Some years ago IBAS carried out a year long study of 4,259 customer’s with Mortgage shortfall debt claims which had followed a UK home repossession during the last recession.  It provided us with a great deal of knowledge on how lenders evaluated voluntary home repossession or forced UK Home Repossessions and on how Mortgage Shortfall Debt claims and payments varied with the individual circumstances.

The number of customers being pursued for huge mortgage shortfall debt after mortgage possession was increasing at that time and unacceptable tactics were being employed in seeking repayment. Mortgage Shortfall Debt claims from Mortgage Shortfalls from UK Home Repossession/s ranged between £8,000 and £110,000 in our study averaging £31,200 and equating to a total figure of almost £104 million.

Lenders often made no contact at all for many years following a repossession. Having by then built a 'new life', customers were devastated to find they faced fresh legal proceedings based on the aged mortgage shortfall debt claim as the means to repossess their home for a second time.

Lenders had used the the law to increase the debt, whilst lack of any contact lulled the customer into a false sense of security.

The sudden shock of being confronted with a huge past mortgage debt bill years later is terrifying. Frequently the repossessed property has been sold at ‘knock down’ price, creating an immediate mortgage shortfall debt. Coupled with enormous sums of  interest, mortgage shortfall debt was often doubled or trebled.

Please note: Lenders will always recommend CCCS and PayPlan for free DMP's (Debt Management Plans) to their customer because they will always attempt to produce payments on the debt claimed - However, DMP's are merely 'management of the debt' which has or is being claimed by the lender it is not negotiating or questioning the legality of the debt or whether it should be paid - these are companies 'managing' your payments for a full debt collection on all debt claimed as being owed. If a DMP is entered into and accepted by the borrower all debts claimed will then continue to be 'chased' for payment - until they are fully repaid.

Bullying and intimidation tactics were common and lenders agents used unreasonable methods to harass and threaten customers.

Threatening letters demanded customers “ring within 24 hours”. Frequent telephone calls and debt collector visits at work and home were designed to add further pressure.

Despite a six year voluntary Code at that time, lenders continued to chase customers outside it. IBAS perceived a hardening of attitude, with lenders displaying increased attempts to chase shortfall debts and often totally ignoring the six year Code.

Lenders also employed the services of unethical legal teams, to pressurize customers into repayment schemes.

Under such extreme pressures, customers unwittingly agreed to repayment plans which they  have no realistic prospect of maintaining.

NB: IBAS issued formal complaints to the FOS because of these unfair debt collection tactics for mortgage shortfall debt claims, which assisted in many cases being settled or resolved and in some cases without any payment being required for the alleged mortgage shortfall debt. See OFT Complaint by IBAS & OFT Complaint by IBAS regarding Asset Recoveries UK Ltd

Please Note: General collection procedures employed by lenders remain as tough today as at the time of our Mortgage Shortfall Debt survey. But, new case law has provided lenders with increased options - the most important being twelve years in which to commence action to recover a mortgage shortfall debt. The six year code mentioned above in our survey cannot be relied upon any longer as a 'defence' to a mortgage shortfall debt claim.

IBAS provide truly independent and impartial mortgage shortfall debt claim advice and direct assistance - and is a unique specialist organization which directly helps it's members.

 email IBAS for help

You will find our 2012 national newspaper comments (plus many more over many years) in the News and archives sections of our site - these prove that IBAS can be relied upon and has been in existence helping business bank customers with their mortage shortfall debt claims and personal guarantees demands since 1992. IBAS has also featured in BBC TV and ITV News items and programmes on UK banking and business banking issues many times since we were established in 1992.

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Independent Banking Advisory Service (IBAS) is a national, independent, non-profit, unique specialist banking customer membership organization which resolves banking complaints and disputes and which has campaigned on UK Banking customer issues since 1992. We provide bank and banking assessment, analysis, bank comment and content for BBC TV News, ITV, Radio and national newspapers.