For years, lenders have landed borrowers with one-off bills for hundreds, even thousands, of pounds to pay for so-called mortgage indemnity guarantees. When times were good, insurers that underwrote the policies filled their boots with our cash. Equally, this meant that if the housing market turned sour, lenders could claw back losses from the insurance companies.
Theoretically, it is possible for insurers to chase borrowers if they want repayment of the amounts they have shelled out to the lenders. In practice, it rarely happens. Friends of mine who were faced with pounds 25,000 of negative equity after a home purchase in 1989 went sour, have never been contacted by the insurer despite their reluctance to join the Foreign Legion or have plastic surgery. Most insurers know you can't get blood out of a stone.
What is more, even when insurers get in touch, they are usually prepared to accept a nominal sum in discharge of substantial debts. Another friend in Harwich is negotiating a pounds 3,000 payment to settle pounds 45,000 of negative equity.
There is, of course, the question of whether or not Fred could have obtained a re-mortgage. Perhaps not, especially after he decided to go to ludicrous lengths to avoid detection. Talk to lenders and you find that many are prepared to consider applicants who tell them of past mortgage experience, including repossessions.
Stripped to its essentials, Fred's story is sad. No doubt, he feels his Walter Mitty-ish tactics have worked. He probably believes he has escaped. It doesn't occur to him that a determined insurer could trace him within 24 hours. In fact, his efforts to avoid paying for his past yuppy lifestyle say more about him than he knows. But then, maybe that's how he gets his kicks.
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