Shortfall query

arwenamen

Hoping someone can advise.
About 5 years ago my family went through a very traumatic situation and as a result, neither myself or my husband were in a position to continue paying our mortgage and started a shortfall application with the mortgage company, in which we would sell the house rather than hand back.
They accepted the application on condition of a specific completion date. This date was not met (does this void their shortfall agreement with us?)but the mortgage company still accepted the money. There were a lot of delays from the side of our buyer and we left the whole situation in The hands of a solicitor and left the house. Unfortunately due to the situation we were dealing with, we both have very little recollection of this time but have recently been looking at our credit scores and realised the debt was listed but they had not contacted us about it (we did provide our forwarding address)

What way do we stand with this? Can the debt be written off? We have a letter from them to our new address from 2013 that says " we are writing to let you know that we have received the final amount you paid to redeem this account. This means that our solicitors have been instructed to discharge the account and remove the legal charge against the property. Please cancel and direct debits or standing order you have set up to make payments to this loan" does this mean they have written off the owed balance? If that is the case why would it be on our credit history?
Really confused about this and also scared to contact them as it's not something we can afford to be repaying so don't know what to do.

Any advice would be appreciated.

xyz123

Letter may indicate what you are saying. Check with land registry for property deeds and they can confirm I'd the charge was actually released.

Thrugelmir

arwenamen wrote: »

We have a letter from them to our new address from 2013 that says " we are writing to let you know that we have received the final amount you paid to redeem this account. This means that our solicitors have been instructed to discharge the account and remove the legal charge against the property. Please cancel and direct debits or standing order you have set up to make payments to this loan" does this mean they have written off the owed balance? If that is the case why would it be on our credit history?

Sounds like a standard mortgage redemption letter. The charge has to be removed from the property to allow the transfer of title to the new buyers. Doesn't mean that the remaining (shortfall ) debt has been written off either. There'll be charges to pay potentially as well. Lenders have 6 years from the date of the sale of the property to pursue the matter.

Why do wish to contact the lender. What do you hope to achieve.

fatbelly

It's 12 years under the Limitation Act. However, The Council of Mortgage Lenders (CML) say in their policy:

“anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender for recovery of the outstanding debt, will not now be asked to pay the shortfall”.

The CML policy is now part of the FCA’s MCOB rules. The CML part of MCOB is a voluntary code, but should be followed as good practice by lenders.

This may not apply if your mortgage started before 2000, or if your lender did not sign up to CML membership, and you will then have to fall back on the Limitation Act.

Are you actually being written to with a demand for payment? If not, I would definitely leave this alone.

It's in your credit history as an accurate record of what happened, and the record stays there for 6 years