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Mortgage arrears: desperate client

I have a client who has got into a terrible mess with mortgage arrears. He is aged 75 and  in poor health, and earns very little from his small business. He has a £300,000 mortgage plus about £90,000 arrears. The house is worth about £200,000 and is his only significant asset. The bank is being very unhelpful and keeps threatening to throw him out of the house. Are there any Government schemes or initiatives which help someone in this position?


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Point out what is good business to the bank.

Going on the figures you quote it looks like bankruptcy is just around the corner.

Government schemes are generally a waste of time - like most things this government claims they are all "smoke & mirrors".

I'm amazed the bank hasn't already reposessed, but, again on the figures you quote, if they did they would be out of pocket to the tume of £190,000+ with no hope of ever getting it back.  This is probably your best bargaining chip. 

Does your client have life insurance?  A mortgage protection policy? 

At present the bank can get a £200,000 house to cover a £390,000 debt.  Not good business.

If insured, when your client passes away the bank will get paid in full by the insurance (assuming their is cover). 

Perhaps that consideration might be enough to peruade them that it would be better business to capitalise the arrears, and maybe accept interest only payments.

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Sack being 75 with a £300k mortgage

How did anyone ever let that happen in the first place ?

They should write it off as a goodwill gesture for being so stupid to give him the mortgage in the first place.

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Still desperate
He took out a mortgage protection policy, but it doesn't help as it only applies if you are employed, not self-employed!

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Still desperate

He took out a mortgage protection policy, but it doesn't help as it only applies if you are employed, not self-employed!


Posted by Anonymous on Wed, 16/12/2009 - 10:24


If they sold that to him knowing he was self employed thats a clear case of misselling.

Was it all charged for at the start and added to the loan?

There could be a good claim against them

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If they sold him protection when it doesn't cover him then he should be able to get all the premiums back.

Get Martin Lewis on the case.

That being said something in this doesn't seem to be right as how did a 75 year old get a mortgage for £300,000 and also how did he get into arrears of £90,000. Have you checked the arrangement is all legit.

Sounds like you need to get and IFA or IP involved.


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as often is the case

I imagine we have about 5% of the relevant information provided by the OP.    Nothing remotely "stacks up" with the parts of the story given thus far.

Does the OP actually know more than they have posted? 

e.g.  when was the property purchased?   was it a genuine arms length transaction?   presumably it was recent (else how on earth has he got a £300k mortgage on a £200k property)?   whether the property was purchased recently or not, were dodgy dealings by the client, the mortgage broker, the solicitor etc etc likely involved?  where was client living before, and what happened to any (if any) previous gain?  how the hell has £90k of arrears racked up if it was a recent purchase?   what protection was bought, from whom, and why?  what advice (if any) did the client take?  from whom?

Until you have a reasonable grasp of the overall picture, you can't possibly hope to dig out a solution.  The bit of the picture presented to us leaves more gaps than facts.

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More info

I try to keep my postings short in order not to bore busy readers. It is all legit. The mortgage was taken out 20 years ago, when the client was making a decent living and long before he suffered ill-health. There has been a recent court repossession hearing, and the client was given 3 months deferral by the court, as he produced a medical certificate 'signing him off' for 3 months. I have now been advised that the Government's mortgage rescue scheme may save the client.

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I'm sorry !!??

He bought a house 20 years ago.  It is worth £200k.  He has a £300k mortgage on it.  Er, is it on a coastal cliff?   Is it on a mine shaft?   Have they built a motorway at the foot of the garden without offering compensation?  In other words, you still haven't given half the story.  It's no good being brief and not boring folk if the brevity leaves out material aspects.

He has £90k arrears.  So he has been in default for ages?   And the bank is being unhelpful.  

LOL.  We haven't been given a single reason yet why the bank should have been helpful  -  getting on in years and ill-health are no easy matter, but nothing actually explains the situation.

Whatever, pleased to hear there is some Govt scheme which will help.  I guess one more credit failure, one more bank bail-out  to add to the zilliions, makes little difference.

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3 - 6 months

Usually banks allow 3-6 months arrears maximum.

6 repayments on a £300,000 mortgage is about £3,000 - where does the other £87,000 come from? 

There is something very odd about this.

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sounds like its his own fault
Why and how did they, the client, let this happen?

The banks are guilty of a lot, but it sounds like they may have had the wool pulled over their eyes here.

20 years ago, the client bought a house, which is now worth 200,000 but has a 300,000 mortgage on it? Have the bank been paying him, rather than him paying them?

Fill is in with all the details please, I am intrigued immensely by this one!

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Raking over the coals

There is not much point in analysing what went wrong, since he is where he is, like it or not, although the rescue scheme may well be the answer. He ran into financial problems about 10 years ago and this has been aggravated by recent ill-health. With the aid of a mortgage broker, he took out regular self-certified loans from a number of banks, to meet his living expenses and loan interest, and the property valuation was somewhat exaggerated each time in order to obtain the top-up loans. This broadly worked while property prices were rising and while banks were relaxed about lending, but things have now gone badly wrong.

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Good grief. We eventually get there.

He falsified loan applications. 

Possibly in conspiracy with others. 

Presumably you reported all this to NCIS / SOCA at the time? 

If not, you may need to watch your position, not his.

(and yet, let's face it, you initially presented this as some poor old pensioner in ill-health being hounded by the nasty old banks.  I particularly love your bit about "the banks are being very unhelpful".  Words fail.  He quite deliberately took their (our!!??) money under false declarations and pretences, and spent it.  What, apart from physical violence to the train driver, is the difference between your client and the great train robbers exactly?  Why exactly do you think the banks should have been very helpful?)

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"It is all legit"

"With the aid of a mortgage broker, he took out regular self-certified loans from a number of banks, to meet his living expenses and loan interest, and the property valuation was somewhat exaggerated each time in order to obtain the top-up loans"

Can you please explain and reconcile these two statements you made.

I agree with previous post ;  you may need watch your own back as much as your client's.   Self-certified perhaps, and in cahoots with broker, but with your knowledge?  Tin-hats time.

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"Have the bank been paying him, rather than him paying them?"

That appears to be precisely the case !!!

Except that raising such inconvenient trifles is "raking over the coals",  rather than dealing with the here and now.

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The answer

It seems that the Mortgage Rescue Scheme is aimed at precisely this kind of situation. It deals with families or elderly people, and the Government is obviously very keen to stop people being thrown out of their homes because of arrears. The Court and the bank should have brought this scheme to the client's attention, and it was inefficient of them not to do so.

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And so it's Official

Crime would seem to pay.

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"It seems that the Mortgage Rescue Scheme is aimed at precisely this kind of situation"   Priceless.

Er, what, where the borrower has obtained money under false pretences.  Perhaps you are right.   Bring out the straightjackets.   And yes, terrible dereliction of duty by the court.  Sue 'em, it will come out of public funds.  Happy Christmas to all, including the elderly fraudster.

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money laundering made easy
Well I think that the OP should be making his report to soca before he breaks up for Christmas.

It drives me crazy, its people like this old gent that caused a lot of this financial crisis. True the bank should be more responsible with its lending, but people should be responsible borrowers too.

When I pay my tax bill in January, and my clients pay theirs, shall we just make it payable to this mortgage company?


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and other posters (or OP posting further) :  " Households that have debts that are up to 20 per cent greater than the value of their home are now able to apply for the scheme".  

Mortgage £390k  (or £300k - I'm not totally sure which).  Value of home £200k.  Ah.  Perhaps the Court and the Bank were not quite so "inefficient"  (LOL) as surmised.

I think there appears to be a 20% gap problem.  Unless of course the OP can help the client bridge that gap with a false valuation.

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