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Mortgage possession proceedings: what is the true level of your arrears?

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When faced with possession proceedings or a Warrant of Eviction a mortgagee can persuade the Court to make a Suspended Order or suspend the Warrant on the basis that they can pay their regular monthly mortgage instalments in the remaining term and pay off the arrears within a reasonable period, usually three to six years.

The first question is; what is the exact amount of the arrears? On some occasions it may be obvious what the exact extent of the arrears is. However, mortgage companies can apply a variety of administrative charges because the mortgagee is in arrears in the same way a borrower may be charged for spending over their overdraft limit. Having represented clients under the Court duty scheme I have seen many cases whose arrears look to be spiralling out of control as the mortgage lender applies more and more charges each month to their account.

Once the amount of the arrears is established the mortgagee can calculate the minimum monthly payments required to pay them off within the reasonable period, the ‘norgan minimum.’

The recent case of Santander (UK) Plc v McAtamney and other cases provide an interesting argument about how the Court should value the exact amount of the arrears and therefore exactly how much a mortgagee must pay in order to clear their arrears within a reasonable period. Master Ellison ruled that the arrears to be considered should only include the actual arrears that have accrued by missed mortgage instalments and not any administrative charges added to the account.

Although this case was decided in Northern Ireland it could indicate how it may be approached by English Courts, particularly as Master Ellison relied upon English case law in making his decision.

The decision may lead mortgagee to argue that their arrears are in fact much lower than the mortgage lender may be claiming. With the balance of the arrears at a lower level it will be much easier for the mortgagee to prove that they can afford to pay off their arrears within a reasonable period.

It remains to be seen how the English Courts will react to this decision and whether there will be further persuasive authority for mortgagees to rely upon in this county but it is a worthwhile argument to make in any case.

Stephensons’ has specialists in this field who can help you if you find yourself in difficulty with your mortgage.

By Jessica Knott, dispute resolution team