people with 100% mortgages to have fresh valuations carried out on their property. If the property is valued to be less than the mortgage the bank asks the householder to make up the difference, eg. if someone has a $500k mortgage on a house that comes in with with a $400 valuation they are being asked to give the bank $100k or the bank forecloses the loan.
AFAIK this only applies to 100% mortgages at the moment, but it may be something to bear in mind if you're thinking about buying or re-financing in the near future. I just hope they don't extend this rather harsh policy to people with less than 100% mortgages, and I wonder if the same will start happening here soon.
Apparently the banks are requiring people with 100% mortgages to have fresh valuations carried out on their property. If the property is valued to be less than the mortgage the bank asks the householder to make up the difference, eg. if someone has a $500k mortgage on a house that comes in with with a $400 valuation they are being asked to give the bank $100k or the bank forecloses the loan.
AFAIK this only applies to 100% mortgages at the moment, but it may be something to bear in mind if you're thinking about buying or re-financing in the near future. I just hope they don't extend this rather harsh policy to people with less than 100% mortgages, and I wonder if the same will start happening here soon.
Last edited by Nerine; Apr 10th 2008 at 9:43 am.
Apr 10th 2008, 9:56 am
#2
Lost in BE Cyberspace
Joined: Jun 2005
Location: In a large village called Auckland
Posts: 5,249
Re: Mortgagee Sales on Negative Equity Property
I don't know about people being asked to refinance risky mortgages, but story yesterday was saying that 100% mortgages were becoming very difficult to get.
http://www.nzherald.co.nz/section/1/...ectid=10502905
The UK learned it's lesson there in the eighties and would only give 100% if you took up an indemnity insurance to cover any potential losses. Those were the days, eh? A sense of deja vu (old age) with history repeating and the same scenarios being played out all over again.
http://www.nzherald.co.nz/section/1/...ectid=10502905
The UK learned it's lesson there in the eighties and would only give 100% if you took up an indemnity insurance to cover any potential losses. Those were the days, eh? A sense of deja vu (old age) with history repeating and the same scenarios being played out all over again.
Apr 10th 2008, 10:15 am
#3
Thread Starter
Joined: Nov 2006
Posts: 2,225
Re: Mortgagee Sales on Negative Equity Property
Definitely a sense of Deja Vu ,we never got into negative equity in the early 90s but bought at the top and sold at the bottom. There's a whole new generation now unaware of the fact that property can go down as well as up.
There's something similar happening here too with 100% mortages. People were being asked to pay $20,000 up front for the indemnity insurance, which is stupid really when they could've used that money as a deposit. Not heard of foreclosures yet but the banks are all the same so it could happen here.
I guess the real story behind this is that both NZ and Oz have their own home grown sub-prime mortgage troubles looming large.
There's something similar happening here too with 100% mortages. People were being asked to pay $20,000 up front for the indemnity insurance, which is stupid really when they could've used that money as a deposit. Not heard of foreclosures yet but the banks are all the same so it could happen here.
I guess the real story behind this is that both NZ and Oz have their own home grown sub-prime mortgage troubles looming large.
