Avoiding Repossession
In response to the “credit crunch” the Government has introduced new procedures which mortgage lenders should follow before they commence residential possession proceedings. This may help some families from becoming homeless as a result of mortgage arrears.
The lender must communicate with the borrower in language he can understand and the information must be clear, fair and not misleading. When arrears occur, the lender must provide their own mortgage arrears information sheet or the National Homeless Advice sheet to the borrower. Full details of the arrears must be given, including the total amount of arrears and, if interest and/or charges will be added, an estimate of how much they will be.
Lenders must also advise borrowers to make early contact with the Housing Department of the borrower’s Local Authority and/or refer the borrower, where necessary, to an appropriate source of independent debt advice.
If a reasonable request made by the borrower to change the normal payment date or method of payment, is refused, then the lender must promptly give a written explanation of its reasons.
The lender must give 15 business days notice in writing of its intention to start a possession claim. The majority of lenders have voluntarily agreed with the Government that they will not commence possession proceedings until borrowers are three months in arrears. Furthermore, if a borrower is making a claim on a mortgage protection policy and there is evidence of a reasonable expectation of payments from an insurer, lenders should not start possession proceedings particularly as the lender quite probably sold the insurance policy to the borrower in the first instance!
One useful method of persuading a lender to consider delaying possession proceedings is for the borrower to demonstrate that reasonable steps have been taken to market the property at an appropriate price in accordance with professional advice. A borrower who is selling or intending to sell “privately” (i.e. without such advice) is likely to have an uphill struggle with the lender. To persuade a lender to delay proceedings the borrower needs, promptly, to provide the lender with a copy of the sales particulars, a home information pack (HIP), and details of offers received. The borrower must expect to incur the cost of a HIP and sacrifice any element of confidentiality about his dealings with his professional advisers. Borrowers are expected to provide the lender with full details of their estate agent and solicitor and to authorise them to communicate with the lender about the progress of the sale and the borrowers conduct during the process.
Possession proceedings should be a last resort for a lender. They should not, normally, be started when settlement negotiations are still actively being explored (e.g. extending the term of the mortgage or changing the type of mortgage). It is vital that borrowers do not allow letters to go unanswered.
Follow the above guidelines and you should be treated fairly and reasonably by lenders. If you find that you are not being treated correctly, the Courts will invoke the new rules in favour of you, the borrower.
Our advice is do not wait until Court proceedings are being threatened. If you know you are getting into difficulties and there is no real hope of negotiating a revised repayment scheme, then Waters & Co. can help you in selling your house through its estate agency and in dealing with all the legal aspects, including liaising with your lender. It will help you to have a solicitor who is also an estate agent during this critical time. Please telephone Teresa Waters on 01675 463855 for a confidential discussion of your situation and, if appropriate, a free market appraisal.
The information contained in this newsletter was prepared in January 2009 by Waters & Co. and is intended for general guidance only. It provides information in a concise form and is not a substitute for obtaining legal advice. If you would like advice specific to your circumstances, please arrange for an appointment to discuss.
The lender must communicate with the borrower in language he can understand and the information must be clear, fair and not misleading. When arrears occur, the lender must provide their own mortgage arrears information sheet or the National Homeless Advice sheet to the borrower. Full details of the arrears must be given, including the total amount of arrears and, if interest and/or charges will be added, an estimate of how much they will be.
Lenders must also advise borrowers to make early contact with the Housing Department of the borrower’s Local Authority and/or refer the borrower, where necessary, to an appropriate source of independent debt advice.
If a reasonable request made by the borrower to change the normal payment date or method of payment, is refused, then the lender must promptly give a written explanation of its reasons.
The lender must give 15 business days notice in writing of its intention to start a possession claim. The majority of lenders have voluntarily agreed with the Government that they will not commence possession proceedings until borrowers are three months in arrears. Furthermore, if a borrower is making a claim on a mortgage protection policy and there is evidence of a reasonable expectation of payments from an insurer, lenders should not start possession proceedings particularly as the lender quite probably sold the insurance policy to the borrower in the first instance!
One useful method of persuading a lender to consider delaying possession proceedings is for the borrower to demonstrate that reasonable steps have been taken to market the property at an appropriate price in accordance with professional advice. A borrower who is selling or intending to sell “privately” (i.e. without such advice) is likely to have an uphill struggle with the lender. To persuade a lender to delay proceedings the borrower needs, promptly, to provide the lender with a copy of the sales particulars, a home information pack (HIP), and details of offers received. The borrower must expect to incur the cost of a HIP and sacrifice any element of confidentiality about his dealings with his professional advisers. Borrowers are expected to provide the lender with full details of their estate agent and solicitor and to authorise them to communicate with the lender about the progress of the sale and the borrowers conduct during the process.
Possession proceedings should be a last resort for a lender. They should not, normally, be started when settlement negotiations are still actively being explored (e.g. extending the term of the mortgage or changing the type of mortgage). It is vital that borrowers do not allow letters to go unanswered.
Follow the above guidelines and you should be treated fairly and reasonably by lenders. If you find that you are not being treated correctly, the Courts will invoke the new rules in favour of you, the borrower.
Our advice is do not wait until Court proceedings are being threatened. If you know you are getting into difficulties and there is no real hope of negotiating a revised repayment scheme, then Waters & Co. can help you in selling your house through its estate agency and in dealing with all the legal aspects, including liaising with your lender. It will help you to have a solicitor who is also an estate agent during this critical time. Please telephone Teresa Waters on 01675 463855 for a confidential discussion of your situation and, if appropriate, a free market appraisal.
The information contained in this newsletter was prepared in January 2009 by Waters & Co. and is intended for general guidance only. It provides information in a concise form and is not a substitute for obtaining legal advice. If you would like advice specific to your circumstances, please arrange for an appointment to discuss.
