Indemnity Insurance?greenspun.com : LUSENET : Repossession : One Thread
I handed back the keys to my house over 4 years ago using Union Finance (Based in Southend), with the Indemnity Isurance get out clause. I understand that the building societies later won a case against someone claiming the insurance should cover the shortfall. What happened next? Did anyone ever successfully claim using Indemnity Isurance?
My building society last wrote to me 3 years ago at my current address. How long do they have to take me to court to recover their money?
-- Tony Brown (Tbrown9263@aol.com), April 12, 1999
What happened next was that the lenders claimed that the benefit of having the insurance was that you got a mortgage you wouldn't otherwise have got. Whether you were mis-sold indemnity insurance is an open question though. Some lenders did not show customers the insurance documents prior to signing.
I'm told Union went bankrupt. At least one person who I think was connected with the company now helps repossessees deal with shortfall claims. He charges #600 and estimates that he can reduce most claims to about #2,000.
He claims he has a copy of virtually every indemnity insurance document lenders have used prior to 1993 or so and uses these to help people. I am unable to verify this claim.
How long your building society has to claim is a very vexed question. I have dumped everything I know about this in the Home Repossession Page.
My advice is to avoid applying for credit and to contact one of the solicitors mentioned in the "Paid Help" section in the Who Can Help? section if you need to.
-- Lee (firstname.lastname@example.org), April 15, 1999.
The situation with indemnity insurance is like this:
The insurance policy is purchased by the lender to protect them against selling the property at a loss if it is repossessed. They took out the insurance because they were lending you 75% or more of the original value of your house. The contract is between the lender and the insurance company - the lender just passed the cost onto you. This is the reasoning behind the case you mentionned (Woolwich Building Society v Brown).
I have not known of any successful challenges to this reasoning.
-- Sue Edwards (email@example.com), April 20, 1999.
Thank you for your response to my request for information on Indemnity Insurance. I would like to resolve my case and any help would be appreciated. My defence against the claim of the Woolwich Building Society is a simple one. In summary:-
1) When I took out my mortgage I was told by my Woolwich advisor that it was a legal requirement that I take out Indemnity Insurance. I was told that this would cover me should the house be reposessed and that it would pay upto 25% of the value of the property back to the Building Society. Any shortfall after this I would have to pay. If as you say the insurance is in the name of the Building Society and does not cover me then the Woolwich advisor lied to get me to pay my #1200.
2) As I understand it Indemnity Insurance came about in the sixties due to the high number of people in the negative equity trap. I've been told that it was to cover both borrower and lender. If it only covers the lender is the legislation out of date and why will the Building Society not provide a copy of the insurance I paid for?
3) The house was sold at about #6k-#10K less than it's market value.
There are other issues I would like to raise but my knowledge of the law in this area is limited and it difficult to find any details of the legislation. If you could help in any way it would be very much appreciated as I believe I've done nothing wrong.
PS Is there anyone elso like myself who was misled about Indemnity Insurance?
-- Tony Brown (Tbrown9263@aol.com), April 20, 1999.
Where customers do argue with lenders over indemnity insurance they usually use the threat of being prepared to go to court to argue it as a way of giving the lender an incentive to agree to a lower settlement.
This only works if the lender is not going to make much money out of (successfully) suing you anyway. The rest of the site goes into this - particularly the Do's and Don'ts section.
What it boils down to is this: Your lender is refusing to show you a relevant document. You could therefore say: "I'm happy to settle this but will need to see this document." The lender will not produce it. It will call your bluff and say: "We will sue and win." You then have to decide whether it is likely to carry out that threat and whether you think you will win if it does. In reality judges often think both parties are at fault but long before you get to that stage, ie before you get to court, your lender will try assess whether it is worth really suing you even if it is confident of winning. The Do's and Don'ts section sets out its thought process in some detail. Based on your assessment of whether you are worth suing, you have to decide whether you are prepared to call your lender's bluff. This is actually how most commercial legal cases are dealt with: economics is as important as moral victory for both sides.
Speaking personally, I would let them issue a writ (ie start the process of going to court) and use discovery to get that insurance document, whereupon I would show it to a competent lawyer (a rare beast) and decide whether to back down or continue on into court with a counterclaim.
My decision to do that would be based on how much I have to lose if I lose totally and how strong a counterclaim might be. But it should also depend on how mentally tough you are: going to court is a truly nerve-wracking experience. Which is why lenders find the threat of it so effective.
-- Lee (firstname.lastname@example.org), April 22, 1999.
We are in the same place as having just received a letter demanding #12000 against what they paid the building society, I am trying to find out if they cando this because of the new 6 year ruling, does it apply here as wellsince this is to do with the mortgage industy???
-- Micheal Beaney (Micheal.Beaney@tesco.net), March 26, 2000.
I find myself agreeing with SUE EDWARDS n this one The fact that the Mortgage is part of a contract and that contract both the Lender and the Borrower agreed to go over the 75 per cent of the Equity in the Property,then if the lender states that you have paid the insurance to cover their Lending, the amount when it gets to court is not seen by the Judge as signing by undue influence or misrepresentation ,that is why Lee is stating ,going to court is hard and tough What appears on the fce to be a prima facia case ,just doesnot wash in court-that is what is called British justice
-- charles twford (email@example.com), March 26, 2000.