If your lender has repossessed the property via a court order, or you have handed back the keys to the property, you may want to know how much you will be liable to pay back. However until the property is sold that will not be clear. However the shortfall has arisen we can advise you how best to deal with it.
It is the responsibility of the borrower to continue to pay the monthly mortgage repayment (including capital and interest), and to continue to maintain and insure and repair the property until such time as it is sold. Many repossessions happen in an economic slowdown just at the time when property prices are falling as well. So whilst the lender has a "duty of care" to you to obtain the best possible price for the property and to keep any potential loss on their part to a minimum, this may be very difficult in a market that has a diminishing asset. Many lenders are now placing the property out to rent for six to twelve months.
When the property is sold, the costs of the sale such as solicitors and estate agents are taken from the sale proceeds and then the mortgage redeemed. If anything is left over any second charges are discharged as well. When all the available funds have be applied, anything that left unpaid will be known as the mortgage shortfall. In a falling market such as we have at the moment, it is not unusual to have shortfalls of up to £50,000
If there will be or is a shortfall the lender can sue for this or more likely, apply to be able to enforce a money judgement on the repossession.
There are different rules as to how long in time the lender can take to come after a debtor for the shortfall. If it is a capital shortfall, then under the terms of the law the lender can still take steps to recover the shortfall for up to 12 years. However that being said, many lenders have signed up to the Council of Mortgage Lenders code which confirms that they will not take steps to recover shortfalls greater than six years old. This is the same length of time that they have to recover interest on the loan.
If you are unsure about how much money you owe or from when this liability runs, you should take advice.
If you cannot afford to pay off the shortfall in full then there are possible solutions:-
Offer a lump sum in full and final settlement. It may be that if the lenders can be convinced that this will be all that can be obtained they make take the offer. Be sure to get it in writing and marked "Full and Final Settlement" If there is no chance whatsoever of paying of the liability the lender may write off the debt completely Bankruptcy may be the only option for very large shortfalls and we are taking a large number of people through the process because of mortgage shortfalls.We deal with many people who have suffered significant mortgage shortfalls. If you feel that you may need our help call 0808 160 5577
About the Author:Contact Steve Thatcher a qualified solicitor with Help With Debt (UK) Limited the total debt solutions company. For all further reading see http://www.helpwithdebtuk.com
For personal contact, email sthatcher@helpwithdebtuk.com. If you have any debt problem whatsover either personal or corporate make Steve your first call on 0808 160 5577. All telephone advice is free.
