Repossession

The ongoing nature of the pandemic and its effect on the working population and the economy continues to impact on many legal areas, including repossession cases. If a homeowner defaults on their mortgage payments, the lender will liaise with them to try to assist in the initial stages but ultimately, if the matter cannot be resolved, the lender will take possession proceedings. This involves the lender applying to court for an order for possession which, if achieved, results in the borrower losing their home.

The Financial Conduct Authority (FCA) issued guidance on mortgages and consumer credit repossessions in November 2020 which provided that firms should generally not enforce repossessions before 31 January 2021, except in exceptional circumstances. The FCA now proposes to extend this guidance so that firms should not enforce repossessions before 1 April 2021.

The FCA has also proposed that consumer credit firms can repossess goods and vehicles from 31 January 2021 but only as a last resort and subject to complying with relevant government public health guidelines and regulations. Firms will be expected to consider the impact on customers who may be vulnerable, including because of the pandemic, when deciding whether repossession of goods or vehicles is appropriate.

The FCA states that:

'This approach takes account of the worsening coronavirus situation and the government's tighter coronavirus-related restrictions which mean that consumers could experience significant harm if forced to move home at this time as a result of repossession proceedings. We recognise that there are also government bans on evictions in some nations, which could also prevent firms from enforcing home repossessions.'

The other side of this coin is that lenders have been reminded that court proceedings to enable repossessions can now proceed. This means that the court hearing relating to the application for possession can go ahead (whether remotely or otherwise). If the lender is successful in obtaining an order for possession, they will be able to go through with the eviction when these are permitted by the FCA. Some lenders take the view that starting possession proceedings can prompt borrowers into discussion or action regarding any arrears.

The outcome for borrowers in difficulty means that a lender could bring a court action to obtain possession. The only aspect of the process which would be delayed is the actual eviction itself. If any borrower is facing court proceedings, they should consider taking specialist legal advice. This will, in most cases, require the borrower to pay for this legal advice, but it might be money well spent if losing their home is the alternative.

To discuss this or any other litigation matter, contact us.

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