F & F on Mortgage Shortfall

[Deleted User]

Hello

We have been paying our mortgage shortfall with StepChange since 2012. The account is listed as satisfied on our credit file and will drop off next year.

We want to try and pay it off in case we apply for a mortgage in the future. The property was not sold for maximum value after we handed the keys back as the lender would not let us rent it out, and would not accept an offer from a company who bought up properties, even though it was a better offer than the eventual sale price the lender secured.

We wrote to them and offered them 24 months worth of DMP payments and said we were considering bankruptcy. They have contacted us saying they do not accept our offer, and mumbled something about 5%.

We could scrape together 5% and offer it, but what if they go higher or decide to try and drag us through court or something. We've only been making small payments, but they've been regular for 5 years now, never missed one.

Just want an end to this so we can move on with our lives. Is 5% realistic - what are others experiences with mortgage shortfall ?

Just trying to clean up our act and move on. We had higher lending insurance on our mortgage so it wasnt like it didnt get paid off either !

Thanks for reading...

LJB290

If they've mumbled something about settling at 5% and you can do it, just make sure you get this settlement agreement in writing before you release funds.
Don't do anything before it is in writing stating that you won't be chased for any further payments following this final payment.

Best of luck!

National_Debtline

Hi there,


I would be concerned that at this stage, they have only 'mumbled' something about a settlement figure - this is not binding. Either party can proposal a settlement at any time and there is nothing to stop you writing to the lender and making a settlement offer. Just remember that it is at their discretion whether to accept it or not. You also mention that the property was not sold for the best price. You could consider challenging the balance of the shortfall and write to them to ask for a breakdown of the debt, challenge it with the lender if you feel they did not reasonably obtain the best price and escalate it to the Financial Ombudsman Service if you are still unhappy. The downside is this can take time but may help if you were to then do a settlement offer.


When doing full and final offer you should write to the lender, you can use our sample letter to help you - https://www.nationaldebtline.org/EW/sampleletters/Pages/Full-and-final-settlement-offers-%28sole-name%29.aspx and you would need to get them to agree, in writing, that they will not chase you for the remaining debt, they won't pass it to any other company that may chase you for the shortfall, and they will mark your credit file as partially settled and a £0 balance. If this is agreed to then you can send the money.


Laura
@natdebtline