My mortgage lender is taking me to court

Summary: This article explains what happens when a mortgage lender begins court action, and what may happen at court.

Falling in to arrears with mortgage repayments can be a stressful time, but often the issue can be resolved by communicating with the mortgage lender. However, there are occasions where the lender may begin court action in an attempt to reclaim the money owed.

Does a mortgage Lender have any obligation before taking court action?

Since October 2004, all mortgage lenders have to follow the rules and regulations of the Financial Services Authority (FSA). These state that the lender must treat the customer fairly and give reasonable opportunity for the individual to repay the outstanding amounts. Furthermore, they must follow what is known as a Pre-action protocol. Under this protocol, the lender must provide information to the individual about their legal rights as well as details of the outstanding mortgage, how much the arrears are, and any interest or charges that are being made. The must also give a fair chance for the individual to repay the arrears.

What happens when court proceedings are sought?

When a mortgage lender starts legal proceedings, the debtor will receive a ‘claim for possession of property’ from the county court which explains what is happening and why. The individual should also receive details of the claim from their mortgage lender. The mortgage lender must follow the rules laid out by the FSA as well as the Pre-Action Protocol. They cannot start legal proceedings if discussions are underway to clear the arrears, or a formal complaint is being investigated.

What outcomes may there be following court?

Possession Order. If an outright possession order is given, the lender can take possession of the property and the individual is given a deadline to vacate. Suspended Possession Order. This is where an individual can stay in their home as long as they repay the arrears under the conditions laid out in the order. Failure to comply can result in the lender applying for full possession, and at this stage they are not required to notify the individual. A money Judgement. If a possession order has been made, but the value of the property does not cover the full amount owed, a money judgement requires the individual to make up the difference. So as well as losing their home, they will still have an outstanding debt to the lender. Adjournment or dismissal. There may be circumstances where the case is put on hold, if more time is required to gather the full facts for example. If the judge finds the lender has no case to claim a possession order, then it could be dismissed altogether.

Can I appeal a decision made in the court?

It is possible to appeal the decision if the individual feels procedures weren't followed correctly, the judge did not have all the facts or the law was not correctly applied. An appeal must be lodged within 21 days.