My shortfall has been bought by a non member of the MCL,am I still liable for the shortfall? My signed agreement was with my mortgage lender.

-- Monika Murphy (monzz@blueyonder.co.uk), January 31, 2003

Answers

Monika,

Presumably you mean the CML? If you do, then I would give them a ring and ask them. You can find their number in my answer to the posting before yours '6 or 12yrs am i liable'. One way, I believe, for lenders to "avoid" the CML 6 year voluntary code is by selling on the debt to a debt collector.

Mark.

-- M Amos (idgroms@hotmail.com), January 31, 2003.

Surely if a debt is sold on, it is only valid for 6 years as it would become a simple debt.

1. You sign an agreement with a lender to get a mortgage. 2. The mortgage is defaulted. 3. The lender sells the debt to another company (presumably for a good price - which may be less than the original debt). The lender has their money (or enough to satisfy them). 4. YOU have no contract with the buyer of the debt and the debt is no longer in relation to a mortgage because the mortgage debt has been satisfied with the lender. Therefore it is a simple debt and only liable for 6 years?

Please put me right if I've got this wrong.

-- One Angry Mother (madcow678@hotmail.com), February 03, 2003.

Tracey,

A solicitor's view re the selling on of a debt is the following:

"My view is that if a creditor sells a debt, the purchaser acquires all the same rights and responsibilities as the original creditor, the vendor.

This happened in a number of pre Bartlett cases, e.g Tupper, Global v Jones, Securum Finance v Ashton and Arbuthnot Latham Bank v Trafalger Holdings (related to the Ashton case). In none of the cases was it even argued that the situation is anything other than the above."

He went on to say:

"Regarding limitations and assigned debts, my view is that the assignment (providing it is properly drafted) makes no diference. If time has started to run against the original lender, it will continue to run against the purchaser of the debt. Likewise, if a debtor has acknowledged a debt to the original creditor, it will have started time running afresh for that original lender, and time will continue to run on the same basis in respect of the purchaser. I can't see any reason why an assignment should restart a new limitation period or change the limitation period applicable to the debt. Liability arises under the original loan/mortgage contract and not under the contract of assignment. If this were not the case, a simple contract could be assigned by way of deed, (a specialty) and thus give the purchaser the benefit of a 12-year period where the original creditor was subject to a 6-year period. This would clearly be illogical, unfair and unacceptable."

He also said that one should ascertain that a debt has been correctly assigned in cases where a debt has been sold on. He would be interested in any arguments to the contrary in respect to the above (so would I). If anyone does have such a legal argument please let me know. Mark.

-- M Amos (idgroms@hotmail.com), February 04, 2003.

Thanks Mark,

That makes it so much clearer!!!

T

-- One Angry Mother (madcow678@hotmail.com), February 05, 2003.