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case studies about mortgage shortfall



the mortgage company got a good price for my house - it's not fair that I still owe them money ...

Some people who contact us are confused about why they still owe money - given that their house has been sold. They may feel it's unfair they have to pay more when they've already lost their house.

  • It’s likely the mortgage company will have incurred costs in selling the house - and interest might continue to be added to a mortgage until the house is sold. So we'll usually say it's fair for a lender to pursue these costs if they’re not covered by the money from the sale of the house.
  • But it isn’t fair to put someone into financial difficulties to recover a shortfall. So we’ll check the lender has worked with their customer to put in place a fair payment plan - taking into account the customer’s individual circumstances. This may mean getting support from an independent organisation like a debt charity, which can help people to work out their income and expenditure and to reach a realistic repayment plan.
  • If we decide a lender hasn’t treated their customer fairly, we can tell them to pay compensation for any upset they’ve caused.


the mortgage company didn't get a fair price for my house - so I shouldn't have to pay the shortfall ...

We sometimes hear from people who feel their mortgage company should have kept their house on the market for longer - so they would have got a higher price, and there wouldn't be a shortfall to pay.

  • If someone feels their house was sold too quickly, we’ll look into how long it was on the market - and how circumstances such as market conditions might have affected the sale price.
  • Interest continues to be added to a mortgage until a house is sold. So we’re unlikely to decide it’s fair for a lender to wait years to sell a property for the price it was initially valued at. We’ll consider whether the lender got the right balance of waiting for a fair offer, without keeping the house on the market indefinitely.
  • We’ll check that a lender got more than one valuation for the house, including at least one independent valuation. If the lender received an offer that was below the valuation price, we’ll consider what the estate agent said about the offer - to see if it seemed fair in the circumstances.
  • We’ll also check that the house was marketed fairly by at least one local estate agent. We’re unlikely to say it’s fair for a house to be marketed as a repossessed property, for example - as this is likely to lead to it being sold for a lower price.
  • If we decide a lender didn’t get a fair price for a house, we might tell them to write off some of the shortfall. They might also need to pay some compensation for any stress or upset their error caused their customer.


I agreed a repayment plan with the mortgage company, but now they're asking me to pay more ...

Some people tell us they agreed a repayment plan to repay their mortgage shortfall, but their lender now says they’re not repaying enough.

  • It isn’t necessarily unfair for a lender to review a payment plan someone’s agreed. If someone’s circumstances have changed, we might agree it’s fair to reduce their monthly repayments - or they might be able to pay off the debt sooner by increasing their repayments.
  • Some people tell us they feel their mortgage lender has harassed them about the shortfall. We’ll check how often the lender has been in contact and how - including whether the lender has taken account of their customer’s communication preferences, such as not phoning at certain times. We’ll also consider whether there’s any evidence that someone avoided being contacted about the shortfall.
  • If we decide a lender has acted unfairly in how they’ve pursued someone for payment, we’ll tell them to work with their customer to agree a reasonable payment plan. We may also tell the lender to pay compensation for any trouble, upset or stress they’ve caused.

case study 1

Miss R’s house was repossessed and sold, leaving a shortfall. She agreed a repayment plan, with her £15 monthly payments due to be reviewed after 12 months. But the lender continued to contact Miss R several times a month, asking if her circumstances had changed - with a view to increasing her payments.

We said it was reasonable for the lender to try to recover the shortfall debt. But we didn’t think it was fair for them keep contacting Miss R each month, when she’d already agreed a repayment plan. We told the lender to review her circumstances after 12 months - and to pay her £500 for the upset and stress they’d caused her.



I didn't hear anything from the mortgage company after they repossessed my house - but now they're telling me I owe them money ...

We sometimes hear from people whose house was sold some time ago - who say the mortgage company has only just got in touch to say there’s a shortfall to pay.

  • Under the rules that apply to mortgages, there are certain time limits lenders have to keep to when they’re asking someone to repay a shortfall. In general, for regulated mortgages, a lender will need to tell their customer within six years that there’s a shortfall to repay.
  • In some cases, we find that a lender initially contacted their customer about the shortfall - but then lost contact for some time before they began to ask for repayments. We’ll look at how long the delay was, and consider whether there’s a reasonable explanation for it. If we decide a lender has taken an unreasonable length of time, we might say it’s not fair for them to tell their customer to repay the shortfall.
  • Some people tell us they thought any mortgage debt would automatically be written off once their property was sold. We explain why this may not be the case - and encourage lenders and their customers to work out a repayment plan that takes into account their monthly income and expenditure.

case study 2

Mrs J’s house was repossessed and sold, leaving a £40,000 shortfall. She agreed a repayment plan - but after a year, she stopped making payments. When the lender contacted her 11 years later, they asked her to repay the remaining shortfall debt.

Mrs J said it was unfair to be asked for the money after so long. But the reason the lender hadn’t contacted her was because she’d moved house, and hadn’t told them her new address. The lender got in touch as soon as they traced her - and we thought it was reasonable for them to ask her to repay the shortfall.

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