Mortgage possession - the rules
Your mortgage lender must send you a leaflet with more information on mortgage arrears and a statement of arrears, which should tell you:
- the total amount of your mortgage arrears
- the outstanding balance on the mortgage
- any interest or charges that you have to pay.
Your lender should advise you to contact the council’s housing department for advice and refer you to an independent debt adviser if necessary.
To help you resolve your mortgage arrears problems, the rules say that both you and your lender should discuss:
- the reason for your arrears
- your financial circumstances
- whether the situation is temporary or long-term
- what you can do to repay the arrears.
Your lender must consider any proposals you make for repayments of the arrears and any other reasonable options you suggest for keeping your home. If your proposals are not accepted, your lender must write to you within 10 working days to explain why.
If your lender makes a proposal for you to clear your arrears, it must make this proposal easy to understand and should allow you a reasonable amount of time to consider this proposal.
If you make an agreement with your mortgage lender, but then don't keep to the agreement, your lender must give you 15 working days' notice that it will start court proceedings for repossession.
There may be action you can take to help resolve your money problems and prevent your lender from repossessing your home. You need to take this action as soon as possible and it is important that you seek advice from a specialist debt advisor, or your local Citizens Advice Bureau, at the earliest opportunity.
Your lender should not start court action for repossession if:
- You have made a claim under a mortgage payment protection policy and you are likely to get a payment. If the policy is not likely to cover the full instalments, you must be able to show that you can meet any shortfall.
- You have applied for support for mortgage interest (SMI), and it is likely that you will receive a payment and will be able to pay any shortfall yourself.
- You are taking active steps to sell the property at a realistic price.
- You have made a complaint to the Financial Ombudsman Service (FOS) about the potential possession claim.
Sometimes, you may be able to challenge the loan or mortgage, and this could give rise to you having a defence to the possession claim, and being able to reduce the amount of the loan, or the arrears. Depending on the strength of the case, you may also be entitled to Legal Aid, subject to eligibility.
Potential defences to a possession claim are:
- That the lender has failed to comply with the Pre-Action Protocol for Possession Claims;
- That the secured loan was taken out before 6th April 2007, is regulated by the Consumer Credit Act 1974, and fails to comply with the Act;
- That an unfair relationship has arisen;
- That you were missold PPI, and the value of the refund could extinguish any arrears and prevent the repossession;
- That the lender has breached the Mortgage Code of Business Rules and you are entitled to compensation that could extinguish any arrears and prevent the repossession;
Our specialist solicitors may be able to assist you and it is important that you act quickly. Our housing law experts have a specialist quality mark from the Legal Aid Agency for housing cases, this means that we will often be able to provide assistance to you free of charge if you qualify for help under the legal aid scheme and are based in the North West of England.