Negative equity is where the value of the property has fallen below the amount still outstanding on the mortgage. Despite this scenario, there are still many purchasers who wish to retain their foreign properties and as a result are happy to try and enter into a renegotiation with their foreign Bank to restructure the terms of a new loan. And as a result, to maintain the loan and their property - but under different financial conditions which are more manageable.
Many Banks across Europe have however in recent years decided to sell on their nonperforming mortgage books to so called Vulture Funds. These funds then aggressively pursue the mortgage debt seeking to recover the amounts. Companies such as Cerberus, Blackstone and Axactor to name a few of the entities now chasing clients in the UK.