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House price shocker - Mortgaged property auctioned for half the market price
Tyrone Reid, Sunday Gleaner Reporter
Forty-one-year oldAnita Pink has lost her home. But the self-made businesswoman who defaulted on her $170,000-per-month mortgage after falling on hard times in 2009 is not fighting the foreclosure. She just wants the financial institution that gave her the $14.9 million mortgage to purchase the property four years ago to sell the house for what it is worth.
"I need justice, not sympathy," she said defiantly.
Pink said she continued to make payments as best as she could after losing her job but it was not enough. She even sold her two cars and made a lump-sum payment but not even that could stave off the imminent auction as the debt had already ballooned to default levels.
She remembered the exact day in January 2011 she received a phone call from the institution informing her that the town house was to be sold via public auction in March.
"When I realised I couldn't come up with the money, I trusted that the bank would sell the property for the amount I owed them because the property was valued in excess of what I owed. I thought I had a right to market value," she said between sighs.
She now regrets not selling the town house herself, which was auctioned for $12.75 million.
Pink was stupefied. "It was a shock and awe moment. I was shocked," she said.
According to documents provided by Pink, Victoria Mutual Building Society (VMBS) sold her three-bedroom, two bathroom mid-terrace town house in the high-demand Liguanea area by public auction in March this year for $12.75 million on the strength of a valuation report that was done only from the outside of the property.
Twice the amount
A subsequent valuation of the property ordered by Pink determined that the Kingston 6 town house could fetch almost twice as much.
The trained accountant says she has appealed to the Bank of Jamaica (BOJ) - to use its regulatory responsibilities to help in having the matter resolved.
She also claimed she was told that the institution would sue her to recoup the rest of the approximately $18 million she owed.
The valuation reportedly commissioned by VMBS stated, "An external inspection of the subject property was done on March 2, 2011.
"We were not able to gain access to the interior of the residence to conduct a full inspection and therefore, all information provided about the physical characteristics and layout of the town house was obtained from an exterior-only inspection and from information provided by our client," read the scope-of-work section of the valuation report done by a well-established valuation firm.
From what was gleaned from outside the town house, the building society's valuators determined that the market value for the property was $13 million with a forced sale value of $10.5 million.
Two days after the house was auctioned, Pink hired VB Williams Realty Company Limited to get a second opinion on the value of the property.
According to the report prepared by that valuation company, "the fair market value of this apartment as of 2011 March 24, is between twenty-four million, five hundred thousand dollars ($24,500,000) to twenty-five million dollars ($25,000,000)".
Pink revealed that in 2007 when she applied for the mortgage, the town house had a $19-million market value and the forced sale was $16 million. "I was granted a mortgage for $14.9 million in May 2007 using a valuation from the same valuator VB Williams," she said.
According to the Pink-ordered valuation report, a "town house such as the subject unit will receive good market response, primarily for rental purposes and/or small household, and commands reasonable capital value".
VB Williams also noted that if the property should be put up for forced sale within a 60-day period, a price of $20 million should be obtained.
So why the chasm in valuations done three weeks apart? A veteran valuation surveyor who has been in the field since 1972 told The Sunday Gleaner that the disparity can be explained by the fact that one valuator went inside the house while the other formed his opinion from outside the town house. "I think that is courting danger..." said the surveyor, who asked not to be named in the article.
Although valuations are partly based on the interpretation of the interaction between market forces, the valuator is convinced that "there should not be that type of a difference" between the bank's valuation and the one ordered by Pink.
She claimed she made no attempt to bar the bank's valuator from gaining access to the town house because she had accepted that the house was going to be sold.
The VMBS did not respond to specific Sunday Gleaner queries. The member-based financial institution said it was against company policy to discuss specific client issues.
Options provided
However, the building society noted that it takes pride in providing its members who are experiencing difficulties meeting mortgage obligations with several options to resolve their challenges.
"This allows our members an opportunity to maintain ownership of their homes and to get their mortgages back in good standing in a timely manner," stated VMBS in a written response.
"We encourage our members to come in and talk with us as soon as they recognise that they may experience financial challenges so that we can explore the possible types of assistance that may be made available to them," stated Peter Reid, senior vice-president and COO at Victoria Mutual.
Pink said she did just that. But because her income was significantly reduced by the loss of her nine-to-five job, she did not qualify for a loan modification.
"Despite our best efforts, some mortgages remain in arrears and as a result the property is placed on auction. However, prior to the auction, the society engages the services of a qualified, independent third party valuator who provides an assessment of the value of the property for the purpose of setting a reserve price," VMBS also said in its written response.
In her letter to BOJ, Pink noted that in May this year, she received an offer of $21 million for the property from a client gleaned through a prominent realtor.
It is against this background that she is perplexed by the building society's sale price. "This does not make any sense as the property can be sold to clear all the indebtedness. It is puzzling why they would accept a valuation that goes against what the market can bear for such a prime piece of property," she penned in her letter to the BOJ.
Name changed to protect identity.
[email protected]
Tyrone Reid, Sunday Gleaner Reporter
Forty-one-year oldAnita Pink has lost her home. But the self-made businesswoman who defaulted on her $170,000-per-month mortgage after falling on hard times in 2009 is not fighting the foreclosure. She just wants the financial institution that gave her the $14.9 million mortgage to purchase the property four years ago to sell the house for what it is worth.
"I need justice, not sympathy," she said defiantly.
Pink said she continued to make payments as best as she could after losing her job but it was not enough. She even sold her two cars and made a lump-sum payment but not even that could stave off the imminent auction as the debt had already ballooned to default levels.
She remembered the exact day in January 2011 she received a phone call from the institution informing her that the town house was to be sold via public auction in March.
"When I realised I couldn't come up with the money, I trusted that the bank would sell the property for the amount I owed them because the property was valued in excess of what I owed. I thought I had a right to market value," she said between sighs.
She now regrets not selling the town house herself, which was auctioned for $12.75 million.
Pink was stupefied. "It was a shock and awe moment. I was shocked," she said.
According to documents provided by Pink, Victoria Mutual Building Society (VMBS) sold her three-bedroom, two bathroom mid-terrace town house in the high-demand Liguanea area by public auction in March this year for $12.75 million on the strength of a valuation report that was done only from the outside of the property.
Twice the amount
A subsequent valuation of the property ordered by Pink determined that the Kingston 6 town house could fetch almost twice as much.
The trained accountant says she has appealed to the Bank of Jamaica (BOJ) - to use its regulatory responsibilities to help in having the matter resolved.
She also claimed she was told that the institution would sue her to recoup the rest of the approximately $18 million she owed.
The valuation reportedly commissioned by VMBS stated, "An external inspection of the subject property was done on March 2, 2011.
"We were not able to gain access to the interior of the residence to conduct a full inspection and therefore, all information provided about the physical characteristics and layout of the town house was obtained from an exterior-only inspection and from information provided by our client," read the scope-of-work section of the valuation report done by a well-established valuation firm.
From what was gleaned from outside the town house, the building society's valuators determined that the market value for the property was $13 million with a forced sale value of $10.5 million.
Two days after the house was auctioned, Pink hired VB Williams Realty Company Limited to get a second opinion on the value of the property.
According to the report prepared by that valuation company, "the fair market value of this apartment as of 2011 March 24, is between twenty-four million, five hundred thousand dollars ($24,500,000) to twenty-five million dollars ($25,000,000)".
Pink revealed that in 2007 when she applied for the mortgage, the town house had a $19-million market value and the forced sale was $16 million. "I was granted a mortgage for $14.9 million in May 2007 using a valuation from the same valuator VB Williams," she said.
According to the Pink-ordered valuation report, a "town house such as the subject unit will receive good market response, primarily for rental purposes and/or small household, and commands reasonable capital value".
VB Williams also noted that if the property should be put up for forced sale within a 60-day period, a price of $20 million should be obtained.
So why the chasm in valuations done three weeks apart? A veteran valuation surveyor who has been in the field since 1972 told The Sunday Gleaner that the disparity can be explained by the fact that one valuator went inside the house while the other formed his opinion from outside the town house. "I think that is courting danger..." said the surveyor, who asked not to be named in the article.
Although valuations are partly based on the interpretation of the interaction between market forces, the valuator is convinced that "there should not be that type of a difference" between the bank's valuation and the one ordered by Pink.
She claimed she made no attempt to bar the bank's valuator from gaining access to the town house because she had accepted that the house was going to be sold.
The VMBS did not respond to specific Sunday Gleaner queries. The member-based financial institution said it was against company policy to discuss specific client issues.
Options provided
However, the building society noted that it takes pride in providing its members who are experiencing difficulties meeting mortgage obligations with several options to resolve their challenges.
"This allows our members an opportunity to maintain ownership of their homes and to get their mortgages back in good standing in a timely manner," stated VMBS in a written response.
"We encourage our members to come in and talk with us as soon as they recognise that they may experience financial challenges so that we can explore the possible types of assistance that may be made available to them," stated Peter Reid, senior vice-president and COO at Victoria Mutual.
Pink said she did just that. But because her income was significantly reduced by the loss of her nine-to-five job, she did not qualify for a loan modification.
"Despite our best efforts, some mortgages remain in arrears and as a result the property is placed on auction. However, prior to the auction, the society engages the services of a qualified, independent third party valuator who provides an assessment of the value of the property for the purpose of setting a reserve price," VMBS also said in its written response.
In her letter to BOJ, Pink noted that in May this year, she received an offer of $21 million for the property from a client gleaned through a prominent realtor.
It is against this background that she is perplexed by the building society's sale price. "This does not make any sense as the property can be sold to clear all the indebtedness. It is puzzling why they would accept a valuation that goes against what the market can bear for such a prime piece of property," she penned in her letter to the BOJ.
Name changed to protect identity.
[email protected]
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