Defending Mortgage Repossession
How to defend a mortgage repossession claim and explore options to stay in your home when your lender seeks possession.
Prezentare generală
When a mortgage borrower falls into arrears, the lender can apply to the court for possession of the property. However, repossession is a last resort — lenders are required by the FCA Mortgage Conduct of Business (MCOB) rules and the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears to take all reasonable steps to resolve arrears before issuing proceedings. Courts have wide discretion to adjourn or suspend repossession proceedings under s.36 of the Administration of Justice Act 1970.
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- You are likely eligible to use this guide if your situation involves defending mortgage repossession.
- You have a genuine legal basis for the matter (contract, tort, statutory right, etc.).
- You have made reasonable attempts to resolve the matter directly with the other party first.
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Engage with Your Lender Immediately
Contact your lender as soon as you miss a payment or foresee difficulty. Lenders are obliged under MCOB 13 to treat customers fairly and explore options before commencing possession proceedings. Options include: a payment holiday, reduced monthly payments, extending the mortgage term, or capitalising the arrears. The FCA expects lenders to consider all reasonable alternatives. Lenders cannot issue proceedings without first complying with the Pre-Action Protocol.
- Contact the lender in writing — keep copies of everything
- Request details of your current arrears and a breakdown of the account
- Ask about the government's Support for Mortgage Interest (SMI) loan if you receive a qualifying benefit
- If your arrears arose from unfair treatment, check your credit agreement — unfair relationship provisions in the Consumer Credit Act 2006 may apply
Seek Free Debt and Housing Advice
Contact a free debt and housing advice service: Citizens Advice, StepChange, National Debtline, or Shelter. A specialist housing adviser can: review whether the lender has complied with MCOB requirements, help you prepare a financial statement, negotiate a repayment plan, and attend the hearing with you. Many local authorities also have mortgage rescue schemes.
- Bring all correspondence from the lender, your mortgage agreement, and a budget to the advice session
- StepChange (0800 138 1111) and National Debtline (0808 808 4000) are free and specialist
- Check whether you have payment protection insurance (PPI) — though claims are now largely time-barred
File a Defence and Attend the Hearing
If possession proceedings are issued, you will receive a claim form (N5 or N120) and must respond. Even if you cannot pay the full arrears, attend the hearing and bring: a financial statement showing your income and expenditure, a realistic proposal for clearing the arrears, and evidence that the lender has not complied with the Protocol or MCOB if applicable. The court can use its powers under s.36 AJA 1970 to adjourn or suspend the possession order on terms.
- A suspended possession order gives you the chance to pay: provided you keep to the terms, you can stay in your home
- Under s.36 AJA 1970, the court can suspend the order for any period it thinks reasonable
- You must show the court you are likely to be able to pay the current mortgage instalments plus instalments off the arrears within a reasonable time
- Take your mortgage statement showing the full arrears and your mortgage account number
Consider Refinancing or Sale
If you cannot meet the terms of a suspended possession order, explore: refinancing with a more affordable lender (if equity allows), a voluntary sale (you sell the property yourself and repay the lender from the proceeds — usually better outcome than repossession), or a 'deed in lieu' arrangement. Voluntary sale avoids the costs and damage of repossession and allows you more control over the timing and price achieved.
- A voluntary sale at market value produces a better price than a lender's forced sale
- If your property is in negative equity (worth less than the mortgage), speak to the lender about a shortfall — they may agree to write off some or all of the deficit
- Any shortfall after sale is an unsecured debt — consider debt advice on your options
If Repossession Cannot Be Avoided
If the court makes an outright possession order and you cannot appeal or comply, make practical arrangements: request a property inspection with the lender's agents to agree the condition of the property, remove all personal belongings, and notify relevant authorities (DWP, local authority housing for homeless assistance). Apply to the local authority as homeless immediately — you may have priority need.
- Apply to the local authority as homeless as soon as repossession is confirmed — you may be housed in temporary accommodation
- Remove all valuable belongings before handing over the keys — the lender's agents will secure the property quickly
- You have a right to a Statement of Account from the lender showing the final balance — this is important for any shortfall negotiations
Challenge Unfair or Excessive Lender Charges
If the lender has added excessive fees, charges, or arrears management costs to your account, you can challenge these through the Financial Ombudsman Service (if the lender is regulated by the FCA) or through the court. The FCA's MCOB 13 requires charges to be no more than reasonably incurred. Excessive charges can inflate the arrears figure and make repayment less achievable.
- The FOS has awarded compensation where lenders have charged unfair fees on mortgage accounts in arrears
- Request a full account statement with an itemised breakdown of all charges
- Check whether the lender has complied with its own arrears management policy
Costuri
Avertismente importante
Do not ignore a possession claim — failing to attend the hearing means the court will almost certainly make an immediate possession order.
A repossession will appear on your credit file for 6 years and significantly affects your ability to obtain any future mortgage.
Even after repossession, if the sale proceeds do not cover the outstanding mortgage, you remain liable for the shortfall — this is an unsecured debt.