The Halifax PLC seem to have established a policy, whereby they send out an "estimated" shortfall claim letter shortly after the property in possession is valued. From my personal experience of receiving one of these letters, I hope, in this guide to be able to help those also unfortunate enough to receive one.

The letter will be similar to this:

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Property Address ****************

Dear ******,

ARRANGEMENT NEGOTIATION

Following the repossession of the above property it is anticipated that when the property is sold there will an estimated amount outstanding of ###,###.##

It has always been the Halifax's policy to instruct debt collectors or solicitors to pursue borrowers directly for recovery of the loss, but this course of action is only carried out where an acceptable arrangement cannot be agreed direct with the borrower(s) first.

I am sure you would wish to avoid the prospect of further recovery action being taken against you using debt collecting agents or solicitors, if at all possible.

The Halifax would be prepared to accept any reasonable 'offer' that you may wish to make towards the loss, either by way of a lump sum payment or, alternatively, by way of an agreement to pay an affordable monthly payment over a period not exceeding 10 years.

If an agreement can be reached which is acceptable to both the Halifax and to you, and this agreement is fully maintained by you, the Halifax will discharge your liability in connection with the loss and no further debt recovery action will be taken against you by the Halifax,and the Additional Mortgage Security Company (formerly Mortgage Indemnity Insurance),in respect of it.

It is to your advantage to consider your position, as further recovery action by the Halifax will be necessary if we cannot come to a mutually acceptable arangement.

Please therefore,consider the contents of this letter and contact *Halifax Employee* on *Telephone Number* within the next 14 days, to discuss your proposals to discharge the outstanding debt.

If I do not hear from you within this time scale, further debt recovery action will be instigated.

Yours Sincerely

*Halifax Employee*

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1. If this type of letter arrives do not panic! Letters from lenders asking you to phone them frequently arrive just at the weekend when it's difficult to obtain legal advice. They're composed to make you fret and pick up the phone. DO NOT phone.

2. The Halifax gave this reason for sending me the estimated claim; "If an arrangement was agreed on the estimated loss and, after the sale, the loss were to decrease, then your arrangement would also decrease in line. If after the sale of the property the loss increased, then you would not be expected to increase your arrangement." Sounds reasonable doesn't it at first glance but who does it benefit? The real purpose is obviously to get you to acknowledge the debt before they proceed to sell the property. Why? Because it doesn't matter if they do sell it for the maximum loss by under-marketing it etc. because you've agreed you'll be liable. Quite clever isn't it.

3. I have now sent a copy of the Halifax's letter to Trading Standards asking them to investigate it's legality. How can they make threats over an anticipation? If you were to phone and make arrangements based on this you would be accepting the alleged debt. I believe that by accepting it you would then have given them an implicit licence to sell at any figure of loss within the amount estimated. I believe that this could possibly be termed deception as you would also be jeopardising your rights to question their actions.

4. Write to the Halifax and ask for a breakdown of the alleged debt described as an "estimated shortfall" (Do not admit any liability)

5. They will then probably reply as in my case with this type of breakdown:

* Amount Owing(includes projected interest to date of sale) ###,###.##

* Approximate Costs # #,###.##

* Minimum expected sales proceeds ###,###.##

* Estimated loss ###,###.##

Note the words "Projected", "Approximate", "Expected" and "Estimated" will probably be used!

Needless to say it's ridiculous to be expected to admit to this alleged debt. So write and tell them so and that you will not be negotiating on this alleged debt.

6. They have now shown their hand! The minimum expected sales proceeds will be based on the lowest valuation as in my case. You have the right to demand these valuations especially as they have clearly based the alleged claim on the valuations and not the actual sale price!

7. Ask them also what the actual date of sale is that they have calculated the projected interest to. As in my case it's probably going to be 3 months from when the property was placed with the Estate Agents.

8. Once you've found out the exact date the property was given to the Estate Agents to handle then, if possible visit the property to check: That it's been cleaned, garden tidied etc. That a "For Sale" sign is up. Take a camera and photograph it if there isn't one or get a witness. Also look for postholes in the garden. Why? Because as in my case they might say the sign had been stolen ! Visit the Estate Agents: check your property is in the window or displayed inside. (They won't know who you are). If it is not displayed ask about the availability of properties where it is located. If you are shown yours, show interest and ask for a copy of the same sales particulars.If they don't show yours just get the name of the sales person for future reference.

9. Later check the sales particulars in comparison with others for positive selling points: Located in Cul-De-Sac, Off-Road Parking etc. If they have neglected to give any you should be pleased (They may be proven negligent). They will almost certainly have neglected to mention "No Chain" or "Vacant Possession". If they have then the case for under-marketing grows stronger as Estate Agents I have surveyed cite this as one of the best selling points for a property.

10. Always ask the lenders if they are ensuring that the Estate Agents are marketing the property in the same way that they market the other properties they handle. They usually won't actually state they have checked this themselves but simply say that the Estate Agents have "assured" them that this is the case.If so and you have evidence of under-marketing then the assurances can be later proven worthless and it will expose the lender to recent case law.

This questioning is really a double-edged sword for the lender because they'll probably reply in some manner that they "believe" it to be marketed in the same way. The sword can then be used to say Ok, I don't believe it but you seem to, therefore it is only reasonable to expect the fees that are charged by the Estate Agents to be "normal" (subject OF COURSE to the normal discount that is usually given when sole agency has been granted - It will have been).

11. The Internet: I believe that at this time after my experiences that it can be proven a reasonable step that a lender should take steps to ensure that the property is advertised to as wide an audience as possible. This means the Internet. Nearly all Estate Agents have their own or are affiliated to a property web site. In the comfort of your own home you can then compare how they have decided to market your property in comparison to others. You can also get printouts! In my case it was glaringly obvious that they were under-marketing it.

I hope in the near future to be able to provide this site with a page of links to the main high street Estate Agents websites.

-- Tony Hayter (Tony@Hayter.com), October 04, 2000

Answers

I can confirm Halifax does have a policy of asking for shortfall settlements before it has sold the repossessed property.

I have documentation from another - settled - case where this has occurred.

You will also find some references to this practice, including Halifax's justification of it, in the long Halifax interview in the Interview section of the site.

Lee

-- Lee (repossession@bigfoot.com), October 04, 2000.

I am concerned that lenders such as Halifax (see above) and Abbey National (see their infamous warning-free Income and Expenditure Forms) are effectively 'entrapping' people into admitting liability for some very dubious debts. In other words, people are being deceived into placing themselves into 'incriminating' situations. Ring any bells? That's right - it's now possible to fight back under the Human Rights Act articles 6 and 8. If any person so deceived ends up in court, they could claim that they cannot possibly have fair hearing because they have been entrapped into admitting a liability, in tandem with having their privacy invaded. Maybe the lenders have finally lost one of their nastiest little weapons? It's a thought. E.

-- Eleanor Scott (eleanor.scott@btinternet.com), October 07, 2000.