Archive for the ‘Why Is A Home Repossessed?’ Category

UK Houses Repossessed

Tuesday, August 4th, 2009



The total number of UK houses repossessed in 2008 is estimated to be in the region of 40,000. This is already a high figure and the numbers for 2009 are expected to be even higher according to the Council of Mortgage Lenders.

The number of homes which were in arrears on their mortgage payments has also increased year on year, with an estimated 220,000 homes in arrears of over 3 months at the end of 2008.

The Council of Mortgage Lenders which produces these figures state that the number of houses repossessed in 2009 will exceed the 2008 figures with the global ecomonic crisis and credit crunch affecting more and more homeowners.

With unemployment figures rising and the number of people expected to lose their jobs over this year due to increase, it is expected that 1 home will be repossessed every 10 minutes in the UK.

Affects of Repossession
Property Repossession can affect people in different ways. For the majority it is a very stressful time and usually occurs when coupled with other bad circumstances. For example, loss of job or break up of marriage could be a factor which can lead to someone losing their home. It can also be due to illness or death.

Often people are forced to move in a hurry once evicted and this upheavel can also add to the emotional stress of the situation. This will not only affect the homeowner but also their family as well. Children are often the biggest victims as they are forced to move to a new environment, often a new school with no clear idea of why this is all happening. Parents are embarrassed to face their children as well as their families and friends and explain the situation they are facing. Repossessions can also lead to the break up of marriages and the breakdown of relationships, so its important to know where to go for help.

Many companies advertise that they can stop repossession etc and help your situation, but often these organisations are just trying to benefit further from your awful circumstances.

Although mortgage companies are often sympathetic to certain situations, failure to meet these payments will result in houses being repossessed.

If you are facing repossession, Repossessed Homes UK can help you on advising what to do by providing free information and advice. Our Links and Advice section is also a good source of accessing info on companies who can assist.

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Selling Or Remortgaging Your Home Before Repossession

Friday, May 1st, 2009



Even though a finance company has begun home repossession proceedings, it does not mean that there is still not an opportunity for the borrower to sell. A homeowner has the right to sell or remortgage their property at any time even up to the day when the locks are due to be changed by the court bailiff.

Selling Before A Case Goes to Court
A borrower in financial difficulty needs to always consider the option of selling their property before it gets repossessed. For example, if the homeowner knows that they are unable to make repayments and the property will be repossessed anyway. In this case if the property is repossessed, it will be more than likely that the home will be sold at auction at a lower price than if the borrower were to sell it themselves. People are often reluctant to take the option of selling due to sentimental attachment to their home and the thought of moving being too hectic.

If a homeowner decides that their best option is to sell the property before it is repossessed, they should speak with lender immediately and inform them of what they have planned. The lender may be inclined to provide the borrower with more time in order to sell the property, particularly if their is equity in the property. It is recommended that homeowners keep the mortgage company informed on the how the sale is progressing. Documents which will prove to the lender that a real sale is under way are mentioned below:

* Documentary evidence of correspondance from estate agents.
* Evidence of any offers which have been put forward at a price sufficiently high enough to recover the mortgage.
* Evidence of letters from a solicitor providing confirmation that a sale is in agreement or is in progress and the date of completion of the sale.

If the mortgage company is satisfied that they will be recouping their loan without having the inconvenience of going through the court process and then have to sell the property themselves, then there is a strong possibility that they will be willing to wait.

Selling Once Court Proceedings have Started
The majority of lenders will carry on with the repossession proceedings in court until they are provided with documentary evidence which illustrates that a property has been sold or is in the process of sale. The mortgage company will require evidence of an exchange of contracts, this to prevent issues of non sale.  People prematurely say their property is “sold” the moment any offer has been received. It is important to note that there is no guarantee of any sale until contracts have been exchanged.

Selling After the Possession Hearing
Courts will also provide borrowers the opportunity to remove all arrears on their mortgage account and avoid home repossession. This is done when the borrower goes ahead and carries out sale of the repossession home by themselves. When attending court, a borrower can advise the judge that the property is up for sale and is on the market. Upon hearing this many judges will grant a 56 day possession order. This will providethe borrower with more time and a good opportunity to make a sale. On occassion the magistrate may grant a period of 3 montsh to carry out the sale. The majority of court judges will want to see documentary evidence that the property which has now been listed has been offered at an adequate price whcih will cover the mortgage when sold. A case can also be adjourned when there is evidence that a sale is pending. This will provide the homeowner with the opportunity to complete the sale and hence avoid home repossession.

Selling Once an Eviction has been Scheduled
A borrower has the ability to prevent an eviction from taking place by selling the repossession property. The court judge will expect to see clear evidence illustrating a sale is pending. In a case where the property is being sold at lower price than the debt on the mortgage, it will be highly unlikely that the magistrate will put a stop on the eviction. If the homeowner can show that they are able to provide money to cover the shortfall on the mortgage then the courts may consider stopping the eviction.

Re-mortgaging
It is important to remember that although it may be easy to find a company which will provide the homeowner with a remortgage on their property, the deal which will be put on the table may not be very competitive and repayments may be extremely high. Another point to note is that missed payments on the original mortgage agreement can result in stains on a credit report and thus limit the options available when it comes to finding a remortgage.

The courts and lenders both view a remortgage as similar to an actual sale. If you are remortgaging at this stage of the repossession process its important to make sure that the lender is kept in the loop as to what is actually happening. They should be provided with any documentary evidence which proves that a remortgage is due to be completed. Judges also can provide a homeowner with further time and stop a repossession if they are happy that a remortgage is due to be completed.

Conclusion
It is important for borrowers to highlight and act quickly as soon as they begin to struggle to make payments. This will give them more time and improve the chance of avoiding repossession by selling their property for a better price than an auction would guarantee or getting a remortgage at a more competitive rate than they would get once more repayments have been missed and their credit report is tarnished.

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Stop Your Home Being Repossessed

Friday, May 1st, 2009



There are many options available to homeowners to stop repossession or reduce the chances of being in a situation where your home can be repossessed. We advise the options available are wider if steps are taken early when it becomes apparent that there will be problems carrying out repayments towards a mortgage. The moment payments are not made, this information will begin to appear on credit reports and thus limit options available, e.g. remortgage.

Choose a Good Mortgage When You Buy
In order to avoid repossession the its important to firstly ensure that the mortgage you are opting for is affordable. Many people suffer by buying above their budget and end up struggling due to changes of circumstances. Before signing a mortgage agreement borrowers should:

* Prepare a proper budget so that they know exactly what they can afford.
* Not assume that income will increase over the coming years.
* Assume that interest rates will go up.
* Make sure that they have read and understood the terms and conditions of the mortgage or loan they are considering.

Many borrowers rely on the advice of mortgage brokers. Brokers make their money through commissions paid when people enter into mortgages that they have recommended. Before signing any document people should make sure they have read and understood it.

Talking to Lenders
Mortgage lenders have a stated responsibility to assist borrowers if they face difficulties with their mortgage. Lenders will often be very accommodating if a borrower is going through real financial problems. Some lenders may even allow a payment holiday – a number of months when a borrower does not have to pay anything. Borrowers should approach their lender as soon as difficulties arise, preferably before payments are missed.

Making Payments
If arrears can be kept beneath a certain level (usually two months’ worth of instalments) lenders will generally not pursue a possession order – even once court proceedings have started. If the arrears are lower than the level required when a case comes to court, most lenders will ask for the case to be “adjourned generally with liberty to restore”. This means that the case is effectively put to sleep. The lender is entitled to ask for another hearing if the arrears build up again. This can happen repeatedly but costs will be added to the mortgage debt every time the case is re-listed.

Selling the Property
If a borrower cannot afford to maintain payments towards their mortgage there is nothing to stop them selling the property themselves. People are often reluctant to sell their home but this is a better option than having it repossessed and sold by the lender. Many lenders will not start repossession proceedings if they know that the borrower is in the process of selling the property.
Once a case comes to court most judges will give borrowers time to sell by granting a possession order for longer than the usual 28 days – a 56-day order is common. Judges may also postpone evictions if satisfied that the borrower is about to sell the property.

Re-mortgaging
The approach of lenders and the courts to borrowers who are re-mortgaging is similar to their approach to borrowers who are selling. Many judges will happily give a borrower more time if they are shown evidence – such as a mortgage offer – that the borrower is in the process of re-mortgaging.
Opening a newspaper or doing a search on the internet will reveal that there are now many companies offering to provide re-mortgages to people who are already in arrears. Naturally these companies will charge a higher interest rate than other lenders. In the current economic climate it is likely that first-time buyers and people with bad credit ratings will find it increasingly difficult to get mortgages.

Getting a Loan to Clear the Arrears
Taking out a loan to clear the arrears on the mortgage may seem like an easier option than re-mortgaging. However, the borrower will then have to pay the monthly instalments on both the mortgage and the loan. If a borrower obtains a secured loan, and fails to maintain payments, the loan company will be entitled to start repossession proceedings. This is often only a short-term solution.

Other Options
There are companies who offer to buy properties quickly so that repossession can be avoided. In some instances the borrower may stay in the property as a tenant. Some companies will pay a borrower a lump sum to clear the arrears, help the borrower to sell the property through agents and then take a percentage of the equity when it is sold. Both of these options will result in a borrower selling their home for substantially below the market value.

Summary
Borrowers should take action as soon as problems become apparent. This will maximise the options available: the more options available, the greater the likelihood that repossession can be avoided.

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Why Is A Home Repossessed and What Happens?

Friday, May 1st, 2009



A property is usually repossessed when a buyer fails to keep up with repayments on a mortgage which is being paid to a bank or building soceity. The owner/lender will then take action using the method of repossession in order to repossess the home.

What happens when a home is repossessed?
Failure to keep up repayments can result in the buyer’s home being repossessed by the lending company. The company will send out bailiffs to evict you from the property and then take steps to sue the buyer in order to recover losses. The lender will often make substantial profits when recovering this money. The company will also charge the borrower for costs involved.

If you have missed two payments on your mortgage then a lending company has the legal power to apply for a repossession order via the courts. When buying a  property, it is extremely important to read any agreement thoroughly before committing  as terms may vary. Do not forget to always read the small print. Remember theses contracts are drawn up by clever and cunning solicitors who want to make it as difficult as possible for you to cancel the mortgage contract.

Below are the steps involved when a home is repossessed:

1. Mortgage Account Falls into Arrears
For most mortgages the lender will not take any action until an account is two months in arrears. At that stage they may write to the borrower alerting them to the arrears, send a Default Notice or make a formal written demand that the borrower pay back the full amount owing.


2. Lender Passes the Account to their Solicitors
The borrower may receive a letter from the solicitors telling them they are in arrears and inviting them to make proposals to clear them. Negotiations may take place and a borrower may be asked to provide evidence of their financial circumstances. Alternatively, the lender’s solicitors may send a letter warning that court proceedings will be started if the arrears are not cleared within a set period, usually 7 days.


3. Lender’s Solicitors ask the Court to Issue a Possession Claim
The solicitors will send documents to the court, including a claim form, which set out the lender’s entitlement to repossess the property.

4. The Court Issues the Claim
The court will send the borrower, who now becomes the defendant, a copy of the claim form and any documents sent to the court by the solicitors. The court will inform the borrower of where and when the case will be heard. The borrower will also receive a Defence Form which can be filled in and sent back to the court – this gives the borrower the chance to set out their position.

5. Before the Hearing
At least two weeks before the hearing date the solicitors will send a letter to the property addressed to “The Occupier” giving details of when the case is to be heard. This is intended to protect anyone living in the property, such as a tenant, who would otherwise be unaware that the property could be repossessed. A few days before the hearing the borrower should receive the lender’s witness statement, which sets out the details of the case and gives the updated figures on the account.

6. The Hearing
Agreements can sometimes be reached with the lender’s representative before the hearing: it is usual to discuss the case with them before seeing the judge. In court, the lender’s representative will provide the latest figures and outline the lender’s case. The borrower can explain his circumstances to the judge and put forward any proposals or defence. There may be some arguing back and forth, and the judge then makes an order. The borrower should write down what the judge orders.

7. After the Hearing
Within a couple of weeks the borrower should receive a copy of the judge’s order from the court. It is vital that any payments which fall due before the order is received are made. If regular payments are to be made the borrower should talk to the lender about setting up a Direct Debit.

8. Breach or Expiry of a Possession Order
The lender is now entitled to enforce the order. They do not need to go back to the judge or give any warning to the borrower. If the property is still occupied the lender’s solicitors will apply to the court for a “Warrant of Eviction”. The court bailiff will fix a time and date for the eviction. The bailiff will usually send, or hand-deliver, a notice telling the borrower when the eviction is to take place.

9. Applying to Suspend the Warrant
The borrower can apply to the court to stop the eviction and a hearing will be listed at short notice. The borrower can ask the judge for more time to clear the arrears or for a promised sale or re-mortgage to go through. Ideally the borrower will have documentary evidence to support what they are saying. The judge may decide to “suspend the warrant” meaning that the scheduled eviction will not go ahead. Such applications can be made repeatedly but, naturally, a judge will be more sceptical if a borrower keeps coming back to court saying the same thing.

10. Eviction
If all else fails the bailiff will come to the property on the day set for eviction, make sure there is no one inside and change the locks. If the borrower has not yet removed all his belongings the lender will usually allow him back into the property at a later date to retrieve them.

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