In a dire situation - Mining town collapse

great outcome for you

i dare say that with the current media environment for banks with the royal comission/etc played a hand in it. perhaps 2yrs ago or in 2yrs time the outcome would be very different.

 

This all happened nearly two years ago so I'd say they are paying the shortfall on a lot of properties

 

indeed it was. that makes the result all the more impressive.

 

Hi I know this post is from a few years ago but hoping you may see this. We are facing a very similar situation where hubby bought two mining town investments 10 years ago and to sell would have a shortfall of 300-350k. We can’t keep up payments and are falling behind.
Have been suggested by a financial advisor to sell and make an offer to Lmi when they come knocking as you did. Wonder if you have more information on how you went with this.
We rent so don’t have another home they could take. We do have two paid off cars, motorbike, a little in crypto and some savings. Wondering if we have too many assets that they would make us bankrupt or if they would still accept an offer. Any help would be appreciated. Thank you

 

Lender AND LMI provider will each want to assess their potential loss. Lenders dont discuss these things but I do know some are very reasonable since you cant get blood from a stone. You want a insolvency and debt specialist involved not a general financial adviser. Start with calling the Govt supported National Debt Hotline (free) 1800 007 007 (9:30-4:30) who can refer a local debt financial counseller. They are specialists in this field and..free. Aim is to avoid bankruptcy. If Hubby has the debts he should call. These things are more easily solved with a disclosure of position and if it appear hopeless making a offer from assets. Lenders write off / write down debts all the time.

Find a Financial Counsellor - National Debt Helpline

 

my 2 cents... I wouldn't pay another cent - put them on the market, get an offer, tell the bank what you are doing and let them decide...your losses are quantified at that point... and then walk away. When LMI makes contact, I have seen that they typically settle for 2-5 cents on the dollar. Break this cycle of stress, it is not worth enduring.

 

Thank you for your reply. We did call NDH and spoke to counsel but they said they didn’t really deal with this which was surprising, maybe we need to call again and speak to someone else.

 

Thank you this is what we are looking at doing. We are concerned that they won’t sell even with a low price or they sell too far apart. What do you think would happen in this scenario?

 

if you get them the offer they can decide what to do... at least then you can quantify the loss. At that point it's the end of it. Does it really matter of they chase you for $400k or $800k though?

Note that a mortgage debt has a statute of limitation period of 12 years. Would be best to settle the resulting debt for a few grand if you can.

this may all seem very scary, in reality it's not that bad. None of this is personal, it's just business. The bank took a risk and it's part of their business model. Evidently you are a mum and that's more important than some corporate balance sheet which you would have no meaningful impact on anyway

 

oh also the sooner you stop paying anything the better - it will set the clock running on the 12 years statutory limit

 

Hmmm. No bank is going to do that. They may just exercise mortgage and leave them and LMI insure to seek payment of shortfalls under duress. Better to negotiate than to disregard

 

Thank you, think I needed to hear this today. Seems like it is controlling our world right now. The uncertainty of what LMi will come for is the scariest part. We have held on so long hoping for the market to change and we just can’t do it anymore. We have money we could settle with just unsure if they would accept. We had a third house which sold recently and have 60k we could leverage with. Unsure if they would try to come for more though. Hubby is on a good wage but with these houses we are getting no where

 

Yes it’s scary not knowing what will happen. Forcing Bankruptcy being worst case and we really want to avoid it.

 

they won't bankrupt you. be sure to engage with the LMI when they come knocking - they are the ones that will take a haircut

 

do what sorry?

 

I’m actually a hairdresser so this made me laugh . We called the agent today to get the ball rolling and put the houses up for sale. Let’s see what happens..

 

LMI is a risk mitigation strategy for lenders not borrowers. If a borrower wants to mitigate risk this way, they’ll need to take out their own insurance such as income protection insurance, life insurance and so on.

The only thing about walking away is that assuming there is nothing leftover after the lender/insurer has taken their share, you lose your investment and have nothing to show for all past payments made.

A reminder that leverage can be a wealth-destroyer not just a wealth-creator.