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Can a loan company change a secured loan to a personal loan?

Hi there! I desperately need advice please. Last year, my home was repossessed due to dealing with a rogue mortgage advisor. We had a suspended repossession order on the property already but needed a simple remortgage to gain control financially once more. Anyway, to cut a very long story short, the house was sold but there was a shortfall on the mortgage and not enough money to pay off any of the secured loan. We have recently recieved a claim form issued by court to claim back the monies plus costs etc from the loan company. Can they do this? I have been told by different people that they can't as the loan was secured on the property and it should have been the mortgage lender's responsibility to ensure that when the house was sold, there would be enough money in the pot to clear both the mortgage and secured loan. The house was sold for alot less than market value for "a quick sale" for want of a better phrase. This seems completely unfair and I don't know what to do. Any help, advice or to point me in the right direction would be very much appreciated. Thank you for taking the time to read this posting.

Hello,

Unfortunately if a mortgage company has repossessed a property then they can sell that house for any figure as long as it is reasonable. They don't need to cover costs of a secured loan if that value isn't reached. What then happens is the shortfall of borrowings against the property would then be treated as an unsecured debt unless there is another property involved that they could secure the debt against.
The good news is that because it can be treated as an unsecured debt the repayments can be negotiated. If you want any further advice give DAT a call and they will be able to go into more detail with you.
Hope this helps