Many people ask “What does repossession mean?” They want to know the rules of property repossession in the UK.

Repossession of a home or property on which the lender holds a lien is enforceable under UK law. Repossession permits the lender to assume ownership of a home when a mortgage or secured loan on the property isn’t paid as agreed. When the buyer uses a mortgage to purchase a property, the lender owns the right to make financial claims against it. A mortgage is a type of securitized loan, in which the home itself is used as collateral to write the mortgage.

The home buyer still owns the property when he or she purchases a home with a mortgage loan. However, if the buyer doesn’t make each mortgage payment in full and when it is due, the lender may attempt to repossess the property to get their money back.

Repossession includes principal, interest payments, and fees assessed on the past due mortgage payments:

  • The Court must decide if the mortgage lender is legally allowed to repossess the property.
  • If the owner doesn’t vacate the property, the Court must determine when or if bailiffs must evict the property owner.
  • When the Court determines the lender has the right to take control of the property, it may sell the property to recover monies owed and any past due accrued interest and fees.

How to Stop the Repossession of a Home

Repossession is usually the last resort of the lender to recover past due mortgage, and the lender may only repossess the property if due process is followed. The lender must follow legal rules to arrive at a mutually agreeable solution. In other words, the lender must consider an agreeable payment plan before it can attempt to repossess the property.

Protection of homeowner rights. Even if the buyer does not qualify for legal aid, it’s possible to reach out to a no-cost housing adviser. In many cases, a housing adviser can help the property owner resolve mortgage issues without going to court. Don’t wait, get UK repossession advice now.

Once the homeowner receives letters concerning past-due mortgage payments from the lender or receives advice from the Court concerning a court hearing date, it’s time to consult a legal professional. The laws concerning repossession are complex. If the lender didn’t follow the legal rules concerning repossession, it is important to engage legal assistance to protect the homeowner’s rights.

Lender obligations to the property owner. The lender must follow the protocol rules before repossession proceedings are initiated. If the lender fails to follow the rules prior to initiating a repossession action, the Court may:

  • Stop the lender from adding new costs to an existing balance
  • Require the lender to reimburse the borrower/property owner for legal defense costs
  • Delay the court hearing regarding the repossession to provide the owner enough time to negotiate a repayment plan with the lender

If the lender doesn’t follow the law, the owner has grounds to stop the repossession process. UK Law says the repossession process may be halted at any stage.

Obligations of the property owner. Borrowers/property owners also must abide by legal protocol rules. The property owner must be prepared to show the Court that he or she maintained contact with the lender (and assumed financial responsibility by responding to letters and phone communications from the lender).

The Court wants to know that the property owner made an attempt to renegotiate terms with the lender and that he or she explored the options available under the law to heal the mortgage default.

The lender’s obligations before initiating a repossession action. Lenders must act reasonably and fairly before starting a repossession action. The lender must entertain reasonable proposals made by the owner to pay mortgage arrears. Failure of the lender to meet certain obligations may be grounds to stop the repossession of the home.

The lender must attempt to discuss the property owner’s finances and provide a “reasonable chance” for him or her to catch up on payments. UK law requires the lender to send brochure information from the National Homelessness Advice Service (NHAS) and the Financial Conduct Authority (FCA).

Importantly, the lender must write to the homeowner in clear, understandable language. If the lender sends information that the owner can’t understand, the owner is required to advise the lender about the difficulty.

The lender must also provide specific details concerning:

  • Current monthly installment amount
  • Mortgage payments made in the past 24 months
  • Total amount of payment arrears
  • Current mortgage balance
  • Charges and/or interest to be added

Mortgage arrears proposals. The law says that the lender is required to evaluate mortgage repayment proposals submitted by the property owner/borrower. If the lender doesn’t agree to the proposal, he/she must write an explanation of the rejection within 10 business days.

The law says that the lender must evaluate all reasonable proposals to enable the property owner to keep the home. If the lender presents a counter-proposal to solve the problem, the proposal must be easy for the borrower/owner to understand. The lender must provide enough time (“reasonable time”) for the owner in mortgage arrears to evaluate the proposal.

Once an agreement is made with the lender, it’s essential for the borrower to keep it. If the borrower breaks the new agreement, the lender can initiate repossession process after serving 15 business days’ notice. Get more information on house repossession – what happens after and find out how you can stop it immediately.

Stop Repossession with a Repossession Loan

Apply for a repossession loan to stop repossession of property. The repossession lender allows the borrower to use funds at a specific interest rate over a certain time period. A repossession loan may help the property owner to consolidate other outstanding debts as well.

How to Stop Repossession of a Car

When a buyer purchases a car on credit, the auto itself secures the loan. Like the home mortgage, the car loan is a type of secured loan. If the owner of a financed car misses one or more payments, and he or she is even two or three weeks late on a past-due payment, the lender can initiate repossession of the vehicle.

The borrower has several options to either delay or stops repossession of the vehicle:

Communicate with the lender. Most finance companies don’t want to repossess a financed vehicle but, if the borrower doesn’t pay, repossession is a last resort. Repossession is expensive for the lender in most situations because it must contract a repossession agent and pay a high fee.

After the vehicle is repossessed, the lender must clean and detail the vehicle. In most cases, the lender will then sell the vehicle at auction and at a discount. For this reason, most lenders want to work with the borrower/owner and bring the loan back to current payment status.

Sell the vehicle. It may be possible for the borrower to sell the financed vehicle before the lender can repossess it. In this scenario, the borrower then uses sale proceeds to pay the remaining balance of the car loan so that the title clears to the new owner.

If a shortfall occurs between the amount the borrower owes on the car loan and the sale proceeds, the lender may be willing to structure a payment arrangement to cover the negative car loan balance. It’s important to discuss this with the lender before assuming an eventual payment arrangement, however.

Understand the law concerning car repossession. When the UK borrower finances a vehicle, the lender puts a lien on the car title to ensure it may legally repossess it if the borrower defaults. Before signing the loan agreement, the borrower should read it with care.

Delay Repossession

Repossession of property can be delayed or stopped when the lender doesn’t abide by laws pertaining to the repossession process. Since most property owners/borrowers don’t know the letter of the law, it is essential to seek advice about repossession and the protocol lenders must follow.

Of course, engaging legal help can be expensive. Finding an experienced legal adviser can be challenging.

Never voluntarily return the keys to the car or home to the lender. Continue to communicate with the lender to find a reasonable solution to avoid repossession.

Stop Repossession of a Car with a Repossession Loan

Repaying the lender what is owed can stop repossession, but where does the owner/borrower obtain financing at this point to achieve the goal?

Apply for a repossession loan to stop repossession of a financed vehicle. A repossession lender places a lien against the vehicle at a certain interest rate over a specific time. A repossession loan can help the borrower to consolidate debts, too.

Resources:

http://www.nationaldebtline.co.uk

https://www.stepchange.org/