If you are facing house repossession , it is essential that you understand the repossession process. This allows you to determine the stage of the process you have reached and what the next steps in the process are. This article outlines the repossession process.
The information has been produced by Stop Repossession Hull as a guide; you should always get professional advice before making a decision based on this information.
Some repossession facts:
- According to government figures repossessions are on the increase – you are not alone.
- Almost 50% of repossession orders can be suspended if you have the know-how.
- You have the right not to be repossessed – Stop Repossession Hull can stop your repossession up to a day before repossession.
- You can usually prevent arrears leading to repossession – read on to find out more.
- A letter from a lender’s solicitor generally means you have seven days to pay off all your arrears or to make a proposal for doing so.
There are several reasons you may be facing house repossession. These include mortgage arrears or arrears on a loan secured on your home; freeholders can evict leaseholders if they break the conditions of their leasehold; a public body makes a compulsory purchase order to buy your home. This normally only happens if a major development is underway, such as a road widening scheme. If you are in this situation, you will be entitled to compensation but, you will not for the previous reasons.
Many people do not understand the process of repossession and often feel lost and isolated when the process begins. They often have an unsympathetic solicitor or lender and feel scared by the idea of communicating with their lender. The next sections outline the repossession process from the very beginning.
1. When you first get into arrears
When you first get into arrears with your mortgage or secured loan you will receive a letter asking you to make a payment. The initial contact will assume there was a genuine reason (changed bank accounts, a period out of work, etc) for non payment and will merely involve a reminder and perhaps a new direct debit mandate should your bank details have changed.
The initial contact is designed to meet the lenders regulatory requirements as set out by the Council of Mortgage Lenders and enforced by the Financial Services Authority. These guidelines are designed to protect yourself and the lender. If you do not respond to these letters or any that follow, the lender will assume you are ignoring them and will start threatening you with court action and repossession. Your lenders will record all of the attempts to contact you and use this information in court to show that they have done everything to help you!
At this stage it is advisable for you to call your lender and try and negotiate a deal where you pay your arrears in instalments. Depending on your situation you may be able to agree to make reduced mortgage payments for a period of time or take a payment holiday. This usually works for circumstances that will span a short period, for example child birth or sickness. You must demonstrate to your mortgage company that your situation will last a limited amount of time for them to agree to this. Remember that the mortgage company will continue to charge you interest on the complete amount of your loan, including any interest you do not meet.
When negotiating with your lender do not agree to anything that you can not afford, as failure to maintain these agreed payments will count against you in court. Remember, you are always better to make some contribution than nothing at all. The most important thing is to communicate with your lenders.
Missing payments on a secured loan can be more serious. Contrary to the myth, second charge/loan companies can repossess your home. Second charge companies are often more inclined to repossess as they have a greater risk of losing money. If your house is repossessed the mortgage company would receive their money first after repossession, then any charges and costs (solicitors etc.) are paid out of the remainder. The second charge company receives any money that is left. You can see why a second charge company will often move to repossess your house faster than a normal mortgage company.
Remember that your credit rating will be damaged at this point; if you continue to miss payments your credit rating will quickly get worse making it very difficult to get a mortgage or credit in the future. It may even be difficult to rent a property to live in. If you do get credit, it will often be more expensive than if you had a good credit rating, meaning you pay a lot more in the long term!
2. After 3 to 6 months of non payment
Generally, after 3-6 months of non-payment the Mortgage or Second charge Company will take you to court to enable them to come to a re-payment arrangement with you to pay your arrears. Once this procedure has started the lender will generally want to finalise the matter through the courts.
Don’t hide your head in the sand, go to court, state why you have missed your payments and try and come to an affordable repayment schedule. If you have large mortgage arrears the courts are move likely to grant a repossession order. However, if you can convince the judge that you are now able to make full payments, they will have sufficient reason to allow a repossession suspension order to be placed. The mortgage lender is likely to object to this and ask the judge to increase the monthly mortgage payments so the arrears are gradually paid back. The judge will normally be sympathetic and agree a repayment schedule to suit you, not the lender. There is case law which suggests lenders should spread the arrears over the remaining term of the loan, rather than just over a few years.
The mortgage lender will charge you each time you go to court to recoup their costs. Lenders costs often reach £500 to £1,000 each time you go to court and generally include solicitors and administration costs. When a redemption figure is sought to pay-off the debt to your lender the lenders costs are added to your mortgage and arrears. There are many examples of legal costs being higher than the secured loan balance!
3. What happens if you fail to stick to the repayment decisions
If you fail to stick to this arrangement the lender will seek, through the court, to repossess the property so they can sell your house and get their money back. You can reapply to the court to suspend the eviction but, you will need an extremely strong case for this to be granted after defaulting on your previous agreement. Once permission has been given to repossess your property, the court bailiffs will be instructed to enforce the court order. You will then be sent a notice stating the eviction date, which will generally be about 2 weeks notice.
4. On the eviction date
On the eviction date the bailiffs will arrive and, if you haven’t already left, evict you from the property. There are no rules about when the bailiffs can come to your home but, it is normally within working hours. Bailiffs can use necessary force to enter the property and have the right to remove anyone that lives there. The locks will be changed and an Estate Agent will be given control of the property. If you have not packed your belongings you will normally be allowed, by appointment, an accompanied visit to remove your possessions. Normally this will not be allowed for about a week after the eviction date.
5. After the eviction date
Once you have been evicted, an estate agent will be given control of the property. They are then supposed to achieve the best market value for the property. This often is not achieved as your house is not marketed properly, not presented properly to potential purchasers, or, only offered to friends and colleagues of the estate agent.
If the sale of your property does not repay the mortgage, plus arrears and lenders costs for eviction, your lender will pursue you for any outstanding amounts. They will also charge you for the privilege of chasing you to recover their money and interest whilst they are doing so!
Stop repossession Hull can help
When you are facing repossession or eviction it is essential you use a specialist company who understands how to approach the situation – we at Stop Repossession Hull can provide you with this service.
Any time up to about a day before the repossession (please try not to let it get this close) we can make an offer to buy the property and, if you want to rent it back, agree an amount to rent your property back to you. If this offer is acceptable to you, your solicitor needs to contact the court. Find a solicitor who understands the repossession procedure, knows what to do to stop the repossession and who can act straight away. If you can’t find a solicitor quick enough we can recommend a solicitor to you.
The solicitor will need to give you a letter to take to court, or fax a letter to the court, stating that Stop Repossession Hull will buy your property and request a stay of execution of the repossession order. This will allow you time for your sale to go through. We will help you through this process. Unless you have had a previous history of messing the court around this will normally be granted.
You will need to go to the court and fill in a form (N224) and pay around £80.00 to apply for time to sell. Remember, we will help and guide you through this process. The N244 can be downloaded from the HM Court Service website. An Example of a completed N244 can be downloaded from our Useful Documents page .
We are a professional, competent and highly organised team ready and able to buy your home quickly and without fuss. Remember, don’t burry your head in the sand, take action by calling a member of our friendly, professional staff on 01482 961961 or e-mailing StopMyRepossession@StopRepossessionHull.co.uk to discuss your options and how we can help you.
Contacting Stop Repossession Hull about your repossession
Stop Repossession Hull specialise in stopping house repossessions by buying your house. If you have sufficient equity and need to sell your property quickly we can help you. Please complete the form below, including as much information as possible.