URGENT - shortfall, judgement in place from possession, want to defend

[pcr1]

I have a situation as follows:

 

- House previously owned with first and second mortgages (approx £75k first and £24.5k second - below CCA limit)

 

- House repossessed roughly 2 years ago by second mortgage holder. Money order obtained at same time.

 

- House sold some time in the interim.

 

- The first mortgage was not fully paid off, by about £3k (settlement figure would have been around about £75k, probably a bit less). They seem to have written this off. Second mortgage holder are chasing for a shortfall of the full original debt of their loan, currently £23k. House was worth c. £110k. It seems they have sold way below market value and not recovered anything towards their own debt, result being they have repossessed and sold the security with no impact on reducing the debt.

 

I estimate the property was sold for £70k, pending receipt of SAR information from lender to confirm. Registry search shows similar/identical properties in the same street selling for c. £105k at about the same time. (Again needs further clarification depending on date of sale etc.)

 

- I have asked for information about this (sale price, marketing, valuations etc.) but it has not been forthcoming so far. Last week I served a Subject Access Request under the DPA so hope to receive all information within the 40 days limit.

 

- Yesterday I received an application for Attachment of Earnings order. I understand I need to return this in 8 days which isn't a problem. However, I feel there may be a case against the company for failing to secure a reasonable price for the property, especially since they have sold it and recovered no money at all for themselves. I don't know how to proceed in this case or if I have a chance of success, especially with the AOE application having been issued.

 

Would the correct process be to apply to have the judgement set aside, then defend it? If so, what should I do regarding the application for AOE? Mention it on the N244 or reply separately stating I'm applying to have the claim set aside?

 

If I have the claim set aside, then lose my defence, can I end up any worse off than I am now other than the £60 fee?

[pcr1]

Bump - any help appreciated please.

 

Last night I checked what evidence I had stored from the time and I have a copy of the advert with an estate agent offering at £99,950 (which would have covered 1st and 2nd mortgages and left money to spare). This suggests sale at a significant value below estate agent's price (c. 30%).

 

I assume I need to submit form N244 to apply to have judgement set aside on the basis of new evidence (i.e. property has now been sold since judgement given) and a defence is now possible (failure of duty of care to obtain best price). Fine.

 

The N55 (Attachment of Earnings application) is a headache, though. Do I submit N244 which will also be asking for suspension of enforcement action and let that override it? Or do I return it as well?

 

Or, because I'm still waiting for DPA request to come through (33 days and counting) and thus main evidence, including statement from sale, do I just fill out N55 response now, ask for suspended order on basis that I will be defending (but offer payment) and then hope to submit N244 before first payment is due?

 

A bit confused!

[sillygirl1]

Because they obtained a money order first time around they have no leg to stand on.

 

They ENFORCED the money order by way of repossession - whether or not it was first or second charge company is regardless - and now they CANNOT further ENFORCE this alleged shortfall.

 

Contact the court and explain what has happened and that they should not be using the courts again to get this money from you.

 

Getting a set aside now is the wrong thing to do, you need to get both companies sent packing - the alleged debt is no longer a mortgage and no longer your liability. They abused the court process in getting a money judgement (I bet they did not declare the true arrears at the time) and now can't come back for more.

 

I've had the same tried on me by GMAC/London & Scottish and the only reply to them has been "Make me bankrupt then....".

 

What is causing you problems with the N245....

[pcr1]

Erm, no, money order applies and is enforceable! Ignoring the N55 can result in prison and it can't be argued against. I must set aside to defend.

 

Soo...any other advice please?

[sillygirl1]

Where did you get that advice from?

 

Having been in exactly the same situation as you, money judgement got by second charge company and house repossessed by them... I have not had anything other than a letter on the anniversary of the alleged sale of the property.

 

Is the sale of the property recorded on the Land Registry records? If not then you can use this as part of your defence - it is a far greater offence in the eyes of the law.

 

If you don't want my advice learnt from personal experience then I will no longer post on this thread.

[pcr1]

I think you're confusing a case where the lender hasn't pursued you. The whole point of money judgements is to enable them to continue to enforce in the event of a shortfall. Did they attempt to enforce the judgement, most specifically through Attachment of Earnings?

 

For where I get the advice from, try:

Money Judgments in Possession Cases - Housing Repossessions (UK)

 

Or:

Shelter England - What the court can do

 

Or:

What happens when your mortgage lender takes you to court

 

Or:

Possession hearings - what the judge can decide : Directgov - Home and community

 

They all say the same thing, but Advice Guide I think says it best:

 

As well as a possession order, a money judgment can be issued by the judge at the same time.

 

A money judgment allows your lender to get back all the money owed on your mortgage.

 

This means that if your lender evicts you and isn't able to get back all the money you owe from selling the property, they can force you to make up the difference. They won't need to go to court again to do this.

 

I don't think the sale is in land registry records, but it could be as there is a spurious entry which could be it, mistyped. How can this be used as a defence? In any case as stated it's not possible to defend against a N55 so I must set aside and defend the original judgement.

[sillygirl1]

The advice is slightly inaccurate, the money judgement needs to STATE that they can go for enforcement after the initial reposession (which in the courts eyes is ENFORCEMENT itself). They cannot have a second bite of the cherry by coming after you for a shortfall.

 

I am now not going to post on this thread again as I have other threads where I can do more good than getting into arguements about the legal processes.

 

In my case both the main mortgage company and the second charge company are in administration which is possibly why no further enforcement has been attempted.

[sillygirl1]

From the first link in your post

 

What is a Money Judgment?

 

 

In fact the situation is not quite as bad as it seems. Money judgments in mortgage cases came to the fore in the early 1990s when large numbers of properties had fallen into negative equity. Lenders were frequently repossessing properties worth less than the debt they were owed. In a 1993 case called Cheltenham & Gloucester v Grattidge it was held that lenders were entitled to pursue different ways of recovering the mortgage debt at the same time. This led to many lenders asking for both a possession order and a judgment for the outstanding mortgage balance. Technically this means that the lender could choose to recover the debt either by repossessing and selling the property or by pursuing the borrower directly for the money.

the EITHER is the crucial part, one or the other, not both.

[pcr1]

From the same link...

 

The reality is that a borrower who was unable to pay the instalments due under their mortgage is unlikely to have £100,000s available to pay off the entire mortgage debt. Therefore, in practice, the money judgment will only become relevant if the lender repossesses the property, sells it and is unable to recover the full debt owing to them from the sale proceeds. At that stage the lender can rely on the money judgment. The lender will give the borrower credit for the sale proceeds and then pursue them for the debt still owing. However, once again, someone who has just had their home repossessed tends not to have a lot of spare cash lying around so it is not clear how many lenders actually chose to take this course of action.

[sillygirl1]

And this bit

 

Some lenders ask for money judgment in the papers sent to the court but then at the hearing ask for it to be "adjourned generally with liberty (or permission) to restore". This means that the lender can come back to court at a later date, when the final debt is known, and quickly and cheaply have that part of the case reinstated to obtain a judgment for the total amount owed.

 

You really need to get more specialist advice than the advice here if you are going to argue legal points, in my case it was simply a case of when the companies first made contact after the reposession to ask for the usual information (which never arrived) and then when the legal company (HL Legal) send their typed statement I asked for full documentation....

 

The resulting silence has been astounding.

 

Clearly you have had some bad luck with the previous judge. I am now definately leaving this post.

Edited June 17, 2010 by sillygirl1
emphasised point.

[pcr1]

That just means they can have it left open to go back and change the amount.

 

Anyway, does anyone have any advice on whether to submit the N244 on its own or return the N55 response also? I suppose it can't do any harm to do both, but it would seem worth waiting on the N244 so I have full evidence to put in what my defence would be. But time I do not have!

[Shadow2009]

Hi PCR1 sorry to hear about your problems. We are at the beginnings of all this but think the lender hasn't registered a money order yet. You definitely need to get some legal advice. There is a lady on the site that owed about 40k and manged to short settle for 8k. If you look at my threads you should be able to pick hers up. Is there anyway you can go self employed as that screws their AOE?

[ndcdavis]

It is usually very difficult to substantiate an allegation of sale at an undervalue. Can you show any defects in advertising etc?

 

The advice above to try to do a deal is probably the best. Put together a careful statement of income/expenditure and assets/liabilities. This is essential to put an offer in context.