Some 6.500 homebuyers, who have already exchanged on properties, could lose thousands of pounds as lenders use loopholes to try and pull out of mortgage offers before completion, according to Convex Conveyancing.
The company says some lenders have been raising last minute questions in an attempt to stop a transaction from going through, partly due to panic caused by the credit crunch.
Research by Convex shows 10% of property deals last month experienced problems with the lender between exchange and completion. Convex says it has never experienced this problem in the past.
Convex estimates more than 6,500 people across the UK could face the disappointment and financial costs associated with a transaction failing after exchange.
The firm is currently advising clients using certain lenders not to exchange prior to completion.
Duncan Samuel, managing director of Convex, explains: “Once the parties have exchanged the buyer is legally obliged to buy the property or they will lose their deposit, which even on a modest property at current prices is likely to be more than £20,000, and may also face being sued for breach of contract.”
Samuel says lenders have been raising last minute issues to avoid making a loan, such as not having all the necessary paperwork or saying they have not had confirmation that the title is a good security.
He says clients should ensure they send all correspondence by fax and recorded delivery to protect themselves.
Samuel also claims lenders have not behaved like this before, saying: “Some of the questions that they are asking we have not seen raised by lenders before.
"The profile of lender raising last minute problems and the number of problems is not a coincidence.
"It is clearly linked to the credit crunch and is a particular issue in the sub-prime market.”
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