Advice on shortfall

carlos700

If you have your house repossesed from the morgage company and say your morgage is 130,000 and the morgage company sells the house for 100,000 do you still owe the morgage company the shortfall ( 30,000 ) ?

How do the morgage company try to sell your house to they go to high street estate agents like we do or do they put the house in an auction ?

dwsjarcmcd

Yes you still owe the money, although in practice they usually insure any shortfall which is paid by the insurers, so you would effectively owe them the money. They can chase this debt for 12 years.

Lenders have a duty to get the best price for a repossession, so they will use high street agents and auctions, it will depend on the property.

David

carlos700

Thanks David what do you mean by the insurers ? Do you mean the morgage company pass the debt onto there insuers so instead of oweing the money to the morgage company it will go to the insuers instead .(sorry i get confused quite easliy nowadays )

silvercar

Lenders will try and get the best price in a short time, so they may place with agents and then decide to auction.

You may have paid a higher lending charge when you took out the mortgage, this will insure the lender (but not you) against any shortfall. Even if this didn't happen, lenders often insure the shortfall risk with large insurance companies.

The lender, or a company they have passed the debt to, can chase you for the shortfall.

The council of mortgage lenders' members have agreed that they will only chase unacknowledged debts for 6 years rather than 12. So if this was an old repossession that hasn't recently come to light, you may be covered.

Nowadays most shortfalls will be acknowledged as the lenders will be keen to put a payment strategy, for the shortfall, in place.

The only time you could walk away from the shortfall would be if you went bankrupt around the time, when the shortfall would be included in bankruptcy.