Advice required for mortgage problem

[Exclus]

My relatively small ten year mortgage has just expired, but because i had arranged a mortgage reserve account which allowed me to draw down more money I now owe more than first arranged, although the debt is still covered over 5 times by the equity in the property. I paid all mortgage payments on time and on the last statement they sent actually overpaid a little. I have contacted the lender and explained that I had put the house on the market and would pay a monthly standing order more than the interest into the reserve account (and have already started doing this) until the property is sold.

The lender has sent a couple of letters demanding me to complete a full financial statement, and required copies of the property sale details. together with my authority for them to contact my estate agent to discuss the sale before they could consider any offer. I feel that the lender contacting my estate agent would be detrimental to my position, and I haven't agreed to this, or for that matter filled in a financial statement.

My wife and I are on Pension Credit Guarentee...very small income...and don't want to lose our home due to any recovery action by the lender. How likely is this, and how long would it be before any recovery action takes place. Any advice on how I should handle this situation would be great.

[IanM]

Re: Advice required for mortgage problem

Hello Exclus, welcome to the forum, you are in the right place for help and advice.

Who are your mortgage company?

Are you selling your house under duress? If you are only selling your house to pay off a debt 5 times lower than the value of your house because you can no longer afford the repayments, and to avoid repossession, then the mortgage company are in the wrong and would probably not be successful in a repo hearing, simply because there is more than enough equity in the property to cover their redemption figure even if the property took over a year to sell and you didn't make any payments at all. Paying the interest until the property is sold is a good sign for any judge when considering whether to rule in favor of the mortgage company.

If your regular mortgage has expired, what are the payment terms of your mortgage reserve account? do you have a contract for your reserve account setting out the terms of the repayments etc.?

Are your mortgage co. taking you to court? Have they threatened to?

Make sure you make your offer to pay the interest only until the property is sold in writing and send it by recorded delivery. Complete the financial statement as requested to prove your income is not sufficient to maintain the mortgage at the current rate and provide them with the sale details of your property but do not allow them authority to contact the estate agents, the mortgage companies have a habit of talking the estate agents into using one of the mortgage company solicitors to take care of the sale, probably so they can hide anything that an independent solicitor would be suspicious of, and make sure you appoint your own local solicitor to handle the sale and the payment to the mortgage company. They may even manipulate the valuations of the house so that they can repossess, sell for £50k under its true value to a client of theirs, take out what you owe, send you the rest and then their client waits 6 months then sells for the true value, effectively robbing you of £50k!

Before you do sell, have you considered trying to get a mortgage with another company with repayments that you can comfortably afford?

If you are struggling to pay a repayment and interest mortgage then you may be able to switch it to an interest only mortgage, although you may have to obtain an endowment policy separately, your mortgage company should explain this to you as a way to avoid arrears and repossession.

Before the lender can take any recovery action you would have to be 3 consecutive months in arrears before they can apply for a hearing, up to 4 weeks to get a listing for court and then 4 weeks notice to you to attend, and then they would have to convince a judge to repossess your house, they would also have to convince the judge they did everything possible to help you to avoid repossession.

Hope this helps in some way.

[Exclus]

Re: Advice required for mortgage problem

Hello IanM, and thanks for your prompt reply and good advice. It's reassuring to know that help is at hand when needed.

The lender is a Building Soc. owned by a major high street bank, and the reserve account is called a mortgage current account, offered by the bank at the time of arranging the mortgage. I presume just an overdraft facility secured by the property. The mortgage only finished its term last month, and I have already paid more than the monthly interest into the current account, and intend doing so until the house sells. As the bank have readily accepted the payment by standing order, does this form any basis of agreeing to my offer of paying this until the house is sold?

We have taken the decision to sell up, pay off the debt, and buy another house outright, avoiding the possibility of getting into debt once again, for our own peace of mind....this was not forced upon us by the bank, but we thought it was the best thing to do. I am sure the property will sell in the few months, and hope this happens before the bank takes any real action.

[IanM]

Re: Advice required for mortgage problem

Excellent decision, they won't be happy but tough!

Make sure you put everything in writing, recorded delivery, and keep copies of all the paperwork. Maintain the payments you have offered them and keep records of payment then sit back and wait for your house to sell. Also keep copies of your previous payment history for any other mortgages with them, do a SAR for all your papers from them if you have no records at home.

If they do take you to court you can provide evidence to the judge that you have done everything in your power to pay off your debt to the lender and are now waiting for your house to sell but can only afford to pay the interest until it sells. Prove the house is worth 5 times more than the debt and the lender is at no risk of losing money by waiting for the house to sell and ask for a general adjournment.

Any respectable judge would accept your proposal and tell the lender to back off.