IBAS - Independent Banking Advisory Service
UK Mortgage Shortfall and Mortgage Shortfall Debt Claims Liability
Updated: 1st December 2023
Mortgage Lenders rely on the Mortgage Deed to chase mortgage Shortfall debt. Signed and witnessed Deeds allow lenders a 12 year Limitation period which commences from a cause of action which can be triggered by two months unpaid mortgage payments. Our experience is that Borrowers are often confused by the very long period of time allowed for Lenders to recoup Mortgage Shortfall Debts.
Whilst the Limitation Act allows a 12 year period for the lender to legally make a claim on unpaid mortgage debts this period can and often is extended by a Law Of Property Act Receiver being instructed by the Lender to manage the mortgaged property.
Also, whilst the first cause of action can be relied upon in some instances, Borrowers often then pay off arrears and remain in a property. That is not unusual and it can further confuse the Limitation Period as payments made to the account will restart the Limitation Clock.
Later if a further cause of action occurs after mortgage payments have been maintained it will then be the last payment to the mortgage account which may be relied upon.
Finding 'flaws' in a lender's paperwork or their legal claim for a mortgage shortfall debt claim provides us with immense pleasure and the results
The major issues are whether by their not investigating those cases properly the FOS or BBRS in accepting dispute cases within their defined guidelines will then properly safeguard the bank customer information without compromising the bank customer's position.
Bank/lender customer cases can easily be compromised when the bank/lender is provided with customer information either by copies or by telephone which should have remained confidential.
Sometimes, even a snippet of important customer information can destroy a customer case.
Banks and Lenders protect their confidential information at all cost and because of that attitude the FOS and BBRS will NEVER divulge Bank or Lender sensitive information to the customer.
We have found that just one letter, email, text message or even a record of a telephone conversation can be enough to strengthen the Bank/Lenders position and tilt the balance in their favor to enable the Bank or Lender to obtain a judgment on the alleged debt claim or to destroy the customer dispute claim.
After 30 years of banking investigations we know Lenders will use many unfair tactics to gain money, property and assets from their customers. All actions start legally with the claim form, which should never be disregarded by the customer, even if it appears totally inaccurate or it is difficult to understand it.
Against the background of the comments above, when
I am relieved at long last. Couldn’t have done it without you!
I am so grateful to you for having been there for me.
Once again thank you for your expertise and support throughout.”
Establishing the facts around a lender's alleged claim is our priority when we investigate Mortgage Shortfall Debt Claims and demands for payment.
Borrowers are often unable to remember accurately what happened or any or do not have the necessary paperwork from the events. That's because Mortgage Shortfall Debt Claims are often 'sitting' many years in the Lenders Debt Recovery Unit.
If the Lender has appointed a Law of Property Receiver to manage the property after repossession - the appointment of the LPA Receiver may well have added more time to the Limitation period and IBAS will then consider the LPA Receivers actions as well.
Therefore, it is not unusual for mortgage shortfall debt claim demands to appear more than 12 years after the customer last thought they had paid a mortgage payment.
In our opinion nobody can properly advise whether a mortgage shortfall debt claim is statute barred without obtaining the full Lender File on the property for which the Lender claims a shortfall is owed - that has to be requested under a GDPR request.
IBAS spend many hours investigating individual Lender files to check on payment dates. We also check the lender's telephone call logs to identify what has been said, when and by whom as Lenders will record borrowers telephone calls as it suits them to do so.
All correspondences are perused and events noted.
Only when we have investigated the full GDPR file can we be sure of the facts on which the Lender will rely for any legal action contemplated.
The result in Mr B's Testimonial below followed IBAS in depth investigations and it was IBAS investigations over many many hours which then led to a very good result for the borrower.
Mr B's Testimonial for IBAS said:
"I am absolutely lost for words with this outcome. I would like to thank all the staff of IBAS who have worked on my case or in the background.
You have lifted a huge burden of debt off my shoulders and saved my home from the clutches of (Lender redacted). I appreciate all the work you have done for me, right from the first day when you took my phone call.
Independent Banking Advisory Service have totally exceeded my expectations.
Whilst I was pinning my best hope on IBAS negotiating a reduced final settlement that I’ll be paying off for years to come, you managed to get a bigger and better outcome for me. The incredible letter written to the Regulators was beautifully crafted and presented to achieve a purpose and it did.
That letter showed the meticulous investigation and analysis IBAS did on my file and you were able to extract all the key points from the investigation and presented them in a logical order to the Regulator to achieve maximum impact.
IBAS analysis revealed aspects of my case and conduct of the lender that I wasn’t even aware of myself. As a result, the lender knew the game was up. They threw in the towel and wrote off the entire mortgage shortfall debt of £70,000 remaining.
I feel a huge sense relief after 15 years of stress and the lender hoping to recover their inflated debt from my home. In many ways, IBAS is the real winner in this case.
Their dual knowledge of the rule book and how banks sometimes operate on the fringes of legal conduct and what is morally acceptable, allows them to spot where questionable act and actual misconduct has taken place.
IBAS is quietly providing a very valuable service to the public but they’re not as widely known as they should be. It took me numerous Google searches before I found IBAS website.
I would recommend IBAS to anyone in the UK who is having problems with their bank or mortgage lender. Don’t try doing it by yourself, allow IBAS, the professionals to sort it for you. Thank you IBAS!"
an email to IBAS for assistance will help you quickly obtain practical and confidential assistance
The major difference between IBAS and any other advice organization is the depth of IBAS specialist knowledge and greater banking experience from investigating business banking dispute cases for 30 years.
That provides IBAS members with better value and also more chance of success.
IBAS investigate, Challenge and Resolve UK Mortgage Shortfall Debt Claims.
IBAS uses knowledge of banking case law derived from negotiating with banks on a large volume of business banking disputes and our specialist knowledge of Lender Debt Recovery Units to identify possible defences within a business bank/lender customer claim or debt dispute and then provide a proven successful strategy.
As an IBAS member Testimonial said: "What benefited us the most was your concise & well thought out advice, very good knowledge/experience of how the banks work, prompt responses and sensible/pragmatic approach".
Mortgage Shortfall Debt Claims have a Limitation period of 12 years but lenders will and do pursue mortgage shortfall debt claims after that time has expired.
Legally they are still allowed to do so. The borrower then needs to know if it is statute barred to contest or defend against the Mortgage Shortfall Debt Claim. Being a Statute Barred debt does not mean the debt no longer exists and lenders may use a debt collection agency to attempt to recover the money. Claims by lenders or their agents (solicitors or debt collection agencies) require careful handling so that the limitation clock is not restarted by incorrect responses to the lender or their agents.
That means establishing all the facts around the lender's claim is essential
Lenders and their solicitors will attempt to limit the facts in their claim to entice borrowers to make proposals to pay - underhand yes - but they do that to elicit your proposals - which once provided will tie the borrower to the debt regardless.
Banks and Lenders will pursue Mortgage Shortfall Debt Claims and Disputes by Litigation and by issuing a legal Debt Claim regardless of Limitation.
Lender's solicitors will pursue you once instructed by the Lender for the Mortgage Shortfall Debt Claim after sale of the property - but do not take their claim as being factually correct.
Solicitors are instructed with limited file information which suits the Lender.
The Bank/Lenders solicitor knows that if their claim is cleverly constructed the Bank/Lender can obtain judgment by default or obtain a summary judgment because the borrower does not dispute the debt claim properly - or sometimes not at all.
Lenders target individuals with existing UK mortgage shortfall debts continually. Does your Lender have new information about your circumstances?
i.e. have you moved in with a partner who has a mortgaged property with equity?
Personal information from voting lists, Land Registry charge sheets and applications for new borrowings (i.e. Mobile phones) from your post code are always being 'trawled' by lenders seeking payment of shortfall debts. Any information found by the Lender which indicates that property or assets can be targeted for payment then puts new partners or even family members at risk from beneficial interest legal claims against their assets.
If you are living in a mortgaged property with a new partner, family member or a friend - do you or they have a Deed of Trust or tenancy agreement to rely on an email to IBAS for assistance can help you quickly obtain practical and confidential assistance - it may also put your mind 'at rest'
All the comments below are from a first enquiry to IBAS from those seeking IBAS assistance after they or their partner received a lender's claim for payment on a mortgage shortfall debt following a past home repossession.
I’m being chased by Debt collectors for a very old mortgage shortfall debt
How long can my mortgage shortfall debt claim be chased for?
I’m being chased by solicitors for a distant or past mortgage shortfall debt claim
I’m trapped by my ex husband’s debts
My Girlfriend’s ex husband left her in debt after their home was repossessed
My ex-husband’s debt from a mortgage shortfall debt following repossession may cost us our home
We have just received an assignment on a mortgage debt from 17 years ago when our home was repossessed
My ex-husband has gone bankrupt and I’m now liable for the mortgage shortfall debt
My ex-wife left me in debt more than 12 years ago and now the lenders are claiming a shortfall debt from sale of the property
My partner and I have married recently but she’s just received a claim for a previous mortgage shortfall debt claim
My Wife’s mortgage debt and old mortgage liability is now being claimed from me after 15 years
I’ve been told the lenders are not taking any notice and now they are issuing a claim into court with 12 years interest
A Joint and Several debt is being claimed against me, because my wife left me with her debts
I’ve been told my shortfall debt claim is outside limitation but the lender’s taking me to court and also claiming interest
We were told when we handed the keys back that the lender would then write the debt off
IBAS Mortgage Shortfall Debt Claims Unit was founded in 1992 and has 30 years experience investigating and resolving mortgage shortfall debt liability claim cases and debt after house repossession and assisted many to settle repossession debt.
There is a 'market' for repossessed properties. Repossessed properties often appear as 'bargain' priced properties at auction and cash buyers can then add distressed properties to their property portfolio to make a profit or enlarge their 'letting' portfolio.
After the lender has sold a repossessed property they are required to provide the borrower with a completion statement.
The completion statement details the sale proceeds and costs. If the sale lost the lender money on the mortgage funds they advanced, there will be a shortfall debt created and that amount will be shown as a mortgage shortfall debt which is due to the lender and also demanded at that time.
That debt may also include interest owed. That debt then becomes a mortgage shortfall liability debt for the borrower/s.
Mortgage Shortfall Debt Claims can be pursued by the lender for 12 years under The Limitation Act.
Most of the lender recovery' knowledge is gained from the lender Internal Notes.
The ‘internal notes’ record the employee's personal observations and details of the customer, their family and relatives, including assets and property and possible inheritance claims. Sometimes also very personal and specific details.
IBAS experiences of case work over many years evidence that bank customers remaining together intact as a family and their survival from any lender debt ‘claim’, depends largely on whether they can channel the immediate anxiety from the lender demand letter into a much more positive thought process.
It is a mistake for ex customers to believe a lender will treat them fairly once they have issued a demand for payment.
If you have recently received a Mortgage Shortfall Debt Claim from a solicitor then email IBAS with your concerns
If you have any uncertainty regarding your Mortgage Lender email us with your concerns
Mortgage Express, Bradford & Bingley and Northern Rock Interest Only Buy To Let Mortgage holders are now being pursued by solicitors acting for UKAR (Drydens, DWF and others) and the tactics now used remind us of our research for the Mortgage Shortfall Debt Claims Survey IBAS carried out many years ago.
It appears that legalized bullying has reappeared where the UKAR agents are attempting to collect on shortfall debt claims.
As with all such cases the facts and specialist advice are crucial for a good result to be obtained for the borrower - DIY defences or forum 'defences' are usually not only inadequate but may be financially dangerous as real defences which did exist may be compromised.
IBAS knowledge has been collated from thousands of IBAS cases over many years which provides unique backup information only available to IBAS - that is used to assess where to investigate and what will produce the best results.
IBAS has a very experienced team providing a unique, totally independent, low priced professional, experienced and confidential service
We have been dealing with mortgage shortfall debt liability claims and mortgage shortfall debt claim disputes and shortfall debts from mortgage possession sale cases since 1992
One of our Testimonials wrote:
"After almost eight years we are finally free of this nightmare and have no fears of what the postman might bring.
May we take this opportunity to express our thanks and appreciation for all the help and advice we have received."
Testimonial from Mr C
“When there were many creditors still chasing me for debts after my home had been repossessed 5 years ago the last thing you want was another 50k mortgage short fall.
When all options had ran out there was only one thing left to do which was to declare bankrupt .however, just before I commit myself I embarked upon IBAS website in my search engine.
I had tried Financial Ombudsman and got nowhere. But it was my last straw so I thought I’ll give it a go .As soon as I became a member things got on pretty quickly. They gave me all the questions and I reply with all the answers. My situation was that it’s highly unlikely I can repay this kind of debt in my life time. IBAS assessed my situation and told me what would be the likely outcome of my case.
IBAS had negotiated a full and final settlement offer to the lender on my behalf successfully. It was the biggest relief I had since I got buried in this financial turmoil. I can’t thank Sara Cummings and her team in IBAS enough .Thanks guys and deeply appreciated all your helps. Mortgage Shortfall people out there please go to IBAS and find out more.”
Peter and Karen's Testimonial:
“Out of the blue we received a letter from a solicitors firm regarding a mortgage shortfall of 26K. Still reeling from the shock, two weeks later we received a County Court Claim Form for 46K, that stated we must respond within 14 days.
If we went to court there was risk of a CCJ, a risk of having to pay perhaps 50K or more, something that could only be funded by losing our home.
Having to keep up with a demanding full time lob, my partner had to search for advice. She spent most of the week in the waiting room of the local CAB receiving well meaning but ultimately useless advice before ‘seeking professional advice’. With time running out we contacted three local solicitors, none of which had any experience of mortgage shortfall debt recovery.
The first charged £50 for 1/2 hour session and advised nothing except to ask for the hearing to be moved to a local court.
The second advised that they could take on the case, but we should be prepared for a long battle and that their costs alone could run up to 25k and beyond, with little chance of winning.
The third although not yet fully qualified would charge £130 per hour (£300 required up front), and advised we should accept responsibility and make an offer to settle, With the deadline fast approaching we went ahead with a settlement offer while we desperately researched on the internet, and came across IBAS.
After a quick phone call IBAS agreed to take on our case for a flat membership fee and we provided them with our paperwork and the settlement offer made by the solicitor. Although still desperately anxious, we at least felt some relief that at last we had found somewhere that knew what they were talking about.
IBAS immediately went into negotiations and kept us regularly informed. Just under a month later they had managed to agree a full and final settlement and even managed to get us 60 days in order to raise the money. Just as one hurdle was over another claim came through, this time for a small loan handled by Paragon.
IBAS took immediate action and managed by argument of limitation, to have the debt written off on ‘goodwill grounds’. Had we gone to them in the first place, a lot less anguish, and possibly even a smaller settlement, could have been achieved. We are supremely grateful to the IBAS team for all their patience and hard work”.
Regards, Peter & Karen
IBAS has featured on BBC TV, BBC TV News, ITV News, Meridian TV and Sky TV News since 1992 and contributed banking editorials and business banking articles for Sunday Times, Times, Daily Mail, Daily Express, Telegraph and Daily Mirror.
Independent Banking Advisory Service (IBAS) - launched in 1992 and are UK Specialist Business Banking Dispute Resolution Experts assisting and advising UK Business Bank customers with UK business banking account overdraft, loan disputes and business banking debt disputes.