Mortgage Arrears Pre-Action Protocol

There are certain areas of law in which if you intend to bring a claim in court you must first follow a specific pre-action protocol. This is normally designed to ensure that both parties have clear information as to what the claim that is being considered is, and on what basis it is being brought. It is also designed to ensure that both sides are able to negotiate and perhaps even reach a compromise before issuing proceedings and bringing the matter before a court.

Mortgage arrears

In regard to the more specific requirement of a pre-action protocol for mortgage arrears, the introduction of the pre-action protocol was loosely based on the assumption that it is in everybody’s interests for an agreement to be reached in regard to the arrears.

The lender does not want to take possession of the property, and would much rather the arrears were paid so that more money will be received in the long run, whilst naturally the owner of the property will not want to lose their home; it is for this reason that the pre-action protocol is in place.

Having said that, there will clearly be some times when the ability to pay the arrears is so limited that possession proceedings will have to be brought.

Possession proceedings

If a lender is considering bringing a claim for possession of the property on the grounds of mortgage arrears then they must first follow the pre-action protocol which includes:

• Providing details to the homeowner of the exact arrears, including any interest and costs
• The lender must take reasonable steps to discuss the arrears and take into account whether the arrears are likely to continue in the long term as opposed to the short term. If the owner has been out of work and just received an offer of employment the lender should not begin possession proceedings
• The lender must advise the homeowner to take legal advice, and usually provide contact details of a particular department of a local authority that might be able to assist
• The lender must consider any reasonable request from the homeowner to change the date of the payment. This will obviously have to demonstrate that if the date is changed the arrears will be able to be paid
• The lender must give the homeowner at least 14 days’ notice of its intention to make a claim for possession if negotiations do not prove fruitful

If this pre-action protocol has been adhered to and the arrears have not been paid, or the homeowner has not made a proposal to pay the arrears that a judge would deem ‘reasonable’, then the lender may start a claim in the appropriate County Court for possession of the property.

If you are in arrears

If you are a homeowner in arrears it is important that you take legal advice at an early stage; a local solicitor should be able to advise on how best to put a payment package to the lender or refer you to a local authority which may be able to provide short-term assistance under the Mortgage Rescue Scheme.

During times of economic decline the importance of the pre-action protocol has been severely tested as more and more people are finding themselves in arrears on their mortgage. If you are in this position the best thing to do is to try to work out some form of payment plan and seek legal advice.

Source:

FindLaw

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