The Consumer Credit Act Could Stop Repossession
Mortgage Arrears Need not Mean Property Repossession
Apr 28, 2009
Job layoffs, ill health and increasing consumer debt have made it increasingly difficult for families to balance household bills. According to the Council of Mortgage Lenders (CML), as many as 500,000 homeowners will have 3 or more months mortgage arrears and face property repossession by the end of 2009.
How to Clear Mortgage Arrears
Homeowners who have been mis-sold a loan agreement that heavily favours the lender may be able to stop repossession as a result of a legal challenge under the Consumer Credit Act. Borrowers may also be entitled to compensation that can be used to clear the outstanding mortgage arrears.
The Consumer Credit Act can Stop Repossession
The Consumer Credit Act 2006 was introduced in order to offer protection to those who have borrowed over £25,000 from an unscrupulous lender. Whilst the definition of what an unfair agreement is are deliberately vague, lending agreements must incorporate an element of fairness.
- A bad credit mortgage has been sold to a homeowner with a good credit rating in order to earn a broker a higher commission.
- The agreement is too one-sided in favour of the lender or incorporates punitive terms.
- A commission has been charged that isn't stated in the legal agreement.
- A usury rate of interest has been charged that is deemed unfair.
- The loan was never affordable because the figures were fudged by a broker.
- A borrower was told that they couldn't get a loan without Payment Protection Insurance (PPI).
There is an exhaustive list of reasons why an unlawful mortgage agreement or secured loan may be in place so legal advice is essential.
Legal Advice Regarding Property Repossession
A homeowner with mortgage arrears has little to lose from asking a solicitor to check the loan agreement to see if they believe that compensation or a write-off of the loan is possible. Homeowners that have been made redundant, have minimal personal savings and are on a low income will usually be entitled to legal aid.
Whilst it is possible for a homeowner to pursue their own case, individuals facing property repossession should seek expert legal assistance. A legal challenge will stop repossession until the case has been decided amicably or in a court of law. This buys a homeowner time to get their life back in order; any compensation awarded can be used to clear the outstanding mortgage arrears.
Consumers that have signed-up to agreements prior to April 2007 should also check to see whether they have an unlawful loan or illegal credit card agreement.
Sources
Council of Mortgage Lenders (CML)
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