Foreclosure After Exchange Of Contracts

Can a lender foreclose/call in a mortgage after exchange of contracts? And if so how does this work?
Many thanks
Flick

5 Answers

Yes although if contracts have been exchanged unconditionally and with a fixed completion date and.the sale proceeds will be sufficient to repay the debt in.full it is unlikely the lender would enforce an order for possession. Although the buyer acquires a beneficial interest in the property on exchange it is overreached by the lender's charge which is a legal interest in land.

Thanks so much for your answer. You have confirmed what I thought.
I was going to put the property into auction, to get a quick sale and repay the lender before the lenders appointed reciever reposesses for breach of contract.
The problem is I have a buy to let mortgage that I was sold 10 years ago, when I was naive and believed the broker who told me this was the only mortgage available to me and as long as I paid the mortgage payments each month the lender wouldnt care that it was my home as it was common practice to use buy to let mortgages in this way. OK, I know I was stupid for beliveing him, I am not trying to blame, just explain. I do not have arreas, but the lender now knows it is my home and is trying to contact/serve papers on me. So far I have avoided them. IF I AUCTION IT I COULD FIND MYSELF EXCHANGED AND OWING THE BUYER 10% + MY LEGAL, (AND THE BUYERS) LEGAL FEES = BANKRUPTCY 4 ME and it would be wrong to mess my buyer around. I'm not sure what to do, my only capital is in the building. If I let them foreclose/call in/ reposses I have nothing, no capital, no home. If I could sell, at least I come out with enough to start again.
Any advice would be much appreciated.

I understand that only very few ‘buy to let’ mortgages are regulated by the FSA, and that new legislation comes in this month. And that under the current legislation the test as to whether a buy-to-let mortgage should be regulated relates purely to the extent of owner occupation. If less than 40% of the property is occupied as a dwelling by the borrower or their relative, this will not be a regulated mortgage contract. My question is If more than 40% is occupied as a dwelling by the borrower or their relative, does the mortgage contract automatically become regulated?

I can't answer your second question, I'm not sure the changes will be retrospective. You say you are not trying to blame but I think you should be! On the face of it your broker was criminally negligent and should be held to account. Are you not able to remortgage with another lender? If not then speak to your current lender. Explain the situation and that you want to work with them to find a resolution. They would rather work with you than repossess.

Thank you for taking the time to post.
I will try to sell quickly, and pay them back. But until then my fingers will be crossed. Hopefully I won't get into trouble.
Kind regards