We had our home repossesed in 1995 and in 2001 received a shortfall claim for £9,954. We then received several letters offering us a final settlement of £2,450 but hadn't got the spare cash to pay it. We carried on getting the offer of final settlement, every Jan and July, but if my memory serves me correctly we havn't heard anything for about two years, we moved house a year ago and we have had mail given to us from the person who now lives there, and there has never been anything about the shortfall.

We now want to buy the council house were in but are afraid of doing so incase they try to claim the house once we have bought it to cover the shortfall. We don't know if the 12 year rule applies here, but if it doesn't we are willing to finalize the situation by making a final settlement, I have previousely been advised that if they are offering £2,450 we could get it down to £1,500, how can we find out our situation?

Also, how would all of this reflect on our application for another mortgage and when I once got the info from the council about right to buy it asked on the questionaire if you had ever had a home repossesed, why? Are you not allowed to buy your council house if you have?

I know i am asking a lot of questions, just hope someone can help us understand our situation and advice us of the next best step towards our goal of owning another house and being able to put the past one behind us onece and for all.

Thanks san

-- sandra patten (santrev@lineone.net), June 10, 2004

Answers

From the information you give, and the fact that you have moved house, it looks to me as if the collection trail has gone cold.

You don't say who your lender was - if it is one of the CML members, then they have a voluntary code that they will not chase for shortfalls after 6 years which of course for a repossession in 1995 has been exceeded. Other lenders who are not CML do chase for 12 years after which the debt is statute barred.

The problem is that if you do acknowledge the debt and try to get a settlement figure, you restart the collection clock (i.e. the 12 years starts again (if 12 years applies that is).

As to the council question - I would put no to the bit about having a home repossessed. You will ony have to put your current and previous address and so long as there are no judgments or CML data against either property, you will be OK. Get a copy of your credit report from Experian and Equifax (both of which you can do online) and check your credit history to be sure - if they are clear - get on with it and get that house bought before the right to do so disappears as most labour councils are against disposals of council property!

Good luck

-- David J. Button (davidjohnbutton@supanet.com), June 11, 2004.

Hi John, Thanks foe your advice.

You say to put no to the question about having had a home repossesed, but the council gave us a house because we had been repossesed, won't it be on their records?

-- sandra patten (santrev@lineone.net), June 11, 2004.

You didn't tell us that in the original posting Sandra. This is going to be a case where you are damned if you do and damned if you don't. If you say on the form you have had a house repossessed - then you are unlikely to get a mortgage unless you go to a sub-prime lender.

If you put no, you never had a house repossessed and the council records show you have, then you certainly won't get a mortgage.

The best answer is to toss a coin- heads you do, tails you don't. But if you do get turned down for a council mortgage - don't give up, there will be somebody out there who will lend, albeit at a higher interest rate!!!!

-- David J. Button (davidjohnbutton@supanet.com), June 11, 2004.

So the council ask that question for them to give you a mortgage.

What if you don't want a council mortgage anyway, how do you go about buying your council house then? Do you not have to apply to the council first?

-- sandra patten (santrev@lineone.net), June 11, 2004.

My advice is to be honest. If you tell lies on any application it could come back and bite you on the bum later.

I was rehoused in 1997 after my home was repossessed. This year I made a F & F offer with the Abbey and settled everything...thanks to this site. I recently approached a well known bank (e mail me direct and I'll tell you who it was) and they made a mortgage offer with no quibbles at all and that was with me being totally honest about the repo. What the advisor told me that because it was more than three years ago that it didn't show up! I was so relieved and I had worried about it uneccessarily beforehand.

Tell the truth and then you can sleep at night.

Hope this helps!

Good Luck

Moira

-- Moira (Anderston828@aol.com), June 12, 2004.

Sorry something I should have mentioned is that I would not buy any property until you determine if a shortfall still exists. If you go ahead and it transpires you DO still owe this shortfall they could put a charge on your property.

You will have to establish the situation re the 12 year rule. You could also get a copy of your credit file which might then reveal your whereabouts to your original lender. However if you are at a stage where you want to move on with your life and stop hiding you will have to face this full on.

Your credit file (from Experian and Equifax) might show up the alleged debt and then you can work from there. Be very careful if you decide to contact the mortgage lender and ask for advice on the site regarding writing any letter to approach them re settlement. Do not go in with the max you can afford first time....they will probably refuse it and want more. Don't tell them anytiing they don't need to know especially about your plans to buy your council house. The fact you are in a council house you could use to demonstrate to them that you have no assets etc etc.

Be very careful how you go and post on the site for advice EVERY time you are not sure about something. SOMEONE will keep you right.

Good Luck

Moira

-- Moira (Anderston828@aol.com), June 12, 2004.

Sandra,

I concur with what Moira has said. Be aware that lenders/debt collectors also read this site. I am also of the opinion that when you apply to check your credit rating, this action flags up any registered debt and can be picked up by a debt collector. As regards the CML 6 year voluntary code you should read what the CML actually say:

These are extracts taken from the Council of Mortgage Lenders web site: "www.cml.org.uk/servlet/dycon/zt-cml/cml/live/en/cml/pub_info_dept". Read everything on the web page though, as there are exclusions.

In addition, from 11 February 2000, lenders who are members of the Council of Mortgage Lenders have agreed voluntarily that they will begin all recovery action for the shortfall within the first six years following the sale of a property in possession. Anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender about recovering any outstanding debt will not now be asked to pay the shortfall. The Association of British Insurers supports this approach on behalf of the mortgage indemnity insurers.

All lenders which subscribe to the Code have now agreed to adhere to it whether they are a CML member or not. You can check whether a lender subscribes to the Mortgage Code by phoning The Mortgage Code Compliance Board on 01785 218200.

I think you really should resolve the shortfall problem first as Moira says. If you don't you can wind up with a charge on the new property and that will also accrue interest!

I would first put the lender to strict proof of the debt and see if the CML vol code applies in your case, if this doesn't result and it's also impossible to raise the shortfall amount and reach a negotiated settlement, perhaps you could get another mortgage with the original lender and include the negotiated shortfall amount in that. If you'll have a lot of equity in it they might accept. Of course, the shortfall fig you would have to pay is likely to be higher than if you reached a normal negotiated settlement. Just an idea anyway. Good Luck.

Mark.

-- M Amos (idgroms@hotmail.com), June 16, 2004.