Response to Guy from Justask,(posted 7367 days ago)Many thanks for reading my points.
Of course it is not in anyone’s interest to go to court, as there is always the problem of incurring legal fees on top of the claim. However it is really up to the lender to choose whether or not they wish to go to court which falls mainly on the feasibility of maximising their return from the short fall balanced with their ability to substantiate the shortfall claim. Of course there is no reason why some strong minded folk may wish to got to court themselves in an attempt to challenge the lenders, sadly in some cases a futile attempt of moral standings. Thus again much depend on the ex-borrowers financial situation or the lenders position, such as:
a. If he/she is property owner or has access to equity in another property. In this case if one does not offer a high percentage of the shortfall the lender will most certainly go to court to get judgement with the sole intention of then applying for a charging order.
b. If the offer from the borrower is close to what the court may consider as appropriate then the lender would more than likely take up the offer. (just make sure it is a full and final, with the normal conditions applied).
c. If he/she doe not own their property or have no equity interest in another the lender would be less inclined to go to court in view of wasting more money, however if the only option in maintaining that interest, they would no doubt at the 10/11yr point go to court even if it is just to keep the shortfall claim open thereafter. A CCJ can be chassed for up to 6yrs and then would have to back to the courts and justify it.
d. The ability of the lender to justify its claim is also very important thus just as important to chase the lender for every bit of information that may reduce the claim or even fingers crossed be strong enough for a claim to be struck out should it go to court. The lenders appear to rely on the ignorance of us common folk (big mistake, when you corner someone it’s a case of ‘cry hell and let loose the dogs of fury'.
OVER THE YEARS I HAVE SEEN TOO MANY PEOPLE FIGHT INAPPROPRIATE CASES IN COURT AND END UP LOOSING, WITH HEAVY COSTS PENALTIES AND SIX YEARS WORTH OF INTEREST ON TOP.
Hence the reason why you tend to get the court summons at the 5yr 10/11mth period just to get the interest element added on. What you have to remember is that if you do pay the initial shortfall claim they will not tell you about the interest element until after, then come chasing you for it. Or it may be the case that the lender is only chasing you for their element of the claim and the MIG claim would follow in due course if not at the same time.
Under selling is one of the main defences, however it still has to be proved to some degree, how, well one would most certainly need to approach the Land Registry and get the average house selling price of that post code during the period that the property was sold. Additionally one would need the lender to show that they had made every effort of obtaining the best price for the property and sufficiently advertised the property by providing copies of the sales literature and advertisements. Any shortfall here would put a serious argument to underselling the property.
The lenders will be pursuing the mortgage element (principle), charges, interest for that year and interest on the amount owed (which is the statutory interest). The lender would appropriate any monies received against interest first followed by any charges and cost (this is usually indicated in the deed if not as Guy had pointed out would be seen to be by the courts from previous precedents). They do this so that the shortfall claim can be pursued for a longer period, remember they have 12yrs for the mortgage element.
ALSO, I AM CONCERNED ABOUT HOW LENDERS WILL REAT NOW TO SARNs. ANY RECENT EXPERIENCE WOULD BE HELPFUL.
Hence the point of making an application for ‘pre-trial disclosure’ gets that information that might not be so forthcoming. Consider this, it’s not the information that they provide which of concern but the in formation that is not there, so one should always consider what is missing and more importantly why is it missing.
I HAVE COME ACROSS NUMEROUS CASES WHERE LENDERS WILL NOT EXCHANGE INFO AND DOCUMENTS IN BREACH OF THE OVERIDING OBJECTIVE OF CPR 1 AND THE PRE-ACTION PROTOCOL PRACTICE DIRECTION, BUT THIS USUALLY ONLY RESULTS IN COSTS PENALTY, IF THAT.
The cost penalty can it’s self be quite damaging i.e. pursuing a claim for £6k the legal fees would be around £3.5k, if the lender is only awarded £3k and loose the cost element then they are out of pocket by £500, sadly though the borrow still owes £3k!