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Most lenders have a policy that they will apply for an Order for Sale once a mortgage account is 3 months in arrears. This will first involve passing the account to a firm of solicitors on the panel of solicitors approved by the lender.

 Once this has been done, the lender is likely to refuse any further communication with the borrower, and he must deal directly with the solicitors. Under the mortgage agreement the borrower will have agreed to pay the solicitors charges, and therefore the cost of any discussions can be high. In most cases the solicitors will insist on obtaining an Order for Possession, but will agree to this being suspended if the borrower has a realistic prospect of paying the arrears and maintaining payments within a reasonable time.

Lenders are usually signatories to a Lending Code, a voluntary agreement with the mortgage industry intended to promote good practice. It is probable that having a fixed policy on possessions, and delegating communications to external solicitors is in breach of at least the spirit of the Code. The Code is now administered by the Financial Services Ombudsman.
Once a lender has issued a Summons, then the matter will be given a hearing date at the local County Court and the borrower will have the opportunity to reply to the Summons with any defence. The lenders will inevitably attend the hearing through a local solicitor instructed by the lenders solicitors. It is vital that the borrower should also attend the hearing.

The Court has a number of options available to them. One such option is to make an outright Possession Order when they will specify a date when the borrower will be required to leave the property. Another option is the making of a Suspended Possession Order. This would enable the borrower to remain in the property so long as they complied with the terms on which the Suspended Order has been made. Typically, in such a case the Court would order the borrower to pay current mortgage installments together with a fixed monthly sum off the arrears. The Court also has powers to adjourn the proceedings or to dismiss the proceedings if they do not think any form of Possession Order is appropriate.

If you are attending a possession hearing you should be ready to explain to the Judge why mortgage arrears have accrued. You should also be in a position to satisfy the Judge that you will be able to pay off any outstanding arrears within a reasonable time.

Even if it is clear that you are not going to be able to discharge the arrears or maintain future monthly payments, it is sometimes possible to persuade the Court to allow you a little more time in order to see if you can sell the property yourself rather than have it repossessed. This is important. If the lender sells the property, it is unlikely to be presented in the best way to realize its full market potential, and the costs of sale are likely to be far more than if you arranged these yourself.

Substantial legal costs will be added to the mortgage account once solicitors are instructed. After this time there will be little flexibility in reaching a sympathetic agreement. You should therefore always:

· Try to reach an agreement directly with the lender before matters are passed to solicitors

· Keep to any agreement reached with the lender

· Inform the lender of any problems when they occur

· Make early arrangements to sell your house, if financial problems make maintaining the mortgage impossible.

· Ensure that your lender complies with the mortgage code, and properly considers your situation