**Repossession/outstanding sum some 12 years later**

Tootsie_Roll

olly300 wrote:

I've found this:
http://www.payplan.com/debt-library/joint-and-several-liability-the-limitation-act-1980.php

and this:
http://www.payplan.com/debt-library/mortgages-mortgage-shortfalls.php
It's 12 years for mortgage debt.

Abbey would have sold the debt on to another company.

This company would add interest, finders fees and other such made up things on to the debt to make it bigger.

What ever arrangement they have come to with the other person they will be trying their luck to see what they can get out of you.

You probably don't have to pay it back because of your circumstances.

If your husband is conducting his current account properly Abbey would have no reason to close it.

Sorry but I know for absolute certain that to date Abbey have never sold a mortgage shortfall debt.

I agree though that it is almost certainly statute barred.

jamesd

JJ27, do nothing in reply. Do not give any indication of any sort that you have even received the letter. Don't write, don't phone any number they give. Completely ignore them. This is so you don't either start the statute of limitations clock counting again or encourage them to think that there is a chance of them getting money from you. Even seeking time to pay is enough to restart the clock.

There are two key purposes of a letter like this:

1. Confirming that they have succesfully located you. So don't respond.
2. Getting details of your financial situation so they can work out if it's worth taking you to court. If there's even the slightest hint that you have assets or more income, this will encourage them to chase you more aggressively.

Get your husband to write down anything he's told them, any agreements he's made, any offers or anything else that may have been done. The idea is to try to find out when the statute of limitations takes effect and prevents them from seeking any more repayment.

The Abbey bank account terms might say that they can recover other debts from funds in it. It's prudent to use a different account until you're sure that the mortgage claim is time-barred. They haven't done it already but I suppose that might be because they don't yet know there is a related debt. At a minimum, don't accumulate significant money in it.

Should you want to pursue this but contest the amounts, you might do things like starting by asking them to prove that you owe them the money and that they sold the property for the best achievable price. Any valuations he had done independent of them to suppport a higher price than the one they obtained might be useful for this. Throughout, expect them to try to get you to agree that you owe them some money. Don't use any words that could even conceivably imply that. Just stick to asking them to prove that they had a mortgage agreement and that the amount they are seeking is money they are entitled to claim. The purpose of this sort of response is to ensure that they can only claim what they are entitled to claim and to make it clear that they will have to prove this and won't be able to do it speculatively and on the cheap. Combine that with a low income and legal action becomes very unlikely to be a profitable route for them to pursue and they are more likely to write off the money. But I suggest not taking this route, given the apparent proximity of the time bar. Waiting seems more approrpiate.

It appears that this may be the last speculative attempt to get some money before the time bar takes effect, if it hasn't already. You might receive one or two more letters threatening legal action as routine attempts to bludgeon you into agreeing to pay anything to avoid going to court. Don't. Instead, seek advice from debt experts in the very unlikely event that you actually do get a letter from a court. Given your financial situation going to court is likely to be to your advantage rather than theirs, since they can't extract more money via the court than you're able to pay.

mi-key

You dont say, but was this letter from a company called Thames Direct or something similar ? These lot seem particularly dodgy - they buy up old debts from companies like Barclaycard for a few pence and then chase for them, adding on loads of interest and extra charges.

This story does point out one thing though that is worth remembering - if your house does get repossessed that doesnt mean you dont owe anything anymore ! A lot of repossessed houses never get to auction, and are sold by the bank or building society direct to local property developers they do under the table deals with. The developer gets the house for a fraction of its true value, the bank gets the interest on the loan they give the developer for the house, and the house owner gets a letter saying they still owe the difference.

Gorgeous_George

Plenty of advice not to pay the debt.

Out of interest, why shouldn't the lenders expect to be repaid?




GG

jamesd

Because this site is about the interests of the consumers, not the lenders. That means giving suggestions that maximise the benefit of the consumers, subject to them being legal.

Because we've seen no proof so far that the debt really was incurred. Did the lender get the best available price for example? They are required to. mi-key explained one worry.

Because we don't know that all the other costs, like insurance for a vacant property, valuation and estate agents fees were competitive.

Because we don't know the circumstances. Was the mortgage properly carried out, lending to someone who could reasonably be expected to afford it?

Because the claimed debt is 23k on a 40k mortgage, which is quite an interesting sum to be asking for, assuming that the lender didn't lend at more than 90% LTV and had half of the money they claimed paid by the other person. Half of 10% of a 40,000 mortgage is only 2,000. Getting from there to 23k takes a 23% annual interest rate. Assuming half of all costs and fees amounted to another 2,000 initially, getting to the claimed amount takes an annual interest rate of 16%. This is a bit hard to believe.

Though note that the other person is said to have paid less than half, suggesting that the debt amount might not be accurate.

Because we don't know if all charges which have been made are not penalty charges and are otherwise fair, per the requirement prohibiting penalty charges and only allowing actual costs.

ctabuk

I would just like to add something here. It was my Company that exposed City Mortgage Corporation in the News of the World and The Times - we saved over 3,000 families who were in danger of repossession orders - which was why I said about 6 years because I know of one judge that kicked out an older claim. So if these guys get tough PM me.

Tootsie_Roll

ctabuk wrote:

I would just like to add something here. It was my Company that exposed City Mortgage Corporation in the News of the World and The Times - we saved over 3,000 families who were in danger of repossession orders - which was why I said about 6 years because I know of one judge that kicked out an older claim. So if these guys get tough PM me.

Repossession and the 6 year statute law are unrelated - I wonder why you think they are.

Tootsie_Roll

Lots of assumptions and inaccuracies in this post that may be misleading to the OP so I will respond to the points raised. Please note I agree that it is unlikely that the OP will have to pay anything at all due to the debt being unenforcable under statute law.

jamesd wrote:

Because we don't know the circumstances. Was the mortgage properly carried out, lending to someone who could reasonably be expected to afford it?

Never come across a statement like this for a mortgage account usually only for unsecured debt. As the borrower takes legal advice I would guess that it would be impossible to make a case for this and would just be a waste of time and money.

jamesd wrote:

Because the claimed debt is 23k on a 40k mortgage, which is quite an interesting sum to be asking for, assuming that the lender didn't lend at more than 90% LTV and had half of the money they claimed paid by the other person. Half of 10% of a 40,000 mortgage is only 2,000. Getting from there to 23k takes a 23% annual interest rate. Assuming half of all costs and fees amounted to another 2,000 initially, getting to the claimed amount takes an annual interest rate of 16%. This is a bit hard to believe.

Don't assume anything. No one claimed the other party was paying half or the LTV was 90%. Where does the 10% figure come from ? Why is it relevant ? You also only calculated 1 years interest what about the other 11 !We don't know how long it took to sell the house - could have been years, also bear in mind 12 years ago interest rates were much higher and continues to roll up (compounding) untill the house is sold, any remaining balance can continue to accrue interest as well. I agree getting a breakdown would be a good idea if the OP was actually going to have to pay something back. I don't have any difficulty seeing how the debt got to this side but then I have seen 100's of them.

jamesd wrote:

Though note that the other person is said to have paid less than half, suggesting that the debt amount might not be accurate.

No it didn't - it stated 'their fair share'. Actually they would have said this as it makes the person they spoke to at least feel like they are not being singled out.

jamesd wrote:

Because we don't know if all charges which have been made are not penalty charges and are otherwise fair, per the requirement prohibiting penalty charges and only allowing actual costs.

This is all nonsense, don't know of any penalty charges that get applied in these sorts of cases.

jamesd

Tootsie_Roll wrote:

Don't assume anything. No one claimed the other party was paying half

JJ27: "That amount they are asking for doesn't seem like half of what would be outstanding." Of course they are each liable for the full debt not paid by the other party so it may well not be half.

Tootsie_Roll wrote:

or the LTV was 90%. Where does the 10% figure come from ? Why is it relevant ?

90% was a fairly common maximum lending amount and also not an uncommon amount to get on a repo sale, leaving 10% of the property value to recover. LTV is relevant because 100% less LTV is the unsecured amount at risk. This gives us some estimate of the possible original debt amount. Only an estimate, since we don't know the original number and JJ27 hasn't supplied it and may not know it, since it sounds as though no real examining and questioning of the lender's figures has been carried out.

Tootsie_Roll wrote:

You also only calculated 1 years interest what about the other 11 !

I used compound interest on the estimated capital for 12 years. To get from 2000 to 23178 in one year would take an interest rate above 1100%. To get there from 4000 would take above 500%.

Tootsie_Roll wrote:

We don't know how long it took to sell the house - could have been years, also bear in mind 12 years ago interest rates were much higher and continues to roll up (compounding) untill the house is sold, any remaining balance can continue to accrue interest as well.

Yes sales can take a while and meanwhile interest accumulates and adds to the sum owed. Still seems like a pretty high figure to be claiming. Hard to say since we don't know what is being claimed for or what interest rates were being charged during the intervening years.

Tootsie_Roll wrote:

This is all nonsense, don't know of any penalty charges that get applied in these sorts of cases.

High costs for debt collection letters, statements, late payments and such have been judged to be penalties, not true costs, from banks and credit cards. I don't see a reason for mortgage lenders to be treated differently. We don't know how much of the claimed debt might be due to such charges.

As you wrote above, the CML 6 years agreement and/or the 12 years statute limit may make all of this moot.

saver_sam

Sorry to say but your husband appears liable for the shortfall. I believe these are the parts of the law the building society may rely on to press their case.

Limitation: Section 29 (7) of the Limitation Act 1980 states limitation periods may be repeatedly extended by acknowledgement of payments.

Therefore if any payments have been made towards this shortfall then each payment acts as a fresh accrual of the right to receive the balance of the mortgage under section 29 of the Act 1980. Accordingly the 12 year period starts again from the date of the last payment. Also case Wilkinson v West bromwich Building Society [2005] UKHL 44 supports this.

Section 31 substantiates the above and provides that : "a payment made in respect of any debt or liquidated pecuniary claim shall bind all persons liable in respect of the debt or claim"

Pursuant to Section 20 of the Limitation Act 1980 and Bristol & West plc v Robert Wayne Bartlett & Anor [2002] EWCA Civ 1181 the limitation period applying to a mortgagee's claim against a mortgagor for the principal amount of a shortfall debt following the sale by the mortgagee of the property is 12 years.

Probably the bank has applied any sales proceeds to the contractual interest firstly, then the conveyancing costs and finally to the capital sum. The capital sum is then know as the principle.

Joint and Several Liability: Under a clause in the terms and conditions contained in the legal charge, the mortgage debt is a joint and several liability of your husband and the other party. Therefore they are both liable individually (as well as together) for the full amount of the mortgage debt and therefore also the shortfall.

If it goes to court you may find they apply interest as well under Section 69 of the County Courts Act 1984.