Reposession process

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I'm hoping someone can help. Northern Rock are telling me they are going to look for a court date to take posession of our house (mortgaged) as we are in arrears. Can someone please tell me the process they should follow and some idea of timescale? It's quite a daunting and scary prospect and the information will help clear and focus my mind. Many thanks in advance.

-- A Gibson (bodohmmi@hotmail.com), April 09, 2003

Answers

Have you tried contacting your local council housing department and/or social services? They can sometimes help prevent a possession taking place. Some of them too have professional advisory centres. I'll try and find the answers to your other questions, unless someone else knows?

Mark.

-- M Amos (idgroms@hotmail.com), April 10, 2003.


What will happen is this:-

1. NR will apply to the court for a hearing date. You will then be sent a summons for possession of the property. That summons will contain a response form upon which you send your reply in to the court either admitting or denying their right to possession of the property. If you are in arrears, you have to accept their right to a possession order.

2. Before the hearing date, negotiate with your lender to accept something off the arrears plus the ongoing monthly instalments.

3. THIS IS MOST IMPORTANT - GO TO THE HEARING - THIS IS PARAMOUNT AND TAKES PRECEDENCE OVER JOBS, DEATH - EVERYTHING!!!

4. At the hearing, say what arrangement you have reached with your lender and ask the Judge to make a suspended possession order under the Norgan rules (which effectively allows you the rest of the mortgage term to pay off the arrears if necessary!) Have with you details of your income and expenses and be prepared to show the judge that you can indeed afford your offer.

5. The judge will make a suspended possession order - this will state that you have to give up possession by such and such a date - usually 28 days hence - but the order is suspended so long as you pay ..........(i.e. what you have agreed).

6. The judgment for the whole of the money due under the mortgage is also suspended (so neither the possession or the judgment will go on credit bureau records) and it only becomes "unsuspended" if you do not keep to the terms under the order.

7. If the worst happens and you default on the SPO arrangement - you can go back to the court to ask them to vary the order. If you have defaulted since the SPO then the lender can issue a Warrant for Possession which allows the Bailiffs to come and evict you. If you reach this stage, all is still not lost because you can apply to suspend the Warrant - but you will have to show good reasons as to why the judge should give you another chance at this very late stage.

-- David J. Button (davidjohnbutton@supanet.com), April 10, 2003.


Here is some more info given by a solicitor on the process, it's a bit technical in places as you can see, so if you have any further questions just post them up.

Whether the lender can take possession proceedings depends on the terms of the mortgage - as per limitations - e.g. two or three missed payments.

If sufficient payments have been missed, the lender must give the borrower'notice before action', i.e. a warning that proceedings are to be issued if the arrears are not paid. Failure to give notice before action is not fatal to the proceedings but will usually mean the claimant will not get any costs.

The above applies to non consumer credit mortgages - if it is regulalated by the CCA, it is necessary for the lender to serve a 'default notice' before issuing. If this is not done, it is fatal to the claim (although the notice can then be served and the claim reissued).However, if it's a first mortgage, it is very unlikely to be covered by CCA.

Following the notice before action, a possession claim is issued. This will include a hearing date which must be at least 28 days after the claim is served. What hearing date is actually specified depends on when the court next has time free. It could be a month or it could be a number of months (e.g. B'ham) depending on how big/small the court is and how busy it is.

Assuming the borrower wishes to hang on to his/her house, s/he needs to complete the N11M, the form that comes with the possession claim (N5). There is guidance (N7) which accompanies the other paperwork. The information required on N11M is pretty self explanatory.

The N11M should be filed with the court as long as possible before the hearing date. It is generally not a good idea just to turn up to the hearing with it, although it's not fatal.

It is essential that the borrower/defendant turns up to the hearing - it doesn't go down well not to.

Again, assuming that the borrower(s) want to keep their home, they must make an offer of payment of arrears (on top of the normal monthly instalment). This should be included on the N11M and they should go to the hearing to support their proposal.

Under the Admin of Justice Acts, s36 of the 1970 Act, and s8 of the 1973 Act, the ct can make a suspended possession order(SPO)where the arrears can be paid in a 'reasonable period'. The Court of Appeal has interpreted this as the remaining period of the mortgage (Cheltenham and Gloucester v Norgan [1996] 1 All ER 449). Lenders will often press for repayment over shorter periods, but the ct will be bound by Norgan unless there are unusual or exceptional circs. However, it is not in a borrower's interest to look for repayment over longer than necessary - due to interest on arrears and other default charges, the longer they take to clear arrears, the more they will end up paying.

In respect of interest on arrears and other default charges, it is important to consider the offer of a (monthly) arrears payment and the (monthly) arrears interest and other charges to ensure that there is a 'net' repayment of arrears (over and above the accruing charges) which will clear the arrears by (at least) the end of the term as per Norgan.

Should a suspended order be made which the borrowers later have difficulty sticking to, application can be made to vary the terms of the SPO by reducing the amount towards arrears (ct form N244 + 30 fee (unless on benefit and exempt)). There may well be difficulties, however, if a variation would mean that the arrears will not be cleared by the end of the mortgage term.

PS The AJAs do not apply if the mortgage is regulated by the CCA, but similar, and sometimes better orders can be made under the CCA, although this is not always straight-foward.

Hope you can still focus after all this, and it's not too fatal :). Good Luck.

Mark



-- M Amos (idgroms@hotmail.com), April 10, 2003.


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