Mortgage lender acts for Possession of a property
When a mortgage lender acts for possession of a property via the courts applying to England & Wales.
Possession claims are the last resort when discussions between lender and borrower have failed following the consideration of several possibilities, e.g. extending the term of the mortgage, changing the type of mortgage, deferring the payment of interest, capitalising the arrears, i.e. adding the arrears to the outstanding mortgage and using any government forbearance initiatives in which the lender participate.
If no agreement has been arranged to pay off mortgage arrears in a suitable period, legal action maybe required. The legal costs of lengthy proceedings can be substantial and, under the terms of the mortgage deed, will normally be paid by the borrower. The process travels through several stages which we provide the necessary expertise and workflows covering:
Pre-action Protocol for Possession Claims based on Mortgage Arrears setting out the steps that lenders and borrowers should take to ensure that court proceedings are a matter of last resort. In this section we consider compliance and sanctions. The lender and borrower may be required by the court to explain how they have complied with the protocol. From 1 October 2009, lenders must demonstrate compliance with the protocol by presenting two copies of Form N123 - Mortgage pre-action protocol checklist at the court hearing.
Legal framework & background to court action for mortgage arrears, including the lender's remedies. We investigate if there are tenants in occupation. The lender should also seek information about whether the property is occupied by an authorised tenant. If at the possession hearing there is an authorised tenant in occupation of the property, the court will consider whether to issue further directions, to adjourn the possession claim until possession of the property is recovered from the tenant, or to make a possession order conditional upon the tenant's right of occupation.
Mortgage arrears possession process taking the steps the lender will undertake to bring possession action, and the options available to the judge.
Mortgage arrears calculations how mortgage arrears are calculated (part of the statement of account).
Second charge loans requirements for lenders of second charge loans before taking possession action.
Lenders steps before commencing court action. A lender must not consider starting a possession claim where the borrower can demonstrate certain criteria which would postpone legal action, e.g. submitted a claim to the Department for Works and Pensions ('DWP') for Support for Mortgage Interest (SMI) or Universal Credit, an insurer under a mortgage payment protection policy, or a participating local authority for support under a Mortgage Rescue Scheme, and other factors, such as making a genuine complaint to the Financial Services Ombudsman (FSO) regarding the potential possession claim.
Defences possible defences in mortgage possession cases.
How borrowers defend claims? Steps that can be taken in the court proceedings, including the possession hearing.
Types of orders the judge can make following a court hearing.
Time orders and consideration when the court might grant such an order.
Changing court orders how the borrower can challenge or amend the order made, for example because of a change in circumstances.
Eviction by bailiffs enforcement of possession orders by the court's enforcement agents (bailiffs).
After eviction powers the court has after repossession, the lender's responsibilities to the property and the lender's sale of the property.
Selling the home where the borrower wants to sell the property, either during or after possession proceedings. In order for the lender to postpone a possession claim pending the voluntary sale of the property, the borrower needs to provide the lender with information e.g. details of offers received, copy of the particulars of sale, copy of the energy performance certificate (EPC) or proof that one has been commissioned and details of their estate agent and conveyancer. The borrower should also authorise the estate agent and conveyancer to communicate with the lender regarding the progress of any sale.
Notwithstanding, if the lender does not receive the information listed above or refuses to postpone legal action on different grounds, it should give its reasons at least five working days before it starts proceedings. The outcome post sale can lead to a mortgage shortfall debt, whereby the sale by the borrower or the lender may not be sufficient to clear the mortgage in full (see Mortgage Shortfall Insert).