What is Property Repossession?

“Your home may be repossessed if you do not pay your mortgage or other loans secured on it.”

The repossession of homes is becoming a more and more frequent occurrence particularly in the UK as a result of the credit crunch. A property is usually repossessed when an owner is unable to make mortgage repayments and falls into arrears with the mortgage lender, and as a result their home is repossessed via a court order. Having your home repossessed can be an awful ordeal particularly when it has occurred as a result of circumstances which you are unable to control.
Home repossession occurs when a mortgage lender, usually a bank or building soceity, decides that the loan which has been lent to a borrower or owner of a property can no longer be recouped by reasonable means. This results in the mortgage lender applying to the courts for the issuing of a repossession order and following this is an eviction order.

What happens during the whole repossession process is explained below:

1. Failure to Make Repayments
Due to a variety of circumstances homeowners often find themselves being unable to make repayments on a mortgage. In the majority of cases a mortgage lender will allow 2 payments to be missed before taking further action. The lender will contact you via telephone or mail in order to try and recover missed payments. If you are in this situation speaking to the mortgage lender and arriving at some arrangement for further repayments would be the best step to avoid repossession of your home. Lenders will always consider repossession when there is no alternative so trying to negotiate a solution to the problem is always the best option.

2. Possession Order
Possession hearings are relatively informal. The judge will look at the documents in support of the claim and ask the claimant’s representative to confirm the latest figures on the account. The judge will then consider what order to make. The basic possession order gives the mortgage company the right to repossess the property 28 days after the hearing but the judge can make different orders.
A possession order is when a lender approaches the court for a possession order as:
a) a homeowner has made no attempt to contact the mortgage company with regards to arrears on their account.
b) the lender cannot reasonably expect the homeowner to make repayments because of finance problems or bankruptcy.

When a mortgage company or lender makes a possession order, the borrower or property owner will be required to appear before a magistrate of the courts along with a representative of the mortgage lender. Upon appearing before a judge, the homeowner is provided with the opportunity to appeal for lower repayments as long as they can prove that the income which they are receiving is low enough to justify the amount they are offering to pay.
At this point the representative of the lender can decide whether or not to agree to the terms which are put forward by the borrower. If the repayment is thought to be sufficient, the lender will often agree to a new repayment structure rather than carry out a repossession. The judge can overrule the decision of the mortgage company if he or she feels that the homeowner will be able to make the repayments of the arrears on the mortgage account. If the judge decides to go down this route they will issue a Suspended Possession Order.

3. Suspended Possession Order
When a homeowner appears before a judge in court, the judge may decide to issue a Suspended Possession order. If the homeowner can prove that they will be able to make further repayments on this property, the judge may agree to giving them more time to make repayments or even a temporary new repayment structure to clear the arrears.
If the terms of the Suspended Possession Order are not adhered to ie. if repayments are not made as agreed, the mortgage lender can restart the proceeding of repossessing the home. This will result in the lender applying to the courts for an eviction notice. When a homeowner misses their repayments, a judge is likely to go ahead and issue an eviction order so it’s very important to stick to the payments agreed within the suspended repossession order.

4. Eviction Order
The final part of a property repossession is an eviction order. When an eviction order is issued by the magistrate, it will specify the date on which the homeowner will be required to leave the property. Bailiffs will arrive if the premises are not vacated by the specified date. They will remove you from the property. It is important to note that obstructing a court appointed officer is regarded as a criminal offense and it is not recommended. If the property has not been evicted by the specified date, then the bailiffs will remove the homewoner from the property and with only what few belongings they can carry. There will be an opportunity to collect the remainder of the belongings on a further specified date in the company of a court appointed officer. Following the eviction and removal of all belongings from the home, property repossession is complete. Repossession properties are then sent to auction. But could this repossession property have been avoided in the first place. Click for info on how to avoid home repossession in the first instance.

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