First of all - don't panic.
Lenders are legally allowed to commence repossession action if you are two months behind. However, this is costly, takes time, the Courts frown on lenders who have not engaged with the borrower to resolve the matter, and consequently most lenders will try to agree a way forward without getting too heavy. the Government doesn't want lender's repossessing people (it tends to reflect on their financial policies backfiring) so lenders are less inclined to go for the jugular.
There is also now in place a 'pre-action Protocol' which requires lenders and borrowers to work together. If the lender doesn't play ball then the Courts can reject a repossession order.
The aims of this Protocol are to –
(1) ensure that a lender or home purchase plan provider and a borrower or home purchase plan customer act fairly and reasonably with each other in resolving any matter concerning mortgage or home purchase plan arrears; and
(2) encourage more pre-action contact between the lender and the borrower in an effort to seek agreement between the parties, and where this cannot be reached, to enable efficient use of the court's time and resources.
This Protocol will help you if you play ball yourself.
You made a commitment to pay the mortgage. If you can't, as opposed to won't, then you must contact the lender and explain the situation. Again, most will be sympathetic but only if you don't lie to them, and act with integrity. Tell them as much about your financial situation as you can. Be honest.
Try and have some kind of plan, even if it is long term , which will demonstrate to the lender you are taking your responsibilities seriously and will eventually repay them what you owe. for example, would a period just paying the interest help you? If the debt is not getting bigger the lender might allow a period of interest only, which with low interest rates at the moment, might help until you get back on your feet.
If you really cannot pay this mortgage well into the future, it's time to think about alternative housing - a smaller house you own, or one you rent. Do NOT borrow more money to pay the mortgage - this will only cause more problems.
Sometimes, for genuine problems, the lender might consider re-setting the account so the arrears are treated as part of the total debt, and you start afresh with a slightly bigger mortgage but no arrears to catch up on - useful if you have been through a dodgy period financially (eg redundancy) but now have income, although not enough to clear arrears.
If your lender is unhelpful, contacting Citizens Advice may allow you to put a plan together. They can also help you with what to say if you are summonsed to a repossession hearing.
Above all, COMMUNICATE. Don't bury your head in the sand. If you simply won't pay, as opposed to can't, then failure to keep in touch with the lender will mean they have no option but to bring the fiull might of the legal processes down on you. | 06.17.11 @ 11:50