Have you heard of the Repossession Pre-Action Protocol?
Receiving a home repossession order due to mortgage arrears is undoubtedly a distressing experience. However, it’s important to know that there are specific procedures and protocols that lenders must follow before they can proceed with a possession order. One key safeguard for homeowners is the Pre-Action Protocol for Mortgage Arrears. It is designed to ensure that all possible alternatives to repossession are explored, providing a fair chance for homeowners to address their financial difficulties.
The first step in the protocol emphasises the importance of clear and open communication between the lender and the homeowner. Lenders are required to inform homeowners of their arrears, the amount owed, and the impact these arrears may have on their mortgage. This communication should be straightforward, aiming to help homeowners understand the severity of the situation and the urgency of taking action.
Lenders also have the responsibility to provide detailed information about the outstanding mortgage balance, how the arrears have accrued, and an itemised statement of charges incurred. This transparency is vital for homeowners to have a clear picture of their financial standing and to verify the accuracy of the information provided by the lender.
Lenders are also obliged to explore all possible alternatives. This includes considering any requests made for changing the way the mortgage is paid or for time to sell the home, if that’s an option that is being considered. Lenders should also discuss the possibility of capitalising the arrears, extending the mortgage term, or altering the type of mortgage, among other solutions. This is a collaborative effort to find a viable solution that could help arrears more effectively.
An essential component of the protocol is the recommendation or referral to free independent debt advice. Financial counselling can provide homeowners with a broader perspective on managing their financial situation, including dealing with mortgage arrears. Taking advantage of such advice can be a valuable step in finding a way forward.
The protocol ensures that homeowners are given reasonable time to respond to communications from their lender, to seek advice and to consider any proposals made by the lender. This time is crucial for making informed decisions without the pressure of immediate action.
Lastly, the protocol underlines that taking court action should be a last resort. Only after all other avenues have been explored and there remains no viable solution to address the arrears should lenders proceed with court action.
Understanding their rights and the procedures that their lender must follow can empower homeowners to take proactive steps towards resolving the situation. The Pre-Action Protocol for Mortgage Arrears is there to protect homeowners by ensuring that all possible solutions are considered before repossession becomes a reality.