twistedmelon

This is someone owns two properties one with a mortgage and the other owned outright. They are unable to make the mortgage payments and are looking at having to let the bank reposses
The mortgaged property has 30,000€ to pay off but has 15 years still to run, so in total we are looking at 66,000€. If the property is valued at 70,000€ would that satisfy the bank or would they come after the second property.
Many thanks

JnK

It always amazes me that people want to give their houses back to the bank in lieu of what they owe... I think actually they took the "money" from the bank and not the "house". Maybe give the house back to the previous owner, get the money back and give back to the bank what they took. Banks aren't real estate agents and really don't want the houses.

Domino

which is why they get an agent to sell the house off at any price so long as they recover enough to balance their books.

Michael74

It is my understanding that in Spain when property is repossesed the outstanding debt is still payable plus any costs incurred re administration etc. in the process

JnK

I can only imagine the cost of finding some of the people who have just locked up and left...

johnnyone

wouldn't they be better off selling for say 35k. Thats half the value of the property and there are buyers for bargains. Alternatively couldn't someone take over the mortgage?

twistedmelon

They have tried both those options but as the market is slow to the point of standstill and the location of the property it has got to the point where they just can not pay the mortgage and therefore wait for a buyer to come along.

I'm still not clear what the debt is. Is it 30,000€, the amount to pay off the mortgage or is it 66,000€ the total of the 20 year mortgage?
It is my understanding that it is the latter as the bank consider their future loss as relevant, although in reality this is just them being greedy they are allowed by law to persue this "loss".
My main question still remains, is there a possibility they could take the other property to cover any outstanding debt?

Domino

can they let the property to provide income to cover the mortgage payments ??

poolboy

of course the bank will go after the other property's equity for the shortfall - otherwise the debt would be picked up by all bank customers in the form of a write off.

The only person benefiting is the bank managers brother who will get it for the mortgage value plus a coffee.

jonnyx

Yes they certainly can and they probably will.

twistedmelon

Thanks to you all for that advice.
It is as they feared that they could end up losing both.
Maybe the court will put an "hold" on the second property rather than insisting it be sold.
I don't know how banks are allowed to get away with it, because the only loss the bank will make is the profit they could have made.
They will get a house worth 70,000€ plus the 25,000€ already paid on the original 35,000€ mortgage, so that's 95,000€ for at most a 66,000€ debt AND the possibility of losing their second home....crazy world.

JLFS

I may be a bit dim here, but if the mortgage owed is for 30k why do they need to pay 66k?

If there is 15 years to go and the mortgage runs for the whole term, then the total interest may add up to 60k, but the bank cannot demant 15 years interest on a loan that is repaid early.

it could well be a couple of thou on top that the bank bungs on the outstanding amount, for lost interest.

twistedmelon

They cannot repay the loan early as they cannot sell the property.

JLFS

What I mean is, you said they were looking at 66k? I dont understand how you came up with that figure is only 30k is outstanding on the loan.

Domino

but the bank can repay the loan if they repossess and sell the property. At some point the clock stops ticking, just depends on the terms of the mortgage as to whether it is when the property is repossessed.

as with certain uk institutions there may be an "early repayment" sum of a couple of hundred euros - and the bank will be entitled to claim for legal expenses which could easily ramp up to a couple of thousand - but its getting to that point is the problem