Mortgage Fraud On Offplan Properties

[fishy]

I'm in a situation very much like is described in another blog whereby the buyer is sold an inflated property at a "discounted" price, is hand-held through the buying process....

Young, naive and wanting to invest; now stuck as rent does not cover mortgage/service agreement & property is in a lot of negative equity...

Has anyone any experience of this? Is there any way out? Virtually nothing is in writing & EVERYONE (developer, agent, solicitor & mortgage adviser have disappeared!)

Advice greatly appreciated.

Thanks

"So how can such a large mortgage be obtained? The mortgage lenders rely on the valuation being realistic and presume that the customer has shown his commitment by paying the 15% deposit. The mortgage form simply shows that £45,000 has been provided “from the applicant’s own funds”. Therefore in not disclosing the gifted deposit, the customer has committed a fraud on the lender. But surely the customer’s solicitor would point this out? After all, they handle the deposit and lender’s principal on behalf of the customer for payment to the developer. Not at all, the solicitor is hardly independent, receiving hundreds of similar instructions each year referred to them by the developer. Indeed, they even take receipt of the gifted deposit from the developer, returning it to them with the balance of the transaction received from the lender, ostensibly to give the impression that the customer did own the deposit funds. The solicitor will say that they are receiving the deposit funds from the developer “who was holding them on behalf of the customer”, but in reality the customer is obtaining property that is overvalued even after being discounted by the deposit sum by obtaining a 100% mortgage from an apparently unsuspecting lender.

The response of the lenders is to sue the surveyors and solicitors for professional negligence and to repossess the undervalued properties from the defaulting customers. Many of these property developers come in similar variants of the same theme, and then they go leaving bankrupted individuals in their wake. Some are closed down by the Department of Trade and Industry (now the Department for Business Innovation and Skills) but some are the major construction companies – sailing close to the wind with their “buy to let” operation."

[Melboy]

I don't think there is lot you can do about it tbh ......other forum contributers may be a bit more knowledgable on the subject though.

I have been following this type of story for a few years now from newspaper and telly reports on the very subject you have raised.

It was crazy years 2004-2007 and the warning bells were sounding loud and clear but still people ignored the warnings and piled into the property market like there was no tomorrow with the enivitable result......crash!

Many many people in your position have had no other alternative but to go bankrupt or hand the keys back or whatever they have had to do. I hope there is a way around your problems.... good luck.

Mel.