Capital Recoveries chasing old GE Money secured loan - home repo'd

[warspite1]

Hi all.

 

Received letter from Capital Recoveries (£5000), this relates to a scured loan on a previously Re-possed property some six years ago and I now live in council rented property. SARd and just had the reply stating that they are unable to comply "as this relates to a deed and not a credit agreement. Any advice very much appreciated.

[warspite1]

oops I forget to mention the loan is with GE Money. Does this make differance??

[warspite1]

Foolishly took-out DMP with Blair Endersby Plan paid them most of the time, but due to my husbands work pattern - in work sometime, short-time most of the time we fell behind and cancelled. Their paper-work shows that payments £1:00 pm was made. However unsure if this payment was made? But from memory 6 Year is boarderline. Does this help??

[cerberusalert]

Was it a SAR or a CCA request you sent? The SAR would cost £10 & the CCA £1.

 

Is it around six years since the last payment through the DMP?

[cerberusalert]

The problem is if it was a secured loan then the Statute of limitations is 12 years any other loan is six.

 

You will probably need to send GE money a SAR to see exactly what the contract is, whether they've added any unfair charges and PPI which you can reclaim.

[warspite1]

Sorry it was a cca and will new send Sar today and let you know the results. xx

[cerberusalert]

The SAR will need to go to the original creditor not the debt collector.

[duncanb]

Hi Warspite1 I am having almost exactly the same issues as you, I had a Igroup Second charge on my property. Had it taken away 2006, I did at the court proceedings state we believed it was Irresponsible lending...Somthing the OFT may or may not have ruled on...I have sent my SAR to GE Money, just this week.

 

I need to know if it is still possible to take the Mortgage co back to court to fight this, I have been told It would be possible on PPI and probably on Fees added, as we found out this week from DMS that the amount Igroup have claimed for is 54K on a original loan of 33K, 21K in charges Greedy Bar!"*^%)...and they did not even sell the house that was down to the first charge....

 

Anyone else out there suffering from these scavenging ****.

 

Please keep in touch we may be able to help each other...

[warspite1]

Sorry for the delay in replying.

 

My mortgage provider was GE as well. Have you done a land registry search to find out in what name the property is registerd. I suspected that it is still in your name.

 

Kind regards

[duncanb]

Hi warspite1, Thanks for getting back to me ,, no worries about the delay, its a busy time of year, No I have not performed a land search I assumed this would have changed with the new owners....???

 

Duncan

[warspite1]

hi Duncan

This may not be the case as my name still shows as owing the property. Recieved reply to my SAR and it appears that they are chasing me for the mortgage/repossesion shortfall, which surpise surpise is just short of six years. Try Martins Money Tips for your shearch as there are a couple of sites that are free.

Hope this helps

Wraspite1 xx

[duncanb]

Hi Again warspite1 thanks for that info I will check on the land reg, your reference to Six years i am a little confused, I don't wish to rain on your picnic. But I am under the impression the statutory time limit for Mortgages is actually twelve years....? its six years for Banks loans etc. check it out I may be wrong..

 

Duncan

[cerberusalert]

If the mortgage company are members of the CML (IIRC) they have a code of practice where they have said they will not pursue a shortfall after six years.

 

The CML statement

Shortfalls arising from the last recession (1989-1993ish) started being pursued in earnest by lenders and mortgage indemnity insurers in the late 90's and understandably resulted in much negative reaction and litigation. To try and improve the industry's image and offer some comfort to borrowers, the CML updated its statement of practice on arrears and possessions in 2000. At the time it was widely accepted that a mortgage shortfall could legally be pursued for 12 years although the issue had not been tested in the higher courts. The CML's statement at point 29 was as follows:-

'In addition, from 11 February 2000, lenders who are members of the Council of Mortgage Lenders have agreed voluntarily that they will begin all recovery action for

the shortfall within the first six years following the sale of a property in possession. Anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender for recovery of any outstanding debt will not now be asked to pay the shortfall. The Association of British Insurers supports this approach on behalf of the mortgage indemnity insurers. In Scotland, lenders will begin recovery action within five years.'

The CML's statement was further clarified at points 30 and 31 to specify when this new voluntary 6 year limit would apply. In this case 'just writing' is sufficient for the lender's purposes to be able to comply with the voluntary CML statement. There is no requirement for the lender to have any acknowledgement from the borrower to then continue pursuing the shortfall for the 12 years provided for in law.

'Does this time limit apply to every case?

The new time limit does not affect anyone who is already adhering to alternative payment arrangements for the shortfall debt or who has already been contacted by the lender, even if the initial contact was made with them by the lender after six years from the date of the sale of the property in possession. The six year limit only refers to beginning recovery action and does not affect a lender’s ability to recover the shortfall debt over a longer period. If there is evidence of mortgage fraud, the new time limit will not apply.

Following the sale of a property in possession, lenders often find it difficult to contact the former borrower to advise them of any surplus monies or shortfall debt. Lenders use a variety of measures to identify where the individual is now living. This might include using tracing agents. Situations can arise where a lender or its third party agent is trying to contact the individual (for example, by letter or telephone) to discuss repayment of the shortfall, but the individual simply chooses to ignore such contact. This is despite the fact that the contact is being made at the individual’s new address. In these cases, lenders will consider that contact has been made for the purposes of the new six year limit. Lenders will also consider that contact has been made where the borrower has responded to the lender’s correspondence. Simply sending the borrower a final statement of the mortgage account alone will not constitute contact. If an individual is unclear whether contact has been made within the six year period, the lender will be able to confirm the position. '

Since 2004 this voluntary agreement has been included in the FSA's Mortgage Conduct of Business rules. MCOB 13.6.4 states:-

'(1) If the decision is made to recover the 1sale shortfall,1 the firm must ensure that the customer is notified of this intention.

(2) The notification referred to in (1) must take place within five years of the date of the sale (if the regulated mortgage contract or home purchase plan 1 is subject to Scottish law) or within six years (in all other cases). '

This does not change the legal position and is not legally binding but if a lender was to fail to comply in relation to an FSA regulated mortgage (i.e. a residential 1st charge mortgage taken out since 31 October 2004) a complaint might be made to FOS. Again, a lender would not require an acknowledgement of the debt to satisfy this rule and it would be sufficient for them to demonstrate that the notification had been sent to the borrower at an address at which they were reasonably believed to be resident.

The legal position

As I have said it was generally assumed that mortgagees had 12 years to pursue a shortfall from the date of the sale of the property. This assumption has been tested in the last 10 years and the legal position clarified.

In the case of Bristol & West Plc v Bartlett & Anor [2002] EWCA Civ 1181 (31 July 2002) it was established that a mortgagee has 12 years to pursue payment of the principle debt under section 20 (1) of the Limitation Act 1980:-

(1) No action shall be brought to recover—

(a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or

(b)proceeds of the sale of land;

after the expiration of twelve years from the date on which the right to receive the money accrued.

And 6 years to pursue payment of interest under section 20 (5) of the Limitation Act 1980:-

(5) Subject to subsections (6) and (7) below, no action to recover arrears of interest payable in respect of any sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of land, or to recover damages in respect of such arrears shall be brought after the expiration of six years from the date on which the interest became due.

At this point it was a commonly held belief that a mortgage shortfall could be pursued for 12 years from the date of the sale of the property. This aspect of the law was also to be tested in the case of West Bromwich Building Society v. Wilkinson & Anor [2005] UKHL 44 (30 June 2005). This case established that the 12 years runs from the date of the last payment not the date of sale and the case of Bradford & Bingley Plc v. Rashid [2006] UKHL 37 (12 July 2006) established that correspondence acknowledging a debt also starts time afresh.

Conclusion

I hope this makes it clear I am not labouring under the misapprehension that correspondence sent by a lender starts time afresh for them to pursue a legal claim. My intention was to illustrate the fact that lenders are not supposed to pursue a shortfall for the maximum legal period of 12 years if they have not taken some action within the first 6 years. I wholeheartedly agree that a payment or written acknowledgement is required to start the 12 year legal limitation period afresh and hope I have illustrated the legal framework for this.

Lordsugar says he surrendered his property 3 years ago so (assuming no subsequent contact or payment from him) Santander therefore legally have a further 9 years to pursue him for the principle element of the shortfall.

I would be very interested to know the case law in relation to challenging the amount of the shortfall and the where the requirement for an annual statement comes from. I know there is a requirement in relation to FSA regulated mortgages for annual statements under MCOB 7.5 but didn't realise this continued after possession in relation to shortfalls. I also understand that MCOB 13.5.1 provides a requirement for statements a minimum of quarterly even on shortfalls if charges are being applied to the account.

KC

Edited December 26, 2011 by cerberusalert

[duncanb]

cerberusalert

Thank you for that Information, this may really come in handy...

 

Regards Duncan