First Mortgage Trust
Address: P.O. Box 2587, BATH, BA2 6ZA
Email: admin@mortgage-loan-uk.net



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Property Repossession Debt - Can you negotiate?


Property repossession is distressing. If a lender does claim a shortfall following the sale of your property you do have options. In most situations seeking professional advice and starting negotiations is the sensible option. With skilful negotiation often a settlement can be reached by paying only a fraction of the initial claim. Be careful when acknowledging a debt however.

The Debtwizard has come across numerous cases where the lender has been unable to pursue the borrower because they are ‘out of time’. The situations that this occurs in can be complex but are covered in detail in the members’ section. The situation can become more complex when a ‘money judgment’ has been obtained and / or when a loan agreement is in joint names. Complexity however can often work in your favour.

There has been considerable legal argument, the most relevant of which we detail and explain the relevance especially to the separate interest and capital elements of a shortfall. We cover the principal elements of the Limitation Act of 1980 and explain how the proceeds of the sale of a property contributing to reducing the loan and outstanding interest repayments.

Lenders can add various costs in addition to the defaulted loan / mortgage agreement. These costs must of course be reasonable.

A selection of cases regarding a mortgage shortfall claim by the lender following a home repossession are detailed below. The settlement figures are paid on the understanding that it is in full and final settlement of the debt on the debtor for all claims arising and will include the lender and the MIG mortgage indemnity insurer. Please note that every case is considered upon its merit and as a result the settlement figures will vary.

The member's section details other, often free, resources that can assist you in reducing your lender’s shortfall claim and how to use the information gained from such resources.

MIG (Higher Lending Charge) - The insurance that doesn't insure you
MIG is controversial - policies are issued to protect the lender and not the borrower. If there is an amount outstanding after the property is repossessed then the MIG insurer will compensate the lender – not the borrower. Even though you have paid for the insurance, the lender is the only one that benefits. The MIG insurer will pursue you, the borrower, for the shortfall (known as 'The right of subrogation').

If the borrower has evidence, from the lender or his agents, stating that the policy is for the borrower’s benefit and that the borrower may not be left with a debt following repossession, then he / she may well succeed in arguing that they should not have to cover the shortfall.

Click here for clear and impartial debt advice.



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