After the repossession of your house if you have received a financial statement (showing details of sales proceeds) from your lender that demands payment for the outstanding amount, then you must communicate with your lender to resolve this mortgage shortfall. This mortgage shortfall arises when the amount received by the lender after selling your house is less than the total amount you owe.
Stopping Repossession UK makes sure that the lenders follow all the rules as given in the pre-action protocol so that an amicable agreement for paying mortgage arrears is reached between their clients and their lenders
Salient Features of the Pre-action Protocol
- Lenders must be clear, fair, and not mislead borrowers during any communication
- Lenders & borrowers must make reasonable efforts to reach an agreement
- A lender must give a written reason of rejecting a proposed repayment plan made by the borrower (within 10 business days of receiving it)
- A 15 business-days notice must be served to a borrower by the lender if a court action is sought
- Lenders must take possession action (go to the court) only as a last
- Conditions Under which Possession Action Must be Delayed
Once an outright possession order is made, the borrower’s house becomes the property of the mortgage lender and the borrower must leave the house by the date mentioned in the order. In the event, a borrower doesn’t leave the house by this date, then the lender has the legal right to apply for a warrant of possession with the court to evict the borrower from the property.
Once you fall into arrears, your mortgage lender will start taking appropriate steps to reach an agreement with you regarding payment of these arrears. It’s imperative on the borrower’s part to respond in the best possible manner to such attempts made by the lender as the judge who will hear your case will give a substantial amount of weight to your willingness in settling the arrears (and to get current on the monthly mortgage payments). Some of the important tips that will make your time at the court a little bit less nerve-racking are discussed below.
If no agreement has been reached and you have received 15-days’ written warning (from your lender for starting the court action) and defence form thereafter, then you must prepare yourself for the court hearing. In case you have any special needs or require an interpreter, get in touch with the court using the contact details sent along with the defence form. It is recommended to have your financial records handy so that you could prove your capability to pay the amount you proposed to the lender.
There are several steps a lender must follow (like pre-action protocol) before requesting the court for a repossession order on mortgage arrears. Depending on what has transpired during these steps, the court can make different types of orders. In any event, your lenders must give you 15 days’ written warning stating that they are planning to move to the court for a repossession order.
If you have taken a mortgage or any other type of loan which is secured on your home and in the event you default on mortgage payments i.e. if you fall into arrears your lenders have the legal right to repossess your house. However, there are certain rules outlined in the Civil Procedure Rules known as pre-action protocol for possession claims that must be complied with by both the parties (borrower & lender) before court proceedings, to obtain a possession order can be started. Any lender making a possession claim must complete a form known as Form N123 which details to the court what efforts that have been made by the lender (claimant) to reach a repayment agreement with the borrower (defendant) in the last three months in accordance with the pre-action protocol.