Are you looking to stop a repossession order? Find out the different sources of help with repossession and how they can help you avoid a forced sale.
Since the economy improved after the meltdown of 2009, the number of repossession orders granted by the courts have reduced considerably. The figures produced by the Ministry of Justice showed that 17,134 families had their home repossessed in the third quarter of 2009, a figure that was actually 34% lower than just 12 months earlier, during the last few years the numbers of repossessions in England and Wales has stood at around 20,000, so it remains indicative that many homeowners are either ineligible for or aren’t aware of the many options available to stop house repossession.
Ways to Stop a Repossession Order
Take time to document income and expenditure to determine affordability. Also, gather information about the value of the property relative to the mortgages and loans secured on it. No matter how bleak a situation appears, it is still possible to avoid the repossession of property. The potential options include reaching an agreement with the lender, challenging the legal validity of the agreement, a sell and rent back plan or the new government mortgage rescue scheme.
An Agreement with the Lender to Prevent Repossession
The lender is legally required to do all that is realistically possible to avoid the repossession of property. If a homeowner is able to make the monthly repayment, as well as making a contribution towards clearing the arrears, it may be possible to get a suspended possession order. This means that, provided that the homeowner makes the agreed repayment, he can continue living in the property indefinitely.
Unenforceable Mortgage Agreements
It may be possible to stop home repossession, pending the investigation of whether a mortgage agreement can be legally enforced. The judge may be prepared to adjourn proceedings so that a legal professional has sufficient time to assess whether the relationship between the lender and borrower is fair. If it isn’t, perhaps due to a usury rate of interest, the lender may find that they need to pay damages and/or re-write the contractual agreement. Cartel Client Review (a leading claims management firm) provides a free service to individuals who have received a court date for a possession order.
Government Mortgage Rescue Scheme
The government recently introduced a £285 million scheme to help up to 6,000 vulnerable families over the next two years. However, the criteria are very specific so it will only assist up to 10% of homeowners.
- The homeowner should be in a vulnerable position – pregnant, dependent children or elderly (physical or mental impairment).
- Household income must be below £60,000 per year.
- Mustn’t have a second home.
- The total value of any loans secured on the property must amount to less than 120% of the properties value. This means that negative equity must not exceed 20%.
Provided that the above criteria are met, a social landlord will purchase the property for 97% its value. They will then become the tenant of a Housing Association and pay a rent that is 20% below the market rate. As an alternative, there is also a home equity loan that is designed to assist individuals who have a minimum of 25% home equity. This can help to improve affordability.
Avoiding Repossession with a Sell and Rent Back
In order to qualify for a sell and rent back plan, the homeowner will need a minimum of 25% home equity. A property cash buyer will step in to prevent a repossession order being carried out as it means that the lender will get their money back. Whilst the offer is below the current market price, the homeowner is able to avoid estate agent fees, legal expenses and the possibility of a repossession deficiency following the property auction.
Help with Repossession
Although it is always best to seek guidance from a debt charity or the housing department at an early stage, it is possible to stop mortgage repossession at any time up until the premises have been vacated. If personal circumstances have changed and payment is now possible, it may be possible to get a suspended possession order. Others may wish to consider the various schemes offered by the private and public sector and/or a legal challenge of the validity of the agreement.