Mortgage related question

mstq

Hey guys

So there's been alot of talk, over the recent years, about banks going after homeowners who cannot upkeep their mortgage repayments and people always provide information on how to stop the bank from taking the house and what were their outcomes, etc.

Recently, -aka just now- as I was brain storming thoughts through my mind after reading an article, I thought of a pecuniary situation - what if the person is "fine" with the bank taking the house? Would that person become cleared of any debts after telling bank to take the house?

On one hand you could say the bank might seek to have their interest paid - they might seek compensation for their loss of expectation, but on other hand it's their business risk, that someone might default; and it's a risk (loss) they have to incorporate into their business operations.


Any ideas? Anyone knows if something like this had even happen?

cheers
mstq

Tom Young

At 1:40 am?

A mortgage deed is usually the largest so called debt a person succumbs to in their lifetime.

That being the starting point, one expects that the above scenario is moot once the market value, or sale price of the property is significantly less than the mortgage deed. Therefore, the mortgagor stands indebited to the mortgagee for the residue.

This phenomenon is also known as being in negative equity.

The converse may arise. If so, the realisable value of the property would be known to the mortgagee/bank, etc. thus alleviating the mortgagor of their obligations, usually on a consensual basis.

Mortgage = Debt;
Debt = Repayment obligation;
Repayment obligation = continuous/obligatory reduction of debt;
Failure to meet continuous obligation/s = Default/Arrears/Enforcement.