Repossession Prevention

Below we outline the main factors to prevent a property repossession

The Council of Mortgage Lenders have set out seven areas lenders must adhere to in order to be able to claim a shortfall claim. A recorded delivery notice must be served within 28 days of sale. Clearly stating the following:

• Date of the mortgage deed under which the power of sale was exercised.
• Address and description of the property sold
• Name and address of the vendor
• Name and address of the purchaser
• Amount for which the property was sold
• Whether the sale was by private treaty or public auction
• Completion date of the sale

Courts do not just accept this reasoning if you can prove the price they accepted fell significantly short of valuations you have secured independently. Courts are less happy  with lenders who refuse to deal with your doubts over the sale price, especially in situations where shortfalls lead to further financial claims..

You should secure two independent surveyors valuations or sales particulars from estate agents, including the crucial asking price. It is significantly more difficult to get it valued years later at a time when you're being chased for a further shortfall.

Lenders don't bother to chase people who cannot pay. It costs them more to chase them than they can get back from them. But they will watch for signs that you have a job and will chase you if they see it.

Potential action you may face

There is a lot you can do to save your home. Do not simply hand in your keys to the lender and give up. Interest will continue to accrue right until the time the complete debt is discharged. Instead, you should draw up a financial statement. This should specify all income and expenditures. Include all wages, part-time, casual work and social security benefits. Outgoings and expenses such as council tax, vehicle and children's expenses. From this figure you will understand your financial affairs and more importantly,  how much you can pay your lender each month.

You could ask to repay the arrears over the same remaining period of your mortgage. You might also consider taking in a lodger, though ensure permission is asked from the lender.  You can earn up significant income from your lodger without having any tax liability on the income.

If you can at least show efforts to make regular payments and that the general state of your finances are about to improve your lender should be receptive to your proposal.

Lenders cannot expect you to pay the full amount  in one single payment. Even if your lender takes legal action, the situation is never hopeless. Contrary to popular opinion, courts are loath to make people homeless, especially if there are children involved.

Possession orders are only made in the most extreme and hopeless cases, where a borrower has made absolutely no effort to remedy a grave situation. In most cases, judges will assess the financial position and suggest the amount to be paid each month. Provided you stick to that agreement, the court is highly unlikely to order possession against you in the near future.

If possession is ordered, you can actually take advantage of the situation and ask the court for permission to sell the property yourself. Obviously during this period you are entitled to remain in occupation and by retaining sales control you should be better placed to secure a higher price than your lender would have accepted.

Tips:

• Do get valuations for property
• Do keep all correspondence with Lenders / Creditors
• Do keep all documents / bills / correspondence connected to the property
• Do try and work self-employed
• Don't apply for loans or credit
• Don't strip the place

That said, in cases such of these where you are in danger of losing your home, you should seek full legal and financial advice as soon as possible.