Why silence with your lender is not Golden.
In the complex relationship between lenders and borrowers, communication plays an important role. For homeowners facing the stress of mortgage arrears, the instinct to retreat into silence can be understandable yet counterproductive.
When lenders stop receiving payments, they start a series of steps designed to engage the borrower. This usually starts with reminders via phone calls, emails, and letters. However, when these attempts are met with silence, the lender’s approach changes. They might increase the frequency of their attempts or pass on the matter to a specialised collections team. This phase is crucial, as lenders prefer to recover debts and avoid the legal and financial costs of repossession.
If the lender continues with the silence, the lender changes direction, usually by engaging debt collection agencies or initiating legal proceedings to recover the owed amounts. This stage can be stressful for borrowers, as it often involves formal notices of legal action and ultimately, court proceedings. It’s worth noting that legal costs and additional fees start to mount up, adding to the borrower’s financial strain.
As a last resort, lenders may proceed with home repossession. This drastic step is taken when all attempts at communication fail and there’s no possibility of recovering the arrears. Repossession is not only emotionally hard but also significantly impacts the borrower’s credit rating and future borrowing capabilities. Throughout this process, the missed payments and non-engagement negatively affect the borrower’s credit rating. Each missed payment is a mark against the borrower, making it harder to get credit or mortgages in the future.
Communication, or the lack thereof, significantly influences the lender’s approach. Lenders generally prefer to find a resolution that avoids the legal and financial mess of repossession. By communicating, borrowers can explore options like loan modifications, repayment plans, or even a temporary forbearance. These avenues can provide breathing space to get back on track, protecting both the home and credit rating.
At Repossession Help, we are always encouraging homeowners to engage with lenders at the earliest sign of financial distress, so they can open doors to solutions that preserve their home and financial future. If the homeowner for some reason is unable to talk to their lender, we can negotiate with the lender on their behalf.