Mortgage repossession in UK is the repossession by a lender of a person’s house due to default on his mortgage loan. Typically, the process by which the mortgage repossession is carried out involves obtaining an order for possession from the courts followed by an eviction warrant. The eviction warrant is then enforced by court-appointed bailiffs. Once mortgage repossession is done, that is, the lender has already obtained possession of the house; the lender can sell the property to recover the unpaid arrears.
It is important to remember that your home can only be repossessed by your mortgage lender only if the following steps have been followed:
1. You are notified in writing by your lender about your unpaid arrears at least twice. During the first time, the lender will ask you to voluntarily settle your obligation with them. If you fail to respond, or the lender is not satisfied with your response, the lending company will send you another warning you that it will start court action to repossess your home. You will be avoiding repossession if at either stage; you will negotiate with the company and come up with a proposal on how you can pay your debt with the Mortgage Company or bank.
2. The lender does formally ask the court to issue a possession order on your home, citing the reasons for making such request.
3. The court will notify you of a hearing where in a judge will determine whether or not you can keep your home or whether ownership should instead be passed to your mortgage lender. At this juncture, it would be in your better interest to get legal help from a solicitor or housing adviser.
4. The judge hears the mortgage repossession case. At this point, you will be avoiding repossession if you can convince the court that can and will pay your obligation with your lender. For this purpose, you may need professional help in crafting a realistic loan repayment proposal. Depending on how well you argue your case, the judge can decide to:
* make an outright possession order, meaning you lost the case
* make a suspended possession order, allowing you to keep your home subject to your complying with certain conditions such as paying your current monthly instalment plus a fixed amount off the arrears, or making a lump sum repayment towards the arrears by a certain date, or making a series of extra payments on specified dates .
* adjourn or postpone the case, as when the the court needs more information from either you or your lender before making a judgement, or you need more time to raise a lump sum to pay off the arrears * strike out or dismiss the case, meaning your mortgage lender has lost the case and cannot repossess your house.
* make a time order for second mortgages or secured loans, that is, by either changing the interest rate or extending the term of the loan.
5. The court does grant the possession order on your house requested by your lender.
6. Bailiffs are sent to remove you from your house in case you have not on your own vacated it. At this stage, another way of avoiding repossession from still taking place is by filling and submitting an N244 Application Notice which is a request for another hearing wherein you justify why you need not be evicted from your home. Again, the success or failure of this exercise depends on how convincing your loan repayment proposal would be to the judge.
7. After the repossession, your creditor will take steps to sell your house. Once sold, the lender will keep the money that is owed and return to you what is left of the sales proceeds. If it happens that the sales proceeds is less than what you owe, you will still be indebted to your creditor for the shortfall.