Property Repossession shortfall query

[Aruamom]

This is a question for someone who has been through a property repossession with a shortfall and made an arrangement with the lender to pay the shortfall.

Unfortunately I’m in this situation and wondering whether if a second owned property is repossessed, can the lender pursue me to sell my home to pay for the payment shortfall or if they will accept a payment arrangement?

either might be possible, ask them. If you are asking if you can be made homeless by defaulting on a loan, the answer is yes.

Providing you can reach and maintain a payment arrangement the lender is satisfied with, mortgage shortfall can usually be treated the same way as other non-priority debts. If your shortfall is very large, or the payment arrangement you’re proposing isn’t feasible (i.e. £100 per month on a £50K debt) or you don’t keep up with payments, the lender can pursue court action, or force you into bankruptcy to recoup the debt from the sale of other property or assets.

Can I ask gently why you didn’t already come to an arrangement and waited for repossession. And why you’re asking on Mumsnet and not the lender. I’d speak to them urgently, it depends on how much you owe and I guess how long this has been going on and if you’ve made previous promises to pay and have not done so.

OP’s posting history indicates she’s been through a difficult and drawn out divorce involving an ex stalling financial settlement and having to obtain a court order for sale of a property - so I’m going to guess related to this.

Ah ok, thank you

AFAIK, you had a property, 1 mortgaged to Bank A

When the loan went into arrears Bank A takes possession of the property and sells it

You also own Property 2 which we shall assume is mortgaged to Bank B

Bank A can seek to get a charging order against property 2 for any debts you are 'in default' with BUT it can only force a sale IF you dont comply with the terms of the order. ALSO Bank B has the 'first charge' so Bank A will only get what is left to cover its debt - if anything

Might that help?

It is technically ex’s property. But for the lender we are both named which makes it my problem too. He has dragged it until it is in negative equity unfortunately and now I’m having to consider challenging possibilities.

The bank has not yet taken possession or sold property A. I’m ill with stress and am thinking of selling my home and returning to my country of origin. Would this be seen legally as me committing fraud? I’m happy to agree a payment arrangement once the repossession and sale of property A is complete (which may take up to 2 yrs), but don’t feel my health will permit me to continue as is, i (and my son) need to be near my support system.

You really really REALLY need to talk to your creditors before you do anything.