My partner and I had problems starting last November when he was signed off work by his doctor due to injury for two months, then when he was ready to go back to work they made him redundant. We explained our problems to our mortgage lender, Abbey, and forwarded doctor's notes etc.

We have continued to pay something towards our mortgage every month, but have still built up some arrears. Abbey now want the full amount of arrears in one go. We tried to come to an arrangement with them but they don't want to know. My partner now has a full time job and we have been paying the full mortgage amount each month for the last couple of months. Because we couldn't afford the whole amount of arrears in one go they had their solicitor write to us, giving us seven days etc. Our arrears were £2800, we then managed to pay £1,500 off the arrears, leaving us with £1,300. We have also been paying the full mortgage amount each month on top of this. They still didn't want to come to an agreement for the remaining arrears, even though we paid a large chunk off, and so applied for a court hearing. To add, when I phoned abbey to discuss they said it was up to the solicitor and that they couldn't touch the account now. When I spoke to the solicitor they said it was Abbey's decision, so I phoned Abbey back and they said they can't help. So I haven't been able to discuss it with anyone.

I have forwarded to the court everything, receipts for amount paid, proof we've been paying the mortgage for the last few months, reasons for problems etc. etc.

The court date is near now and I'm just getting nervous because we've had a letter today from the solicitor saying that they are asking the court for possession next week and we'll have 28 days to get out. They've also added at the bottom that's it's a shame to lose our house as there is a lot of equity in it!!!! Is the judge likely to order repossession for £1,300? Any advice welcome!

Sorry this is long!

-- (mburfield71@hotmail.com), August 06, 2004

Answers

If I understand your posting correctly Abbey has instructed solicitors to obatin a possession order and although you do not say so I suspect Abbey will also seek money judgment against you. You don't say what provoked you into your efforts to repay arrears but I suspect this may have been as a consequence of Abbey issuing cout proceedings against you and the Lender will probably add the costs of the hearing to the security. Although its legal advisors are unlikely to mention costs at the hearing but you should so as the court at least considers that the costs claimed are reasonable.

If you cannot afford legal representation you should attend the hearing in person and seek to adjourn the proceedings or suspend any possession order that the court might be minded to issue on terms based on what you can afford over upto (depending on what the court decides)the remaining term of the mortgage towards arrears (Administration of Justice Act s36). Be careful this amount will be on top of continuing to repay future mortgage instalments. Again the court will decide based on the information you provide for its scrutiny how long it allows for you to fully repay the arrears.You should be aware that it would be favourable for the court to adjourn the proceedings rather than issue a suspended possession order. However,if you do not keep up all the payments the court orders you to pay this will result in either increasing the costs that are added to the security and or eviction. Sorry I cannot be more positive but I think I have outlined the worst case scenario and if the judge sees that you have done your best to remedy any mortgage default then you might be able to convince the court not to allow Abbey to add its costs to the security. Good luck and if you want me to elaborate on any of the points I raise feel free to place another posting on the home repo site.

-- Anon (moto10@hotmail.com), August 06, 2004.

Take a look at the postings by David Buttons and myself under "Reposession process" dated 9th April 2003 re Suspended Possession Orders and the "Norgan" case. If you have difficulty finding it let me know & I'll paste it up again. I'll also check to see if there is anything new to add. Please though check out all info with a qualified lawyer. So much for the Mortgage code!! Have you seen it ? I don't think Abbey National have. Perhaps a reminder to the MD of Abbey would be in order. I would also contact your local MP and consider contacting the National Press.

The following is taken from a previous posting, can't remember where...

Many county courts now have duty advice desks on mortgage possession days. These are staffed by advice workers from local CABx, independent advice centres, money advice centres, local authority housing depts, solicitors and law centres. The adviser on duty can advise you about your rights and may be able to represent you in court. To my knowledge, the following county courts in London have mortgage duty desks:

Bow, Brentford, Willesden, Shoreditch, Central London, Romford, Ilford, Bromley, Croydon, Wandsworth, Edmonton, Barnet, Uxbridge.

Also NACAB (National Associations of Citizens Advice Bureaux) has a website where you may be able to find the address and tel no of your nearest CAB.

FIAC is the Federation of Independent Advice Centres. We have over 950 advice centres in membership across the UK. About half offer debt advice, eg Mary Ward Legal Centre, National Debtline, Bristol Debt Advice Centre etc. All members give advice on any area which is completely free and confidential. To get details of your nearest FIAC member centre, contact FIAC on 0171 489 1800 or write to: Nick Pearson, National Money Advice Co-ordinator Federation of Independent Advice Centres 4 Deans Court St Pauls Churchyard London EC4V 5AA. Fax 0171 489 1804.

Mark

-- M Amos (idgroms@hotmail.com), August 06, 2004.

Here is an extract from CML Statement of Practice January 1997 Handling of Arrears and Possessions

The Abbey National are members of the Council of Mortgage Lenders and should adhere to the following, see the full statement on: http://www.cml.org.uk/servlet/dycon/zt- cml/cml/live/en/cml/pub_info_arrears

2. The following general principles are relevant to the question of mortgage arrears -

(a) When a borrower falls into arrears, the problem should be handled sympathetically and positively by the lender. The lender's first step will be to try to contact the borrower to discuss the matter.

(b) As soon as financial difficulties arise, the borrower should let the lender know as soon as possible.

(c) Once contact has been established, a plan for dealing with the borrower's financial difficulties and clearing the arrears will be developed consistent with the interests of both the borrower and the lender.

(d) Possession of the property will be sought only as a last resort when attempts to reach alternative arrangements with borrowers have been unsuccessful. The borrower will remain liable for the full mortgage debt.

Mark.

-- M Amos (idgroms@hotmail.com), August 06, 2004.

16a in the statement alearedy mentioned above is particularly interesting...

CML/Government Statement on Arrears and Possession Procedures

16. In December 1991, after detailed discussions with the Government, the CML reaffirmed that it is the policy of lenders to take possession only as a last resort, and to handle arrears problems efficiently and sympathetically. A formal announcement was made by the Chancellor of the Exchequer in the House of Commons and at a CML Press Conference on 19 December 1991. The announcement referred to the fact that -

(a) Where borrowers have suffered a significant reduction in their income but are making a reasonable regular payment, lenders do not seek to take possession.

(b) In the knowledge that income support will in future be paid direct, lenders will not take possession in cases where mortgage interest payments are covered by income support.

Mark.

-- M Amos (idgroms@hotmail.com), August 06, 2004.

Some further info obtained for you....

I would have thought that the worst case scenario is a suspended possession order (SPO) on terms of current mortgage instalment plus something off the arrears. C&G v Norgan (CA) allows the court to spread the arrears payments over the remaining term of the mortgage if this is necessary.

It is worth requesting the court to adjourn the case 'sine die' (indefinitely) on the above terms on the basis that no possession action should have been taken as the borrowers had paid a large amount off the arrears and were trying to negotiate an arrangement to clear the rest. If the court will not do this, the fall-back is the SPO.

I would have thought that it could be argued that Abbey had not complied with the CPR 'overriding objective' in that they refused to negotiate reasonably and did not do anything to avoid the necessity of court action - in other words, the possession action was unreasonable, unnecessary and unjustified in the circumstances.

Because of the non-compliance with the CPR in bringing an unnecessary claim, the court should be asked to order that 'the claimant does not add the costs of this action to the security or otherwise recover them'. If the court makes no order as to cost, Abbey are able to add them to the security (i.e.to the debt) under the terms of the mortgage. These costs can be considerable.

If Abbey are allowed their costs, these will be added to the mortgage and will accrue interest so it is important to consider what (extra) interest orother charges are accruing and try to increase the monthly payment to cover these

The court may not be prepared to disallow Abbey's costs but, as above, I think the worst scenario is an SPO. It is important that the borrowers attend court to try to persuade the judge that they have made every effort to keep Abbey informed of their circumstances, paid what they could while in financial difficulties and since getting back into work, have resumed the full monthly payment and paid a large amount off the arrears. Abbey's lack of cooperation needs to be highlighted, and it would be useful to take as much detail of the contacts with and offers to Abbey/their solicitors (and their responses) as possible, e.g. in the form of a chronological log or diary (some/all of this may have been sent to the court already). Non-compliance with the Mortgage Code should also be highlighted, with copies taken to court to give to the judge and the other side (print them off the net).

The borrowers should write to the court and Abbey's solicitors asap stating that they intend to ask the court to adjourn the action on terms of the monthly instalment plus £X towards the arrears (this needs to be as much as can comfortable afforded but in any event enough to clear the arrears by the end of the mortgage) and wish to oppose Abbey's right to costs on the grounds that the claim was premature and unnecessary etc. It is better to declare your intentions as soon as possible and not raise issues at the hearing without warning. The court does not like this. An income and expenditure statement should be taken to back-up the offer. It is possible the hearing will be adjourned to give the case more time to be heard. If this happens, the borrowers should start paying the sums offered asap

Hope this is helpful.

-- M Amos (idgroms@hotmail.com), August 08, 2004.

hi,

I've been trying to look for the page you mentioned re: David Button and yourself. Can you direct me to it? Thanks

-- (mburfield71@hotmail.com), August 09, 2004.

I've posted them up again, see below:

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.

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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.

-- M Amos (idgroms@hotmail.com), August 09, 2004.