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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