Property repo'd and sold - So Shortfall Debt becomes a reality

[nuke em]

Does anyone have experience of shortfall debt, how to deal with it, does a lender chase or is it sold/given to a DCA. How is this delt with under the CCA. can you claim that they sold it to cheap for example?

[gizmo111]

This doesn't come under the CCA.

Usually a lender will chase it for a while then pass it on to a DCA, they have 12 years before it becomes statute barred.

[rory32]

They have 12 years on the capital but only 6 years on any interest that has been added to the debt. When was the mortgage taken out? When was the property sold?

[nuke em]

Mortgage was Taken out early 2004, sold last month

[rory32]

The following may be useful National Debtline England & Wales | Debt Advice | Factsheet 11 Mortgage Shortfalls

[nuke em]

Yes Rory thanks for that, its something i have already seen, just also asking if anyone's real time situations and experiences...

[gizmo111]

I paid a reduced settlement after 11 years - shortfall was £7K and I paid 2.2K

[PriorityOne]

I paid a reduced settlement after 5 years - shortfall was £26k on a joint liability debt of £52k. I paid £500 (F&F) around 8 years ago now..... and yes, you have read that right !

 

A lot depends on your personal circumstances and whether they think they can get any more out of you.... so box clever where you can. Years ago, I can remember reading about lenders being aware that they were unlikely to recover the full amount of a shortfall debt.... and would be prepared to negotiate, rather than chase token payments for years on end. I also read that they were unlikely to negotiate in writing in the first instance..... Both of these were true in my own situation.... but the F&F was put in writing (which I still have) and included a promise to amend the records at Experian.... which they did.

 

How much are you being chased for ?

 

[debtsurvivor]

Hi

 

I can only tell you what happened to my OH he was in a similar situation with the Halifax who were asking for a 42K shortfall when they sold the property in possession, we were shocked by the low price they sold at when we requested information. We decided to seek and pay for legal advice this was around 1998 the property had been sold in 1991. Together with the solicitor we gathered evidence that the property might have been sold at too low a price we ask for and was provided with the copy valuations reports that the lender obtained at the time of the sale. We then gathered historic evidence of property prices at the time, we even resorted to speaking with his old neighbours and wrote to the new residents in the property who obliged us with information regarding the condition when they purchased, and we were able to point to some inconsistencies in the reports produced.

 

OH attended the court personally together with myself the solicitor and a barister who spoke for him. The Judge was happy that OH seemed to have a counter claim and told the Halifax that they need to rethink their possiton and find a way to settle with him. After a further 3 months during which time a few letters were exchanged and it was agreed that in fact OH might have owed Halifax £10K as OH had no means of paying any lump sum and could only contribute a token payment from income (an exageration) what we decided to do was that I offered to pay £3K in full and final settlement I gave them 28 days to accept of my offer would be withdrawn leaving them to pursue OH through the court.

 

Halifax accepted we also paid £1200 in legal costs, we thought this was quite good value to make the whole thing go away in five months. Our local CAB were totally ineffective on this occaision, but they have been great on many other matters. I have to say that the expertise of the legal people gave us the mental toughness needed to see us through. However at that time we knew nothing about CAG and with the benefit of hindsight I think we may have tried the route Priority One took at least in the first instance.

 

Good luck with whatever action you decide.

[nuke em]

I paid a reduced settlement after 5 years - shortfall was £26k on a joint liability debt of £52k. I paid £500 (F&F) around 8 years ago now..... and yes, you have read that right !

 

A lot depends on your personal circumstances and whether they think they can get any more out of you.... so box clever where you can. Years ago, I can remember reading about lenders being aware that they were unlikely to recover the full amount of a shortfall debt.... and would be prepared to negotiate, rather than chase token payments for years on end. I also read that they were unlikely to negotiate in writing in the first instance..... Both of these were true in my own situation.... but the F&F was put in writing (which I still have) and included a promise to amend the records at Experian.... which they did.

 

How much are you being chased for ?

 

 

I wonder why they would not want to deal with you in the first instance in writing ? also how come it lasted for 5 years , did you make payment during those 5 years or could they not just find you?

 

they have just started chasing me for 27k

[nuke em]

Hi

 

I can only tell you what happened to my OH he was in a similar situation with the Halifax who were asking for a 42K shortfall when they sold the property in possession, we were shocked by the low price they sold at when we requested information. We decided to seek and pay for legal advice this was around 1998 the property had been sold in 1991. Together with the solicitor we gathered evidence that the property might have been sold at too low a price we ask for and was provided with the copy valuations reports that the lender obtained at the time of the sale. We then gathered historic evidence of property prices at the time, we even resorted to speaking with his old neighbours and wrote to the new residents in the property who obliged us with information regarding the condition when they purchased, and we were able to point to some inconsistencies in the reports produced.

 

OH attended the court personally together with myself the solicitor and a barister who spoke for him. The Judge was happy that OH seemed to have a counter claim and told the Halifax that they need to rethink their possiton and find a way to settle with him. After a further 3 months during which time a few letters were exchanged and it was agreed that in fact OH might have owed Halifax £10K as OH had no means of paying any lump sum and could only contribute a token payment from income (an exageration) what we decided to do was that I offered to pay £3K in full and final settlement I gave them 28 days to accept of my offer would be withdrawn leaving them to pursue OH through the court.

 

Halifax accepted we also paid £1200 in legal costs, we thought this was quite good value to make the whole thing go away in five months. Our local CAB were totally ineffective on this occaision, but they have been great on many other matters. I have to say that the expertise of the legal people gave us the mental toughness needed to see us through. However at that time we knew nothing about CAG and with the benefit of hindsight I think we may have tried the route Priority One took at least in the first instance.

 

Good luck with whatever action you decide.

 

 

yes thanks for that, i know i might have a case against the lender for selling off too cheap but i think this is a delaying tactic. I def think trying to get some cash together and make a F&F to them to clear it once & for all is the way to go if possible . Especially when they find out that i have 2 more props being sold at auction next month (both with different lenders) so more shortfall debt i guess as well.... Guess the whole lot will top out at circa 100k :?

[payingonlyencouragesthem]

Don't offer anyone anything yet. If it turns out at £100k I'd make sure all your creditors knew the position. You then offer them the choice of an F&F you can afford or bankrupting yourself so they get nothing at all. I feel you will get some tempting offers;).

[nuke em]

Don't offer anyone anything yet. If it turns out at £100k I'd make sure all your creditors knew the position. You then offer them the choice of an F&F you can afford or bankrupting yourself so they get nothing at all. I feel you will get some tempting offers;).

 

 

i guess i'll hold on for now though, What should i be saying to the 1 lender who has started to phone up requesting " i get back to them asap etc" ?

[payingonlyencouragesthem]

Tell them to sit on it and spin for the time being. Just say you are selling 2 other properties (true) and will "be in a position to sort the problem out when they complete" (also true). Try to give them the impression there's cash in the pipeline without actually saying as much. It's very important in case it goes to court that you don't actually tell anyone any porkies;).

[debtsurvivor]

Well yes as I said this was our experience your stiuation now that you have said is different. _ What POET says makes perfect sense to me in the circumstances you describe.

[nuke em]

Tell them to sit on it and spin for the time being. Just say you are selling 2 other properties (true) and will "be in a position to sort the problem out when they complete" (also true). Try to give them the impression there's cash in the pipeline without actually saying as much. It's very important in case it goes to court that you don't actually tell anyone any porkies;).

 

 

should i do this via phone or in a letter?

[payingonlyencouragesthem]

should i do this via phone or in a letter?

 

ALWAYS by letter:o. You'll want to file their reply carefully too. You have put yourself in a very strong position by not burying your head in the sand here - it's a huge advantage to start documenting everything minutely before the lender even knows that there could be a big problem.

[PriorityOne]

It wasn't just my lender that wouldn't put anything in writing initially. According to what I was reading in the press (not tabloid) at the time, several lenders were trying to negotiate over the 'phone in order to try and settle shortfall debts. I assume this was so that they could secure a good deal for themselves, while questioning the borrower at the same time about financial reserves, etc.... before committing themselves to anything in writing.

 

My own situation was... that I left the property and moved away to start a new life. Although this looks very reckless and irresponsible, I had very good reason to do so at the time... As expected, the lender eventually traced me and I had a scary letter on the mat one morning.... so game up, so to speak. I contacted them in writing and explained the situation as it was, detailed my circumstances (income/outgoings) and offered token payments on the shortfall.

 

I then wrote and said that I didn't think it fair to chase me for £52K, when my partner was named on the mortgage as well.... so they agreed (in writing) to split the liability in half.... to £26K, with interest frozen on my half.

 

Throughout these early exchanges, they assumed that they had nothing to gain by pursuing me for a huge amount, ie... another property. They didn't ask and I didn't tell them. They assumed that I was renting and when I twigged this, I listed my mortgage as "housing costs".... so I never lied about it either.

 

If it had gone to court, then there was a good chance that I would have had to disclose this info... which is why I offered token payments straight away and appeared co-operative from the start. Due to my circumstances, they accepted £10 per month.... which I had chopped down to £5. Paid £5 per month from then on until I had my 1st letter through asking for £5K in F&F.... and could I ring them to discuss ? I didn't have £5K, so they reduced it to £3K in a bid to get me to settle.... only I didn't have £3K either...

 

Months went by... then the next letter asking for £3K in F&F... and could I ring them to discuss ? Didn't have £3K... so they reduced it to £1K in a bid to get me to settle... but I couldn't get hold of £1K either.

 

Months went by.... until I decided to contact them myself one day. Rang up and spoke to a very nice lady there... Explained that they had sent me letters in the past to try and reach a settlement and were they still willing to do this ? She said that they would be willing to consider any offer, of course. I then said that I was almost embarrassed to say what I could afford.... but she encouraged me to do so.... so I said £500.

 

She then said that she would approach her Manager with my offer and get back to me. She also said that I had shown a great deal of commitment to repaying this debt, even thought these were only token payments.

 

Next morning I had a letter stating that they would be willing to accept the £500 in F&F, Experian would be notified and their files would be closed.

 

It was over.

 

I'm not suggesting that you go down the same route as me... when you have another property it's a risky game to play. I had no choice... and that's why I played it as outlined above. If you wanted to, you could go down the SAR route to re-claim charges and then negotiate on the remaining balance.

 

If this was me going through what you are though.... I wouldn't tell them that you own other properties for now and certainly not in writing.... whether they're being auctioned or not... Do a little digging to see how much they will settle for without knowing this info.... and go from there. If they are completely unwilling to consider a F&F with you, then go down the SAR route....

 

I used to have a saying... "Life is but a game of Chess. If in doubt, move a Pawn" In other words, move slowly until/unless they get p*ssed off with you.

 

Hope it helps...

 

[nuke em]

yes thanks P1, the more peoples experiences the better as far as i'm concerned. I will have to have discussions with them at some point...even so 500 pounds was a complete result.... its less than 2% .......

[PriorityOne]

Let us know how it goes and we will try and help/advise you along the way...

 

[nuke em]

Will do.....

[debtsurvivor]

I’d say that this was a great pragmatic approach by both parties,

 

.... so they agreed (in writing) to split the liability in half.... to £26K, with interest frozen on my half.

 

They don’t have to do this both parties to a mortgage are generally “jointly and severally liable” this means that they have the right to pursue either one of you for the lot.

[PriorityOne]

Yes, I knew that they could have pursued me for the lot.... they could have done a huge amount of damage. It was a tense time, to say the least. However, they did appreciate the fact that I corresponded with them from the start and offered token payments from the start (when they traced me, that is).

 

All of this went in my favour... I was also fortunate to still be dealing with the original lender and not a DCA.

 

If OP can keep this account with the original lender, then the outlook should be a lot brighter; with more room for negotiation.

 

[nuke em]

All of this went in my favour... I was also fortunate to still be dealing with the original lender and not a DCA.

 

If OP can keep this account with the original lender, then the outlook should be a lot brighter; with more room for negotiation.

 

 

Thats what i'm going to try an do, keep with the original lender if poss, i guess they need to believe they will get something otherwise they might take the write down loss, claim back tax relief and sell to a dca

[nuke em]

Mods - i wonder if this could be moved to the "Mortgage Thread"

 

Update. What I have learnt these past 4 months:

 

a) Lenders are not interested in helping most people

b) Lenders love pilling on charges & fees

c) Courts have to give possession or suspended possession when there are 2 or more months of arrears

d) The only time lenders will negotiate is AFTER they have possession

e) Tthe CML & FSA guidelines to do with mortgage arrears and handeling repossessions are for PR purposes only, lenders dont take any notice of them - ( Northern Rock situation shows how weak the FSA is)

f) Put everthing in writing pre foreclosure, never talk on the phone to a lender

g) lost 4 properties already, 6 more before the summer?

h) The "Mortgage" really does come from the French phrase meaning "'till Death"

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