NRAM repossesion => shortfall approx £133,000 - what to do?

[brainthings]

I'm hoping someone will be able to give me some guidance on next steps following my home being repossed 10 days before Christmas 2011 and now NRAM have written to say they have sold the house, but leaving £133,418.80 as shortfall.

 

The notification of the sale included a "Calculation of Final Balance following Sale" but no detailed receipts for the Estate Agents costs (£6,156), Cleaning (£600), Management Fee (£600), Valuation (£144) etc. They have written to me again today threatening action if I do not call them, but I think any correspondence should be in writing. Also, they found my new address via the electoral role/credit reference agency, I believe. I did not provide my new address to them (I don't know if this is significant).

 

Should I be asking for further information on this? Do I have a leg to stand on by arguing against the fact NRAM accepted a low sale price left us with such a large shortfall?

 

I am in full time employment but my partner is self employed as a consultant on commission only basis so has a very irregular income. My salary has to cover the rent and bills etc. There are no assets to sell to recover any significant money to settle the shortfall. I work for a bank so I can't consider going bankrupt as I would lose my job. At this rate i'll never be able to buy a property again, the amount they are looking for would buy a nice flat

 

Any advice will be gratefully received, this forum has been such a great source of information for me over the past couple of years as I battled against various companies

[Lea_HTH]

How they found your address is irrelevant - you ought to have provided it to them.

 

If you work for a bank, and bankruptcy is a no go area, presumably such a large debt will also be an issue unless you make adequate arrangements to repay it. You need to negotiate with them as to what you can afford.

 

You can ask them for a full breakdown of all costs relating to the sale, and you can also find out exactly how much the property sold for, and what other similar properties in the area sold for around the same time. If they did in fact sell for a substantial loss (rather than that you simply had too much secured against the property's value), then you may have recourse to make a complaint and perhaps, ultimately, having the shortfall reduced. However that would be a long trek and will not be resolved for quite some time - however, as the account would be in dispute, you probably wouldn't be making any payments during that time. Starting point is to get the breakdown as per the first line of this paragraph.

 

Purchasing a property with such a large outstanding debt is still a possibility - but the minute you buy something, they will place a charge on the new property for the outstanding debt. Don't ignore this, it's not going to go away, so the sooner you deal with it, the sooner you can all get back to normal.

[brainthings]

Thanks for the reply Lea_HTH, the mortgage was taken out in July 2007 and the only charge to the property was a CCJ related to an unsecured top up loan also from NRAM. This CCJ has 4 years left to run in terms of reporting on the credit file and makes up £30k of the total shortfall. When I started my job, I had to provide extra information regarding the CCJ and you're right, i'm expected to also keep my finances straight, which is why i'm concerned about getting this right.

 

When my partner and I applied for the mortgage, he had a very well paid job and I was a student. My credit score helped, his salary helped. Then he lost his job and I have never earned enough to maintain the mortgage payments & my credit rating is in tatters. Talk about learning hard from my mistakes!

 

With the level of shortfall as it is, is it likely that a small monthly payment would be accepted? My budget is stretched at the moment as it is so i'm worried about what they might say. £100 a month would never pay it off for example.

[Lea_HTH]

My suggestion would be to find out the breakdown and take it from there. Once you know exactly how the shortfall is made up, it'll be easier to challenge it. You'll need information about what other similar properties sold for at the same time to support any claim you make.

 

Once you know that information you will be in a position to know what a reasonable offer to them will be. If, for example, they did undersell the property, then they should swallow that cost, not you.

 

If you just wish to make payment to the shortfall as it has been presented to you, rather than challenging it, then what will be a reasonable payment will be what you can reasonably afford after doing a full income and expenditure; if that is 100 quid a month, then that is what they'll have to accept - at that level though, it would be useful to negotiate with them that if you pay 100 a month for a set period of years that they consider writing off anything outstanding after that period of time. It's all about negotiating with them.

[Ell-enn]

I've got a template letter somewhere for that, based on the CML guidance for selling properties in repossession - I'll have look for the letter and get back to you.

[Wintry]

Hi

 

Useful mortgage shortfall fact sheet from National Debtline

 

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=11_mortgage_shortfalls

[brainthings]

Thanks for the advice given, i'm afraid I go through peaks and troughs in terms of dealing with this (which I know is bad, we do need to get this sorted out to move on with everything).

 

I wondered if anyone can give any advice regarding the debt being reported for 6 years from the date of default (which is Dec 2011 for both the secured and non-secured parts of the Northern Rock claim). Do I need to be concerned about "admitting the debt" and letting this clock start ticking again? Or is that mostly a concern for someone who had not reached repossession stage?

 

Also, when we went to court and the Suspended Order for Possession was made, it stated that "The application for money judgement be struck out" what does that mean, does it benefit us at all? I remember the judge made a specific point of discussing this with the Northern Rock representative at the time.

[Viano]

Hi bt,

 

Do you have any update on your situation?

 

Viano

[brainthings]

Hi Viano,

 

Unfortunately this is still something I have to come up with an action plan on, NRAM have transferred it to a company called Transcom, who I understand are a Credit Management Outsourcing company. They have sent a few letters asking for contact to set up a repayment plan, for the full amount £133k each time.

 

What I am stuck on is how to deal with the huge amount. I am scared to go near admitting the figure and then be stuck with this balance for years and years. However I have recently managed to settle a car repayment loan I had, which had gone to a court arrangement and I was paying £500 a month. This will be the first month I have the extra funds available. My plan was to find a solicitor who could help to fight this from my side. I don't suppose anyone would know if that is likely to have much success?

 

My feeling is that everyone knows NRAM made mistakes giving out mortgages to people who were risky (I include myself in this category) and so surely they have to accept some blame for poor due diligence in the first place?

 

Really appreciate all the information available through this forum, it's been truly valuable the past few years for me.

[caro]

Brainthings, have you followed the advice from Leah earlier in the thread about finding out how the shortfall has been calculated. The sooner you deal with this the sooner you can put it behind you. Time for you to take control of the situation.

[brainthings]

Yes, I did send the letter from nationaldebtline website, and NRAM sent a detailed breakdown of how they came up with the final amount. There were various additions such as cleaning the house, disconnecting gas and water, changing locks, survey, estate agents fees etc. There was no evidence provided that best competitive price was achieved for each thing, is that something that should be backed up?

 

I can post the breakdown on here if anyone would be able to suggest if it seems reasonable or not? I thought the items could be valid, but perhaps the costs were higher than if i'd been allowed to do these things myself.

[caro]

It might be worth questioning them but the main thing is how the sale price compares with other similar properties at that time. What did they do to achieve the best price and minimise any loss?

[Viano]

Hi B,

 

Please bear with me on this, it could be somewhat disjointed.

 

Firstly there are probably unlawful charges in their calculations eg overcharging for sending letters, returned DD's, payment option fees, debt councillor fees & arrears charges that the FSA will not be happy with. Give them a call and find out.

 

Secondly, there is case law regarding underselling vis Cuckmere Brick v Mutual Finance, often quoted in underselling cases, Standard Chartered Bank v Walker [1982] 1 WLR 1410, balance of probabilities that the lender failed to take resonable care to obtain the best price, and I think, including the 10% bracket, when you read it it will come clear!

 

With regard to price, use a house price calculator (or several) to determine what the price should be, the Land Registry is a useful tool. NR will have had a valuation done at the time you took your mortgage use this price to detmine the apprximate value of the property at the time of sale. This will be the motgage value not the market value.

 

I hope this will give you something to work on.

 

v

 

[Viano]

May I suggest you look at Paratus Amc (GMAC) v Countryside Surveyos EWHC 3301 (ch)

and Leagal Mortgage.co.uk for knowdge (advice) regarding underselling.

 

In the Glover.co.uk site in the news section of January 2012 you will find an article headed 'Under current trends in negligence claims against valuers' you will get an idea of what the Courts deem to be an acceptable "margin of error" in valuations.

 

HTH

 

V

[hesanmp]

offer £5000.00 in full and final settlement