My Mortgage Shortfall Dilemma

[MrKrinkle]

First Post, so here goes.

Back in 2008/9 I was made redundant and subsequently got into arrears with my mortgage. The property was repossessed by the mortgage company after we had left to live in a rental property. I received a letter from the mortgage companies in-house solicitor notifying me of the shortfall (30k +), but have had very little contact since. No detailed breakdown of the debt, no regular statement, nothing at all from the mortgage company? Other than registering the default with credit reference agencies, no CCJ's have appeared (would they be registered from a repossession or a money judgement?) in my credit reports.

I have had letters asking me to contact them from 2 or 3 different DCA's acting on behalf of the lender, usually after moving to a new rental property but none of this has escalated to anything more threatening than a standard letter or two. No contact has been made with these agencies by myself over this period of time. Is this common behavior for this to have been left uncontested for this period of time? I have had no contact with anybody for just over 2 years about this matter when a DCA kindly performed a hard search on my credit file which is still showing.

The shortfall debt is gradually reaching the point where it would become statute barred. The mortgage company dont have my current forwarding address, and I'm concerned that if they did decide to take court action over this debt the paperwork would be sent to an old address and wouldn't find out before its too late, limiting any opportunity to negotiate with them or offer a defence.

Equally, I am also concerned that sending them a forwarding address will "poke the bear" and prompt them into action!

I'm in a dilemma about what I should do!

[The Tech Clerk]

Diana Mayhew

[Sam Audley]

Joanna Connolly

[Joanna Connolly]

Do you know the date when the property was sold? The limitation period for capital owed is 12 years from date of sale and for any interest included in the shortfall the limitation period is 6 years. As you have not received any statements this makes it difficult to determine for example if the balance remaining is just interest and charges or if there is still capital in the balance. Obviously the larger the shortfall the more likely that capital is included.

It is important if you are relying on limitation that should you contact them you do not admit the debt in writing or make a payment. If you do either then it starts the limitation clock running again.

It is not uncommon for creditors to leave chasing for the shortfall late as the individual borrowers circumstances can change for the better over a longer period.

As for trying to ensure if a claim is issued that you are served with it so can deal with it I would suggest using the Royal mail redirection of post service which can be accessed on the Royal Mail Website.

I hope this helps you.

[MrKrinkle]

Hi Joanna, Thank you for responding so quickly!

From the land registry I believe the property was sold a couple of years after we had left.

The date where I had 2-3 months arrears on the mortgage was before this. Am I correct in thinking that the limitation period would run from when the mortgage company had cause of action from my arrears? To muddy things slightly further I made a few payments after reaching the point where they would have had cause of action.

Although I know this isn't cast iron reliable, the only indicator I have is an old credit report showing arrears and when the account reached the point of default.

[Joanna Connolly]

Hi

Arrears before shortfall would arguably become statute barred from each arrear date after 12 years (as still secured on the property then) but depends how and when terminated. The safest course to determine limitation is 12 years from the date shown at the land registry for the sale (unless you have an earlier letter of termination) for capital and 6 years for any interest and charges element.

[MrKrinkle]

Sounds as if the remaining limitation period might be longer than I first thought, and its not actually near to the point of SB.

At the time I simply walked away from the property without contact with the mortgage company. I know this is enormously irresponsible, but after redundancy and living out of a suitcase for a prolonged period to work away through the week, my mental health wasn't great and frankly I didn't know what course of action to take. I could no longer cope with being away from my wife and children without any prospect of this ending, and had to choose between paying the mortgage or potentially loosing my family. This might sound a bit melodramatic but this was genuinely the lowest point I've ever reached in my life and its continued to affect me until this day.

Just leaving is also largely the reason I don't have any of the information from around the time of repossession and I'm trying to cobble it together from any information I can find.

I appreciate your time in responding to my posts. I've spent some time researching my options. I may have been foolish in the past, but I'm under no illusion that a bit of googling and reading through MCOB regs is any substitute for your qualification and experience! Thank you.

[Joanna Connolly]

I am glad I was able to help you

[MrKrinkle]

Could I ask what would be a sensible strategy in establishing when the limitation period started? Is it possible after this length of time to find this out from agencies other than the creditor?

If contacting the creditor is the only way to do this. Would a SAR be the best way to obtain the documentation?

[Joanna Connolly]

Making a SAR (or what is now knows as the GPDR) request would probably be the best way of finding out as Kensington's case management notes etc should form part of the response. SAR's are dealt with by a different department but there is always the possibility that your making the SAR could trigger Kensington into further action.

[MrKrinkle]

Thanks Joanna, I will consider sending the SAR to obtain all the information they hold.

In terms of limitation, is there a distinction between handing the keys back and not? Does my none contact with the mortgage company offer them a justification to run the limitation period from the point of sale. If this is the case what would they rely upon to do this?

[PlanB]

I have had letters asking me to contact them from 2 or 3 different DCA's acting on behalf of the lender, usually after moving to a new rental property but none of this has escalated to anything more threatening than a standard letter or two. No contact has been made with these agencies by myself over this period of time. Is this common behavior for this to have been left uncontested for this period of time? I have had no contact with anybody for just over 2 years about this matter when a DCA kindly performed a hard search on my credit file which is still showing.

Hello

May I just ask you a couple of things.

Are you certain that it's been Debt Collection Agents writing to you about this mortgage shortfall, or whether it could have been assigned (sold) to a new business entity somewhere along the line?

Kensington Mortgages sold a large part of its loan book to Bluestone Mortgages when they were going through a restructuring, so does that name mean anything to you?

Also Kensington Mortgages were usually sold through an intermediary not direct by the actual lender. They would use brokers or 'packagers' who would carry out the underwriting on their behalf. How did you acquire this mortgage?

In my experience there would often be a MIG (Mortgage Indemnity Guarantee) insurance policy associated with the loan and the broker would get commission. The insurance would have been paid for by the borrower (added to the loan at the start), but it would protect the lender in the event there would be a shortfall following a repossession. In those circumstances it was the insurance provider (of the MIG) who then pursued the shortfall loss, having paid out to Kensington Mortgages.

What was the name of the DCA who searched your credit file? Searches are only recorded for two years so it may be that someone somewhere is looking at this situation again now. Who is that someone?

Di

[MrKrinkle]

Hi Plan B,

Apologies for the confusion but the mortgage wasn't with kensington. The last DCA to write was Moorcroft and the letters that I have refer to the lender as their client so I don't think its been sold on. Moorcroft were also the DCA that ran the credit check at around the same time that I received the last letters around 2 years ago.

In terms of a MIG, I honestly don't remember if this applies to me and this cover was taken out by the lender. The mortgage was reasonable high LTV so I suspect it might have been taken out. However, it is the original lender named in the DCA's letters rather than an insurer. Would the insurer pursuing be named in the letters?

[PlanB]

Apologies for the confusion but the mortgage wasn't with kensington.

Kensington was mentioned in post # 10 on this thread in relation to sending a SAR.

So if it wasn't them who was it? Or who do Moorcroft name as their "client" in their letters to you?

This may matter because if they were a member of the Council of Mortgage Lenders (now UK Finance) then there was an agreement written into their Code of Practice that their members would only pursue mortgage shortfalls within 6 years not 12 years. This may not apply to you or your loan but it's good to research everything before anyone start to chase you actively.

Did/do you have a copy of the Possession Order or wasn't there one if you handed back the keys (voluntary possession)?

Di

[MrKrinkle]

The original lender was C&G which subsequently became lloyds due to restructuring. I haven't got a copy of a possession order and I don't know how things would have progressed as we didn't formally had back the keys. I would presume they would have need to be granted possession under these circumstances to repossess?

I have got a copy of the original agreement with C&G +T&C's and have information regarding when the last payment was made towards the mortgage. Having said that I cant remember if there was a change in T&C's when the mortgage changed between C&G and Lloyds.