Success story update
The site now includes an update on how the repossession shortfall claim chronicled in Case 4 in the Repossession Tales section was settled.

Not full and final settlement
You'd better sit down before you read the following bad news. Agreeing to a full and final settlement that is less than the amount the lender has the right to ask for does not necessarily free you of shortfall debt.

Why? It goes back to a set of old case law which gets quite complex but it amounts to this: if you are offering less than you owe because you don't have any more to offer, there's no reason the lender can be considered to have had their claim paid. The lender should not have to accept less than is due simply because you made an earlier settlement based on you not being able to afford more.

What are the implications of this? Well one of them is that lenders could continue to pursue you if you happened to come across more money, eg through a well-publicised Lottery win, inheritance or a sudden increase in credit.

But chances are that no lender would risk the bad publicity of continuing to pursue it. Any lawyer who fails to advise you that the full and final settlement phraseology does not protect you could face a negligence action. I would not panic over this but the lawyer who told me this thought people should be aware of it.

Note, I also said "the amount the lender has the right to ask for". I phrased it that way because lenders don't usually have the right to have much of what they ask for in a shortfall claim. Like interest on shortfall claims after the first six years is up. Read on...

Six years or 12?
Many people have asked when the six and 12 year limitation periods on repossession-related debt start from. I've not always had an answer. But I learned last week that the six-year rule runs from the date of repossession and not the date of sale.

Remember, the current law is based on various cases and so this "start" date could change if a court rules differently in any new case. Also, the six year rule currently only applies to the interest lenders claim on repossession shortfalls. It does not so far as we can tell, apply to the shortfall amount itself, which seems to be within the 12-year limit.

We're not sure how administration charges fit into all this but we think you could get away with applying the six-year rule to them.

Lenders whine and dine
Last week I spelt out how the Council of Mortgage Lenders has been whinging about what a poor year 1998 was, primarily because both Government and customers think its lender members should stop treating customers to hidden high charges, overcharging, un-admitted mistakes and mis-selling. One of this newsletter's readers has pointed out that the Council of Mortgage Lenders has mobilised lobbyists and friends to treat MPs to lunches where the lenders can brief them on why it would be such a bad idea to regulate mortgage lenders.

This follows last week's Home Repossession Page newsletter, in which I said that mortgage lenders seemed surprised that the public and the Government don't approve of the way they do business. MPs noticed that lenders began talking about lunch and dinner invitations towards the end of last year and the offers of hospitality have increased since a select committee of MPs recommended a few weeks ago that lenders should be regulated.

You may not have enough money to wine and dine your local MP and he or she may not be inclined to hear your tales of woe. After all: he or she could be swanning it in the posher surroundings that only a mortgage lender can afford. But, a well-worded letter spelling out why you feel that lenders should be regulated might help keep their minds on track.

Sunday Times readers on the war-path
The Sunday Times reports that hundreds of mortgage customers wrote in complaining about lender treatment after it started a campaign against high early redemption fees last week.

It wants the Government to ban the practice of forcing customers to pay up to six percent of the value of the loan to escape from mortgages that are initially offered as fixed, capped or discounted. It said customers complained they were never told about such "lock-ins" and said the Advertising Standards Authority (largely toothless, I'm afraid) was also concerned.

Among the lenders criticised were, well, pretty much all them really. Abbey National, Halifax, Northern Rock, Alliance & Leicester... all came in for stick.

The Sunday Times also pointed out that "the Customers' Friend" the Council of Mortgage Lenders is well nigh run by the Halifax and the Abbey National because of the way it votes for representation based on the size of the lender.

Based on the complaints I hear (and obviously it's not a representative sample) the Halifax is reasonably OK in the way it treats customers. I do not hear the same about Abbey National.

[ends]

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