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Mortgage Shortfall - important new decision

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A County Court Judge in Warrington has ruled that the Alliance and Leicester could not succeed in their claim for an £20,000 shortfall from when the property was sold in 2002.

 

His Honour Judge Platts upheld a District Judge’s decision that the bank’s claim was an abuse of process and should be dismissed.

 

Back in 2001 the Court gave Alliance & Leicester a possession order and a judgment for the amounts due under the mortgage. The bank sold the property in 2002, but the sale did not raise sufficient funds to repay the mortgage in full, leaving a £20,000 shortfall.

 

Earlier this year, the bank brought a county court claim for the balance.

 

At a hearing in August, the District Judge threw out the bank's claim. The bank appealed.

 

Dismissing the bank’s request for permission to appeal, Judge Platts said that it was an abuse of process for the bank to bring a claim now when it already held a judgment for the mortgage debt.

 

“This decision will affect many cases all over the country” explained Nick Davis of Albinson Napier & Co, solicitor for Mrs Reynolds. “Banks often wait for many years before suing for a shortfall. Not all lenders asked for judgments when they obtained a possession order, but those who did will find that they cannot now bring a new court claim for any shortfall following sale of the property.”

 

The problem the banks face is that many of the original judgments are more than six years old, and therefore are very difficult to enforce.

 

 

 

Case details:

 

Alliance & Leicester Plc v Reynolds

 

Warrington County Court 14 November 2008.

 

 

 

Edited by citizenB
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Very interesting. Just got a letter today from Kings Legal re a mortgage shortfall (GMAC repossession about 2 years ago). Will keep you posted. (any help, pointers, always appreciated)

 

FMB

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Sorry, just a question for the legal buffs. In a scenario where a house is repossessed 2 years ago and judgment is awarded the same time as repossession, does that mean that a DCA acting on behalf of a lender has no further legal recourse to chase the debt ie Threaten court action etc. These are my own circumstances and the letter received today gives 14 days to repay the debt. they go on to threaten legal action if no reasonable settlement proposals are forthcoming. This is a "real" debt and I intend to pay it, although I disagree with the figure they are stating. It would be nice to know if I can use this decision to my advantage

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Anyone know where I can get a copy of the court case?

 

Jody


Jody123

Please note I have no legal training - the information I have has been gleaned from too many hours on this site! :-)

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In my opinion the lender can't start new court action for the outstanding sums. What it can do is commence enforcement proceedings for the judgment it has already obtained.

 

As to the figures, the judgment crystallised the amount due at the date of the judgment.

 

This will make a difference because the effect of County Courts (Interest on Judgment Debts) Order 1991 :

1. rate of interest will be simple interest at 8%

2. payments come off capital first.

 

so amount due is:

amount of judgment debt

PLUS interest at 8% from judgment until sale

LESS net proceeds of sale

PLUS interest on (judgment debt less net proceeds) from date of sale to now at 8%

 

 

Hope this helps.

Nick

 

Sorry, just a question for the legal buffs. In a scenario where a house is repossessed 2 years ago and judgment is awarded the same time as repossession, does that mean that a DCA acting on behalf of a lender has no further legal recourse to chase the debt ie Threaten court action etc. These are my own circumstances and the letter received today gives 14 days to repay the debt. they go on to threaten legal action if no reasonable settlement proposals are forthcoming. This is a "real" debt and I intend to pay it, although I disagree with the figure they are stating. It would be nice to know if I can use this decision to my advantage

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Not yet formally reported. I am trying to get it reported and will keep you posted.

 

Anyone know where I can get a copy of the court case?

 

Jody

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This will make a difference because the effect of County Courts (Interest on Judgment Debts) Order 1991 :

1. rate of interest will be simple interest at 8%

2. payments come off capital first.

 

so amount due is:

amount of judgment debt

PLUS interest at 8% from judgment until sale

LESS net proceeds of sale

PLUS interest on (judgment debt less net proceeds) from date of sale to now at 8%

 

Hi Nick,

 

just a question on the above. I thought it was up to the lenders how they applied the net proceeds of sale. In my mates case they state that it was applied to the interest first and then the capital.

 

Jody


Jody123

Please note I have no legal training - the information I have has been gleaned from too many hours on this site! :-)

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If there was a Judgment then my view is that this crystallises the debt and the statutory provisions apply, so the lender cannot apply to interest first.

 

Hi Nick,

 

just a question on the above. I thought it was up to the lenders how they applied the net proceeds of sale. In my mates case they state that it was applied to the interest first and then the capital.

 

Jody

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Brilliant work there Nick.

 

Jody


Jody123

Please note I have no legal training - the information I have has been gleaned from too many hours on this site! :-)

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That is good ndcdavis... :)

 

Was not aware of that ruling...

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Unfortunately county courts do not create precedent but their decisions can be used as a persuasive authority on other cases.

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Thanks for finding the transcript citizenb. :-)


 

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style="text-align:center;"> Please note that this topic has not had any new posts for the last 2348 days.

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