I have a buy to let property which fell into arrears. The mortgage company NRAM (Northern Rock) wrote to my old address to advise that the property was in arrears and that if I did not contact them to arrange a repayment plan, an LPA receiver was being appointed. I wrote to the person named on the letter two days later but did not receive a reply. I then received a letter from an LPA receiver (Touchstone) again sent to an old address, advising they had been appointed. I phoned NRAM and after a long and rather heated conversation they told me that the only way to have the LPA receiver dis-instructed was to pay the arrears in full. This was reiterated several times in the conversation. As the arrears situation was causing me a great deal of stress, I decided to approach my bank for a loan - not believing I would get one as the mortgage was in arrears. They agreed to lend me the money and I reasoned that with the lower mortgage repayments I could use the balance from the rent to pay the loan. I paid off the arrears in full then phoned NRAM for confirmation they would disinstruct the LPA receiver. They advised me that they would NOT do so. I asked what would happen with the £240 excess of rent and was told they would 'run my account in credit', basically, keep that money for themselves. The property is not in negative equity. If they take this course of action I will not be able to pay the bank loan as I have no money to do so. Are they able to continue to instruct an LPA receiver even if there are no arrears on the account and are they able to keep the balance of the rent?Any advice gratefully received. (I am in the UK)
System of Law: England-and-Wales
Written to mortgage company, approached FSA ombudsman
Hi, No but I haven't asked them. All they said when I phoned to say that the arrears had been paid off was that the woman I had spoken to had left a note on the account to say that they LPA receiver would not be disinstructed. I didn't take any independent advice as I believed, rather naively, that as the woman had said that the only way to get the receiver dis-instructed was to pay off the arrears that if I did so, then they would. Based on their previous behaviour - letters sent to old addresses with time limits for reply so we had no opportunity to address their issues in time, etc - it was probably unwise. The tenants have today passed on a letter received from the LPA receiver in which they have used words like 'legal action will be taken against you if you fail to comply', 'if you do not cooperate you may receive a visit from our representative', 'you will need to prove your right to occupy the property' which I believe are rather intimidatory in nature.
Sorry to butt in but would you be able to comment on the legality of taking all the rent for the mortgage company when it is some £200 a month in excess of the mortgage payment. I read some of the Law of Property Act 1925 last night that appeared to say that any excess must be returned to the mortgagee. With regard to the FS Ombudsman, I have been told that they do not act on Buy to Let Mortgages
LLB, LPC, DELF
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