Pre-action protocol for mortgage possession claims

Residential mortgage lenders will be required to have complied with the pre-action protocol in all
mortgage possession claims commenced in England and Wales from 19 November 2008.

The pre-action protocol is designed to encourage parties to exchange information at an early stage, to encourage early settlement of cases or where that cannot be avoided, more efficient case management.

Lenders will be expected to demonstrate that they have tried to discuss and agree alternatives to repossession when borrowers get into trouble with their mortgage repayments. If a case reaches court, lenders will be required to tell the court precisely what they have done to comply with the protocol. It does not alter parties existing rights and obligations although the overall aim of the government has been to help make repossessions a last resort.

The key points of the pre-action protocol are:

· It applies to all first and second charge lending over residential property.
· Lenders will be required to tell the court precisely what they have done to comply with the protocol
· If a lender rejects a proposal for payment of the arrears it must give written reasons to the
borrower within 10 working days.
· The lender should consider not commencing proceedings where the borrower has applied for mortgage payment protection insurance, has a reasonable expectation of eligibility, and can cover the excess, also where the borrower has demonstrated the property has, or will be, put on the market at an appropriate price or has submitted a genuine complaint to the Financial Ombudsman Service about the potential possession claim.

Where the lender decides not to postpone possession proceedings in any of the
circumstances described it must inform the borrower of the decision with reasons not less
than 5 working days before commencing proceedings

Additionally, there are provisions requiring lenders to consider reasonable requests from the borrower for a change of payment date, to respond promptly to a borrower’s proposal for payment. The parties should take all reasonable steps to discuss with each other, or their representatives, the cause of the arrears, the borrower’s financial circumstances and proposals for repayment of the arrears.


For more information visit:
http://www.civiljusticecouncil.gov.uk/files/Mortgage_Pre-Action_protocol_21_Oct.pdf