The Scottish Government

« Previous | Contents | Next »

Listen

MORTGAGE ARREARS AND REPOSSESSIONS IN SCOTLAND

Annex Seven: Borrowers case studies

1. Male

Mr x bought his house under the right-to-buy in 1983 from the Scottish Special Housing Association, now Scottish Homes. He paid £11,800 for this property with a 100% endowment mortgage.

Events were fine until 1989 when they discovered that the central heating that Scottish Special had put in the homes was of a steel construction and consequently eroding the property structure. The SSHA solved the problem for those renting but not for those who had already purchased their property. Home owners affected by this took SSHA to court and lost. He thought about selling but realised the practical difficulties involved and decided not to bother.

He took a second mortgage loan with a private finance company in 1989/1990 for an estimated sum of £10,000. He did not add this to the house but used it to pay other debts such as credit cards and holidays. There were no other problems until he was sacked in 1997. This impacted directly on the mortgage. He was unemployed after dismissal and the DSS paid mortgage payments at 7%. He was unable to meet the shortfall from his benefits. He was repossessed on 23.03.01 and now lives in council property. He is currently unemployed.

2. Male - aged 22

Mr Y bought a 2-bedroomed ground floor flat in a newly built estate for £42,000 in 1998. He took a 100% endowment mortgage.

He had £1000 outstanding to pay on an original loan of £3000 from Bank x at this time. In January 1998 he took out a further £10,000 loan with Bank x. In March 1998 he lost his job. He approached the bank to inform them that he could not make the payments and they extended his overdraft to £1,500. In May 1998 he got a job, paid off the outstanding arrears and took out a further loan of £7,500, this time with a private finance company. In November 1998, Bank x got him to take out a £16,000 loan to pay off previous loans and to consolidate private loan. Everything was fine for a year until December 1999 when he had paid of an estimated £10,000 of the loan.

At this point he borrowed £15,000 from a mixture of family and friends and lost the lot in a failed drug deal. Shortly afterwards in January/February 2000 he lost his job again. He struggled to pay his debts and was also being blackmailed over the failed drug deal. He began to miss payments from January 2000 onwards.

The bank has treated him quite well. They have proceeded with a forced sale and are allowing him to reside in the property until it is sold.

He feels that there is too easy access to credit.

3. Female - aged 28

Mr and Mrs A bought a house in 1994 having sold a flat that they owned. They were initially refused a mortgage for this new house as they had taken out a £5000 home loan on top of the previous mortgage which was still outstanding.

They went back to the bank that had originally given them a mortgage for the flat. They got a 100%+ endowment mortgage (they added the solicitor's fees) from Bank x. This was the same bank with whom they had the loan.

Their circumstances changed when Mr A's overtime at work was stopped - they had based all their finances on this as it had been regular and seemed secure. This coincided with the birth of their second child, after which Mrs A became depressed and isolated. As a consequence she put the first child into a private nursery to help her cope with the baby. Outgoings now increased because:

1. She was now paying nursery fees.

2. She needed the car to get to the nursery, therefore her husband was taking the train a significant distance to work.

3. She was running up large telephone bills because she was isolated.

Other debts at this time included a home loan from the first mortgage, a car loan and a budget account (a type of account where you spread the cost of household bills and can withdraw/borrow on it) with Bank x.

They took out an 'indemnity insurance' which cost £600 and which they were led to believe would cover the mortgage in the event that they could not. No-one they contacted since seems to know what this is. They got a solicitor to contact the bank regarding this after the house was repossessed and sold with a shortfall of £16,000. The bank, on the strength of the solicitor's intervention reduced the arrears/shortfall to £11,000. Mrs A now wants to know, if the indemnity insurance does not exist, why did the bank reduce the amount owed, and if it did exist, then why does she owe anything.

Mr and Mrs A left the house and moved in with her parents pre-repossession and left the bills/mortgage unpaid. She only found out it had been repossessed when she saw that it had been sold in the newspaper. She was never informed by the bank of an imminent repossession and had no idea that she could have gone to court and made a defence. She does not think her ex-husband is aware of any of this either although they have since separated and she no longer knows where he is.

The process could have stopped if the bank had communicated with them more, allowed them to pay less on their loans (consolidate them). They would have liked to have paid less on their arrears while still paying their mortgage. As it stood they paid £100 extra per week to cover arrears, if they could have afforded that, they would not have been in arrears.

4. C - aged 54

Mr and Mrs C bought their house in 1980 for £19,250. They had one child at the time - Mr C worked full-time and Mrs C worked part-time. They took out an endowment mortgage and put down £5000 deposit. They had a further £6000 in savings to renovate the house. In 1986 they re-mortgaged the house in order to build an extension. They also took out new policies with Standard Life at this time which have grown really well.

Mr C was made redundant from off shore work in 1996. He managed to secure various contracts for deep-sea work as an electrical officer. Whilst abroad Mr C became ill in 1998. He was off work for 18 months. During this time he would not sign on for benefits and so lived on their savings for about a year. Even when he wanted to go back to work he could not as his work required medical certificates to go to sea and the drugs he was taking prevented this.

Mr C is not exactly sure on the timescale but knows that in August/September 1999 he was sent a letter by the bank's solicitors threatening repossession. There were three months arrears amassed over a six month period as they had been paying what they could when they could. With help from his children Mr C paid the arrears by December.

He is very annoyed because the Building Society x should have come to him to discuss it, he could have cashed in other policies and paid the mortgage off. The did not warn him, advise him or deal with him personally. When he tried to contact them to discuss difficulties during illness he was given a central number in England to call and he called repeatedly until he got through. They would not accept his offer of paying less until he could get back to work.

Mr C says that Mortgage Payment Protection Insurance did not exist in 1980 when he purchased his home.

He is furious with the Building Society as he is now back on his feet and has had no recurrence of arrears. Should he fall ill again he would cash in his policies with Standard Life immediately.

He thinks his lender could have helped him by suspending or reducing his payments for six months, after all they had made a fortune out of him since 1980. He now knows that the Bank x would have taken over the mortgage and lent him money against it, he feels that Building Society x could have done the same. He says that lenders do not give you enough advice, support or loyalty - they'll just drop you when you're ill and watch you fall.

5. Female - aged 57

Mrs D was living in England with her husband. After her divorce she decided to come back to Scotland with her three children. She worked for the benefits agency down south and secured a transfer to Scotland. She bought a three bedroomed house in 1986 for £24,000. She put down a £3,000 deposit.

She left her job in 1987 through her own choice as she thought she would be equally well off on benefits as she was working. She intended to get a better job but her age went against her. At this time her mortgage interest was covered by the state and she paid £30 per month towards the endowment policy. In 1996 the laws governing a claimant's mortgage repayment was changed. Instead of a variable interest rate being paid, a fixed figure of 7% was calculated from the national average and put into effect. This resulted in a shortfall of £30 per month which she struggled to pay from her benefit money. She has tried to gain employment but has struggled due to her age and the high rate of unemployment in her area.

As a consequence of her low income she is constantly in arrears and struggles to pay other debt such as a hire purchase agreement with Scottish Gas for central heating. She has also fallen behind on bills such as council tax but her three now grown up children help her to pay things.

She has no MPPI and does not think it existed when she took out her mortgage.

6. Female - aged 33

In 1991, Mrs S, who was then single and working bought her one-bedroomed council flat for £12,000. Another £8,500 was added onto the mortgage for home improvements.

Mrs S got married and in 1996 with a child on the way she and her husband bought a bungalow for £55,000. They had both always worked, had a flat to sell and did not see this as a risk. They could not sell the ex-council flat and so rented it out instead. Things were fine until the tenants got their own place and they found that they could not let it again. They kept trying to sell it but in the meantime they had two mortgages to pay.

They took out a £3,000 car loan, £2,000 HP with a furniture shop and approximately £2,000 on each of their credit cards. As they now had two mortgages to pay, they began to increase their overdraft to cover debt/mortgage repayments. The overdraft was £4,500 and the bank had them consolidate it into a bank loan. At around the same time Building Society x loaned them £10,000 to pay off their car loan and consolidate other debts.

They began to get into arrears with the ex-council flat, all utilities including telephone and council tax but were managing to meet their loan repayments and mortgage on the bungalow.

Things were getting too much. They though that the best course of action would be to sell both properties and start again, thus avoiding the humiliation of repossession. They have done this but are now in a situation where they cannot get a mortgage because of existing debt and the fact that they have had their loans consolidated by Baines and Ernst. They are not eligible for council property because they voluntarily sold their house. The council have said that Mrs S would have to leave her job or leave her husband before she could be considered for a council property.

They are still both employed, so although they took out MPPI, they had no reason to claim on it. They are paying £500 per month in privately rented accommodation.

A way to have prevented this, according to Mrs S, would be to make credit less easily available. She also believes the bank could have helped her to sell her flat and take a percentage from it as they could have managed the bungalow. She also thinks the bank could have reduced her loan payments as this has happened with Baines and Ernst anyway.

7. Couple - aged 46 and 47

Mr and Mrs L had an endowment mortgage for a house in G. for £35,500 which was extended to £40,000 on their move to E. in 1989.

Mid 1990 her husband became unemployed as his restaurant business failed. Their household income dropped by £200 per week. She never knew about household finances as her husband controlled all the money and only discovered later his levels of debt and evidence of the double life he had been leading.

Her husband eventually left in 1994 after 4 years of irregular employment and subjecting Mrs L to physical/mental abuse and attempted rape. The event that precipitated their separation was the police pursuing her husband for a rape offence.

After her husband left she worked full-time and tried to pay the mortgage. She got into arrears and the mortgage lender agreed to spread the payments and add them onto her mortgage. After 1996 she struggled to make the re-evaluated payments that were topping £400 per month.

At the time of her divorce in 1997 the lender offered her a deal - for her to clear the arrears and he would transfer the house into her name. This did not happen and her husband was awarded the endowment policy.

In 1997 she met a new partner who also had irregular employment and was struggling to meet his own payments to his ex-wife and children. At this point her family helped her to clear some of her debts and all of her arrears.

She and her new partner had a child in 1999 at the same time that her elder child went to college. Both of these events were an increased pressure on her finances. Her youngest son also has medical problems.

She was working until January 2001 when she was off work sick with stress. Her company paid her off in February 2001 although she managed to pay her mortgage until March 2001. At the same time her father died and she was finding it difficult to cope.

Shortly afterwards Building Society x instigated repossession proceedings. She went to her councillor and Council Homelessness Officer at the point of eviction. They intervened and got her a stay of execution for three weeks. She is now being permitted to stay in the house until it is sold whereupon she will take tenancy of a council property.

However, her ex-husband has not contributed to the house payments since 1994 and stands to gain from the house being sold as he would not sign it over to her. In the meantime, four months arrears have been added to the sale of the house by the lender and she still has to pay this.

She feels that the lender has failed to:

• Look at her circumstances and give her a re-mortgage to suit her needs
• Act on the house transfer
• Communicate/contact her
• Provide advice/counselling
• Have any face-to-face dealings with her - just referred her to their solicitors

Vis-à-vis advice, she feels that the CAB were helpful but could offer little practical input. The council homelessness officer provided good advice, practical help and contacts.

8. Couple - aged 32 and 33

Mrs W bought a flat in1992 for £28,197 because she was getting married. She and her husband bought it from a private individual who provided her with a mortgage broker friend of his. The mortgage broker did not give them any advice, just suggested that they went with an endowment mortgage package. He did not inform them of the existence of MPPI or a structural survey which would have been useful. They were young, naïve, first time buyers and in retrospect they realise that they did not receive adequate advice.

As they both had good wages at this time, Mr and Mrs W took on secondary debts amounting to £23,900 which they repaid on time.

In 1998, a variety of events occurred that led to repossession. Firstly, Mrs W fell pregnant and they decided to try and sell the flat. They had a potential buyer who was willing to pay £35,000 on the strength of a structural survey. The structural survey revealed damage to the gable end which was 22 years old. They contacted the bank, who was only interested in the mortgage payments, and their solicitor who said that they had no comeback. The second event was that Mr W's wages were reduced by almost half when his overtime and bonus stopped. They contacted the bank immediately and asked for a six month payment break but were told "no way".

They knew that the flat could not be sold, was now structurally weak and potentially dangerous so they took the decision to move out and refuse to pay the mortgage.

They were repossessed after two years and the house was sold at auction for £15,000, leaving a shortfall of £14,000. Their drug-dealing neighbour bought the property and they later discovered that he knew about the gable end and bought his flat on the proviso that he repaired it. They have now served a writ on him and the gable end is now being repaired.

They are left with the £14,000 shortfall and £16,000 on secondary loans. Mr and Mrs W are in the process of becoming bankrupt.

9. Female - aged 52

Mr and Mrs J bought a small village in 1991 for £255,000. This comprised eight buildings in various states of disrepair and sixteen acres of woodland. As the buildings are grade A listed, they knew that they would be entitled to grants for their renovation. They did not seek any formal forms of advice as they knew that what they were doing was unusual and felt that they had to work it our for themselves.

Initially, the village was purchased on one mortgage as there had been one seller - a local farmer who had allowed the buildings to fall into disrepair.

When they first moved in, they waited nine months for planning permission which held up all exterior work on the buildings and meant that they had to wait for grants and other funding.

This pattern of waiting continued but the bank allowed them to borrow on the strength of the imminent grants which paid off mortgage arrears and renovation costs.

As a means of releasing equity over the years, they began to mortgage the buildings individually in order to raise capital for the renovation costs. At first their mortgage lenders were two building societies but as their credit rating diminished due to occasional arrears, they were forced to take on mortgages with two non-prime sector lenders. These are two separate companies who operate from the same address and who specialise in lending to people with bad credit. Apparently, their interest rates are very high and they are quite ferocious when Mr and Mrs J get into arrears.

The past three years have been the worst for their arrears although they always manage to pay them off eventually. The reason for this recent spate of arrears is that they have been waiting three years for grants for the final building due to a cowboy architect. As a consequence they have used their money for renovation and fallen behind with the mortgages. They are clear at the moment.

Mr and Mrs J did not take out MPPI because their initial income came from renting properties in Edinburgh and they did not think they would be entitled to it.

10. Couple aged 49 and 38

Mr and Mrs N moved into a semi-detached council house in December 1997. They decided to buy it and got a broker to find them a suitable package. The cost of the council property was £29,000 but they wanted to borrow £36,000 for home improvements. Mainstream lenders would only lend them up to £30,000 so they went with a non-mainstream lender who gave them a 100% endowment mortgage worth £36,000.

At this time, Mr N had good job with a basic wage of £19,000 and an average wage of £32,000 thanks to overtime. They knew the purchase was risky because of their outstanding debts levels of £20,000.

The mortgage came through in December 1998 and everything was fine until September 1999. At this time, Mr N lost his job and they missed their first monthly repayment. They immediately contacted the lender as their intention was to keep the mortgage going to the exclusion of all else. They missed payments in Sept/Oct/Nov 1999 and paid £1200 in December 1999.

They managed to keep all payments going until September 2000 but they were never earning enough from temporary jobs to cover the payments of all their debts. They decided to sell their home but the council wanted £9,000 from the proceeds of the sale in repayment of the discount the got for being council tenants. They could not afford to do this so their solicitor asked the council to drop their request for payment. The council would not do this.

The house was repossessed in October 2000 and they did not defend the action in court. They now owe the lender £8,000 in outstanding costs and have arranged a monthly payment with the lender. The lender is still putting pressure on them for more money.

They had a positive reaction to the Mortgage Rights (Scotland) Act and felt it would have given them some limited breathing space but were not sure that it would have changed the outcome for them.

11. Couple - aged 69 and 62

Mr and Mrs U lived in England in housing tied to Mr U's job. He was retired in 1989 on medical grounds at the age of 57 an moved back to Scotland to a council property as this time.

In 1992 they bought their council property for£32,000 with a 100% endowment mortgage with Building Society x. They were asked to take out an additional insurance policy to cover the mortgage and only found out later that this would never pay.

Some mortgage lenders refused them on the grounds that they were too much of a risk but they found one that said yes, with the proviso of the extra insurance policy because of their age.

They made various changes to the house upon purchase but only borrowed for the double glazing which was a £1000 loan from Bank x.

Everything was fine until Mr U reached retirement age in 1997 and lost his disability entitlement. They had thought they had a fixed rate mortgage but it was fluctuating and the interest increased over time. They started to miss payments on the mortgage and cashed in shares to cover this. They missed more payments and Mrs U went into hospital with ill-health. Their son bought a house nearby so they went to live with him and tried to sell their own house.

They continued to miss payments and failed to meet other bills such as council tax, electricity and gas.

The house was repossessed and after the sale Mr and Mrs U were liable for £2,000. They have struggled to pay this and the loan to the Bank x for £1,000.

Mr U has an acrimonious relationship with the lender and complains that:

• The lender put unnecessary charges on after the sale
• The lender gave them poor information on the extra insurance policy that he was told would cover the mortgage in just such circumstances
• He understood that he would be making fixed payments not fluctuating
• The lender was unsympathetic to their circumstances and allowed them no contact with their solicitors.
• The lender gained from improvements to the house but would not help out.
• Poor pension/benefit levels to help out with mortgage payments

12. Male - aged 43

Mr E came to Scotland in 1986 with his wife and three children. They lived in X in rented accommodation for 6 or 7 years where they had a shop. He got the opportunity to buy another shop in Place C and so was looking to buy a house in Place C. He had been renting for quite a number of years and wanted his family settled in their own home.

He bought a house in 1990 for £57,000 having been refused a mortgage by several banks for being self-employed. He went with Building Society x where he did his everyday banking and took out a 100% endowment mortgage, with MPPI as part of the package. His house was with the Building Society x and the business was with Bank x.

Mr E felt that owning a business as well as a house was risky as these sometimes clashed. He was setting up a business from scratch and had to put a lot of money into it to build it up. So he thought that perhaps he was taking on too much, but he felt obligated to set his family up in a secure home.

After the purchase they redecorated and furnished the whole house. The money used for this was a mixture of borrowing and savings. Mr E borrowed £80,000 against the business with Bank x. His home was not tied up with the business, however, because he did not want to risk losing it.

He noticed a change in 1995/1996 in his income. Other businesses were opening up in direct competition, offering a 24 hour service which proved a problem for the small independent shopkeepers. He saw his sales decline and could not compete with the major players. That took the major toll for them. He did not borrow more to shore up the business as he felt he had already borrowed up to the hilt. He was paying everything as best he could but it was getting difficult to pay off the creditors. He had already paid off Bank x for the business loan as they had the title deeds to the shop.

He was missing payments to creditors such as suppliers and there was only so much he could pay in the light of reduced income. The sequestration was related to outside of the business, related to another creditor who took action (This other creditor was a private body related to education). They took this action in court in 1999 over £15,000. "I was trying to borrow from every avenue possible to try to make this payment but it was just too much. I was made bankrupt in December 1999".

The house was not affected initially by this action. The trustee for the bankruptcy informed him that he would have to sell the house to try and recompense his business creditors. Building Society x also took action for a repossession order at the end of 2000. He took it to his solicitors and pointed out the situation with a view to defending his position in court. He borrowed more from his family and cleared his arrears which stopped their actions. He has ongoing problems with his mortgage lender due to new arrears.

Mr E had a very positive response to the Mortgage Rights (Scotland)Act 2001. He says a court cannot take decisive action without knowing all of the circumstances, so these things should be taken into consideration.

13. Female - aged 27

Miss D joined the police force and bought her flat in 1994 after a period of renting. At first she took out a 100% endowment mortgage with Bank x on a two year fixed rate. After the two year was up Bank x wanted to charge £250 to put her onto another fixed rate mortgage. She was not prepared to pay that and so went onto a variable rate mortgage.

Her mortgage did not change significantly on the variable rate mortgage and her wages were increasing. The payments varied between £210 and £270 per month which was not outwith her means. In 1998 she had a bad year. She began to overspend, going into overdraft each month and writing cheques she did not have the money to cover. She knew she had a problem but did not do anything about it.

She had a store card with no more than £300 on it which was paid off. She had no other debt but she just 'had to spend her money'. This compulsive spending got worse because she was now putting off paying her utility bills to a greater and greater degree until she was being threatened with court action. She said she was earning £1200 per month, with no debt and no dependants so there was no need for her to let everything go the way she did, by her own admission.

In 1999, the mortgage payments began to be affected. Her bank account was with Bank x and until this point they had been honouring her cheques and direct debits, but they stopped doing this. She was maintaining the debt with her overdraft but never clearing it.

She knew she had to get it sorted out and that she had a problem but she did not do anything about it. She missed several payments and received a letter from Bank x telling her to make an arrangement to see them.

She telephoned the lender and they gave her a payment book to pay the mortgage on a monthly basis. She was off work sick for six months and living in D with her parents. She maintained payments for several months and then started slipping back and paying less and less. This was because she got her mobility back and was able to move back home from her parents. She was on her own again and was near shops and so she got worse with her spending.

Her telephone got cut off in November 2000, her electricity was in arrears and she was missing payments on her mortgage. In January 2001, she was served with a letter of repossession. Her parents found out at this point and went immediately to the bank and paid off her arrears and halted the repossession process. She borrowed £5,000 from the bank to help pay off council tax and utilities and to get her car back on the road.

They took the money but did not offer her any debt advice or budget management advice. Her father sorts out her finances for her and keeps a check on her spending.

She thinks it would be better if the lender allowed you to speak to someone face-to-face. She also complains about a lack of communication from the bank.

14. Male

Mr L bought his house in 1994 for £26,000 and put down a £3,000 deposit. He took out a 95% endowment mortgage with Building Society x. He bought this property after separating from his wife.

He was offered MPPI but refused it as it cost too much for what it covered e.g. only six months worth of mortgage payments in the event of job loss.

He was made redundant and the next job did not pay as well as his first job and so he began to get into difficulties. He was in this house for six years and got into intermittent arrears that he would pay off when he could. He got a new partner, got married and now had responsibility (along with her) for her mortgage too. There would be times when one would be working and the other would not and they would help each other with their mortgages.

He has tried to sell the property but it has not sold. Towards the end of last year he was given notice that in three months he would be made redundant. He went to see the bank and they came to an arrangement to pay a reduced amount for several months. When his statement came through he realised interest payments had been accruing on the full amount, the arrears and the monthly shortfall. He ended up owing more than his original mortgage after six years of payments.

In April this year after his redundancy came through, he got fed up with the whole situation and decided he was not paying his mortgage anymore. After three or four months he got a letter saying he had £600 arrears and a threaten of repossession. He told them just to repossess it and the action is imminent.

He had a positive response to the Mortgage Rights Act and felt it would slow the lenders action down and allow people time to get back on their feet.

Update: Mr L has been repossessed and now owes the bank £16,000 in arrears and costs as well as the original loan.

15. Couple

Mr and Mrs B bought their current property after owning a small flat. They needed a bigger property after the birth of three children They took out a 66% endowment mortgage with the Building Society x based on her husband's salary only as she was planning to retrain or study.

They bought a cottage in 1995 and added money onto the mortgage in order to build an extension. In 1998, they took on a business franchise, the first the company had opened up, which she now feels was a complete mistake. They bought the franchise outright as she had inherited money after the death of her father. They borrowed £24,000 as a business loan from the bank for which they put the house up as security.

They both gave up their jobs and dedicated themselves to the business. They went from having a regular monthly income to taking money out of the business to pay themselves. The business did not fare well and she was receiving money from her mother to buoy the business. The franchise broker had set them up and was useless. They were obliged to pay him a large fee, buy all products from him at inflated prices and received no advice or support in return. It was thanks to their good management that the business stayed afloat for two years. They were now in debt to the bank for the outstanding amount on the business loan (£19,000), and they now owed £8,000 in other cost such as Inland revenue and VAT.

In November 1999 they knew that the business would have to close as things were getting on top of them. They told the bank with whom they had the business loan about the business failure and about the franchise broker who was in default to the original contract and whom they were going to sue. They had not defaulted on the mortgage at this stage and the bank for the business loan said as long as they made payments each month they would await the out come of the legal proceedings against the franchise broker.

The court case went in their favour but the franchise broker claimed he had no money to pay them. They still owed the bank £19,000 and were told that if they paid the bank £9,000 , they could come to a settlement agreement and would keep their house which was the security on the original loan. They re-mortgaged the house with Bank x and borrowed some money from her mother in order to pay £10,000 to the bank and settle the loan.

They heard nothing from the bank and knew nothing until bailiffs were standing outside her house with a 48-hour eviction notice. They contacted the bank and a solicitor to try and reverse this process offering the money she had from the re-mortgage. Her local MP intervened and got them a stay of execution. During this time she has persevered with her offer of settlement. This has not been forthcoming and Mrs B is paying the loan of on a monthly basis again. The house is safe at this point but they still want to settle the loan in one lump sum instead of having it hanging over their heads for years.

16. Male

Mr Y bought his first home in 1988 which he sold in order to buy his parents house in 1991. His parents had previously bought this property from the council and were now moving into sheltered accommodation. The property cost him £40,000 and he took out a 95% endowment mortgage with MPPI with Building Society x. At this time Mr Y was earning between £16,000 and £18,000 p.a. and his mortgage cost him £105 per month.

In 1991, he took voluntary redundancy and received a severance pay of £7,000. From this period until 1995, he worked on a temporary basis through agencies. In 1998, the agency work dried up, and over t he period 1995-1998 he struggled to make ends meet, using his severance pay to meet his mortgage repayments. It was as this time that the first evidence of mortgage arrears arose.

He turned to his MPPI policy and was told he did not qualify for it because he was not in permanent employment. He had thought he was covered and was not aware that it would not pay out on the loss of temporary employment.

He also fell behind in his council tax payments but not on other utilities. He contacted his lender after every change in circumstances. Through his solicitor he negotiated a deferral of his arrears repayments until he could find a more permanent source of employment.

The lender informed him that the house would have to be sold in order to recover the arrears. His house was sold on the 31 July 1998.

He is now in full-time employment again and managed to acquire housing association accommodation after the intervention of the Scottish Executive.

He feels that his lender was too prompt to enforce action on arrears and that if they had waited he would not have lost his home as he is now in employment again. He feels that the lender could have offered him a remortgage and spread the cost of his arrears to allow him to get back on his feet.

He feel that he was not given adequate advice on mortgages and on MPPI, he was told he should have read the small print more carefully.

He thinks that the Mortgage Rights Act will help other people in similar situations by allowing them more time for their circumstances to change and by delaying action by the lender. He also feels that people should get more information on MPPI.

17. Female

Ms U owned her own home outright prior to purchasing the property that was repossessed. In 1994 she bought a 4-bedroomed two storey property in Y for £48,500 with her new partner. She put down £21,500 and took out an endowment mortgage of £27,000.

They borrowed £20,000 for cars and household items. Her partner was unemployed for six months after changing jobs. The lived off their savings at this time. Ms U and her partner split up and at this time arrears accrued. Ms U also fell behind in payment of all utilities, council tax and debt payments. She contacted the branch manager to tell them that she could not pay and then she left the property. Her ex-partner moved into the property and she had no further contact with the lender until she re-entered the property and discovered that her ex-partner had not been paying the mortgage. The male partner then disappeared and could not be traced.

The lender had sent a letter to say they were taking court action to repossess the house but she did not know about it as she was not living there. Her solicitor wrote letters to prevent repossession and she came to an arrangement with the lender to sell the property and clear the arrears. The house was sold in January/February 2001.

She feels that the lender did everything they could with the exception of chasing the male partner.

She feels that the Mortgage Rights Act could help people to buy time and resolve differences they may have.

18. Male

K was living in council accommodation with his parents and sister. After their parents death, the property passed to Mr K's sister. After she died, the property passed to Mr K in 1997.

Mr K purchased the property from the council in 1998 for £10,000 on a one-year fixed-rate capital repayment mortgage. At the same time he took out a further £8,000 on the mortgage in the form of a home improvement loan. He also took out MPPI.

For the first year Mr K was fine as his repayments were fixed at £115 per month. After the first year (now the middle of 1999), his mortgage reverted to variable interest rate and the repayments increased to £194 per month.

In February 2000, he took out a £3,500 loan to help make ends meet and pay off his debt. It was at this point that he first got into arrears with his mortgage payments. His health began to deteriorate and in April 2001 he left full-time employment and went on disability/income support. A financial advisor negotiated re-payments with the lender on his behalf. However, he still struggled to make payments and was repossessed in October 2001.

Mr K had MPPI but forgot that he had it and so did not make any claim on it.

There is the suspicion that Mr K suffers from learning disabilities and is possibly mildly autistic.

19. Couple

Mr and Mrs R moved into a newly built council property in 1976. In 1986 they bought it for £13,939 under the council's right-to-buy scheme. They took out a 100% capital repayment mortgage with Building Society x. They received no advice and took this mortgage and thought it was the only one that existed as it was the only one they were told about. They also thought they had MPPI which they found out later to their detriment that they had not.

Everything was fine until 1996 when her husband had a massive heart attack and lost his job after a period of being off sick. They also lost a taxi business they were involved with at this time and had no comeback as they had done it all on trust and had nothing on paper. They managed to scrape through, with intermittent arrears that they paid off, until 1998. That Christmas they were in arrears, being threatened with repossession and had absolutely no money. They decided to take out a loan for the £7000 remaining on the mortgage plus the £8000 that they had in other debt from their failed business.

They tried to borrow £15,000 from a non-prime sector lender but were only allowed to borrow £28,000. They now had paid off their mortgage but had a large loan with a non-prime sector lender with the house as security. In November 1999 they missed a payment on the loan and informed a non-prime sector lender. A non-prime sector lender took three months to get back to them and when they did it was a letter giving them 2 days to vacate the property. She went to a lawyer to try and prevent this, but her husband had got such a fright that he died a couple of days later with a heart attack.

She is now on disability benefit, does not receive any payment from the DSS for her mortgage because it is officially a loan and has to pay the non-prime sector lender's payments from this benefit. She also has her mentally disturbed daughter and her young grandson living with her. She has no one to help, advise or listen to her and is in a state of deep anxiety and distress. She has been in this home for 25 years and does not want to lose it.

She thinks that the Mortgage Rights Act will help people in her situation but feels that it should pertain not just to mortgages but also to loans taken against a home that effectively act as a mortgage.

20. Male

In 1983, Mr K bought a ruined historical building on a 95% repayment mortgage with the Bank x. He converted the lower floor into a coffee shop and lived above it. In 1985 he obtained a license to sell alcohol and changed the coffee shop into a pub. In order to convert the coffee shop, Mr K bought more of the surrounding land and renovated/extended remaining buildings on the site. To this end he borrowed £70,000 from Brewery x and £90,000 from Bank x. He also built a house separate from the pub site.

In 1986, necessary repairs to the local sewage works meant that the road giving access to Mr K's pub was closed for a year. During this time he experienced a sharp decline in revenue. He began to get into arrears with the brewery on the loan, and with the bank on the pub mortgage but not on his house mortgage or any utilities.

The brewery pulled in its security on the loan which led to Mr K's business being sequestrated. He had no MPPI.

21. Female

In 1996 Ms S and her partner bought a flat for £29,950 on a 100% endowment mortgage. A mortgage broker arranged this mortgage and the only lender he suggested was Bank x.

Ms S and her partner were both working full-time at this point but shortly afterwards, her partner left his job to buy a franchise from his employer. At around this time they split up. Ms S left the property and went to a solicitor to obtain a minute agreement transferring full responsibility for the house to her ex-partner.

She knew her ex-partner was getting deeper and deeper into debt, both with standard lending companies and unofficial ones, however she had been parted from him for two years and so did not see it as being any of her concern.

She found out that the property was being repossessed when a sheriff officer came to her house to serve her a notice. Prior to this she had received no warning from the bank that this was about to happen. She contacted the bank and informed them of the minute agreement relieving her of any responsibility for the property, but they said that the agreement had never been lodged with the Court of Sessions and so the bank did not view it as valid.

She was left with a debt of £13,500 of which she has managed to pay £10,000. Her ex-partner has disappeared.

They had taken out MPPI but had no reason to claim on it because neither of them had experienced redundancy or illness.

She viewed the Mortgage Rights Act favourably, saying it may have allowed her earlier knowledge of her ex-partner's debt and she could have taken over the property from him and avoided repossession.

22. Couple 30s

The LAs are a couple in their mid-thirties who bought a house when they were both working full-time. Mrs LA got pregnant in 1992 and went back to work part-time. By 1995 they have an additional three children. Mr LA became redundant at work and arrears began to occur.

They struggled to make ends meet but in May 1996 they were repossessed. They had taken out MPPI but had made no claim on it. They got a Housing Association property in 1996 and are now keen to buy again.

23. Female

The Ms were second time buyers and purchased a property in 1992 for £69,000 but managed to put down a deposit of £12,000.

They have three children and a difficult marriage that results in frequent periods of separation.

Due to a high spending life style, the secondary debt reached £65,000 in 1997. At this time they re-mortgaged their house as they could not pay debt payments out of existing income.

Mr M's ill-health forced him to temporarily retire from work in December 1999. Arrears began to arise on the mortgage in December 2000 when he realised that he will never be able to return to work.

At this time Mr M leaves the marital home for the final time and refuses to pay any more money on the house.

The house was repossessed in August 2001. He had had no contact with his lender.

24. Couple (60s)

Mr and Mrs W bought their house in 1993 under the council's right-to-buy scheme after a thirty year tenancy. They took out a 100% endowment mortgage payable over a ten year period.

In 1997 Mrs W lost her job due to injury and decided to retire at that point. They immediately fell behind in debt repayments but not on their mortgage payments.

Their solicitor advised them to protect their home by speaking to a financial advisor in his office. The FA put them on a £30,000 re-mortgage/debt consolidation loan payable over 25 years. They were to pay £100 per month for the first year and thereafter £400 per month.

They fell into arrears in 1998 and the lender moved for repossession after three months. They got help from family and friends to clear the arrears and managed to avoid repossession. They switched their mortgage to another lender to lower payment schedules in 1999.

Mr W is due to retire in March 2002 and they are concerned they will lose their home then.

25. Female

This was a two parent family with three children. The male partner worked full-time and the female partner was at nursing college. A six month period of unemployment experienced by MP led to first instance of arrears.

Then MP left work to go to college and while he was there he had an affair which resulted in him leaving his wife and three children.

His wife left college and got a job but she was struggling to make payments. In May 1999 she was formally repossessed. They had MPPI but had claimed on it when male partner was first made unemployed. It was paid in June 1994 for 2-3 months but it was a struggle to get it in the first place. It paid half of the mortgage and clashed with their benefit payments.

26. Single Male 27 years old (First time buyer)

Bought home for £23,000 when he was 21 years old as it seemed that a mortgage would be cheaper than renting. Got a 100% endowment mortgage. No savings or debt at time of house purchase. Bought home through insurance broker who fixed mortgage with Bank x. He did not shop around for mortgages. Redundancy caused mortgage arrears. He had MPPI and knew that there was a 3-month wait for it to kick in. He did not make a direct claim as he thought it would happen automatically. Consequently, he never received any money. He went in to see Bank immediately he lost his job and explained the situation. He was receiving job seekers allowance at this time and so managed to pay the utility bills. Bank x took all redundancy money against arrears.

Felt lender was only interested in getting their money. Would have wished for them to be more polite and pleasant, produce a manageable payment plan and give him 6 months to get back on his feet. Sought advice at this time from CAB who wrote letters on his behalf but did not help at all. He did not know lender was going to court to get repossession order. He got a letter from the bailiffs saying he had 48 hours to get out of his home. This was the first he had heard about the repossession. The length of time between the first arrears arising and formal repossession was 7 months.

He now thinks lenders should tell people at the time of house purchase exactly what the plan is if you lose your home.

Since the day of the repossession - he has not heard anything from the lender with no detail of finances owing to them or to him. He has been declared bankrupt. The repossession and eviction process followed by subsequent poor housing has caused Mr X to be long-term sick. He has made several suicide attempts, and is now in counselling. He says he will never enter owner-occupation again.

27. Female, separated, 43 years old (Single parent family)

Originally from a council house background, although parents own home now and the current home is a second owner-occupier home. Home bought for £66,000 in a private sale. Both her and her husband were in full-time employment at the time. Husband was an accountant and father a financial advisor so had plenty of independent advice. Home purchase was not thought of risky as put down payment of £26,000 and was the second time they had bought a home.

Domestic violence lead to martial break-up. This was follow-up by a period of ill-health for the wife, who gave up her job six months after her husband left. Retail therapy by wife after marriage broke down financed on credit cards. She believes it is too easy to obtain credit cards. Husband stopped paying mortgage. They did take out MPPI but this only covered sickness and redundancy of the husband and not the wife.

Almost lost home in repossession the first time at this time (a year ago) due to illness and martial break-up. Family stepped in with financial rescue. Currently, under threat of losing home due to default on a secondary loan (borrowed £13,000 to cover £10,000 loss on previous house sale).

Interviewee did not know case was going to court although letter may have been sent to husband. The length of time between the first arrears arising and action for formal repossession was 18 months, although repossession did not occur.

The deeds of the current home are still in joint names - but marriage split up and now wants husbands name removed from deeds but cannot as joint secured loan still on property. Heading into repossession again due to secondary debt. Mortgage is now paid off.

Believes the bill would have helped her. Would like to see a change in MPPI to cover both people paying mortgage.

28. Married female, 43 years old (Family - 2 adults, 2 children)

Family with 2 children, bought housing association home they were already living in. It was a first-time house purchase. At the time both husband and wife were in full-time employment which they regarded as secure as it would have given sickness pay for a year and a half, and redundancy at the time seemed very unlikely.

They borrowed £21,000 for their home; £17,500 to cover the purchase price and an additional £3,500 to cover the cost of putting in new windows. It was a first-time house purchase. At the time of house purchase the interest rate was 15% and they felt that if they could manage that then it would not go much higher and that they would always be alright. They were always used to having a number of small loans and c. £2,000 on credit cards. They had never had any problems meeting loan repayments and so did have a culture of borrowing, and not of saving. They did quite a few renovations to the home after house purchase. Over a number of years they put in new windows and financed this through adding this onto the mortgage, voluntary redundancy money was used for the new bathroom and a loan was taken out to put in a new kitchen. Over the years, the wife took voluntary redundancy and changed jobs, then through ill-health lost a later job. Husband was made redundant twice from two different jobs. He is now still out of work.

It was a secondary loan of £12,000 that forced the repossession. They never got behind with mortgage with Building Society x as increased overdraft there. The secondary lender would not accept reduced payments or negotiate with them. The reason they did not sell their house and pay of the debt (the home was worth £40,000) was that it would make them ineligible for council housing. The house was repossessed at a great loss and the debt was not cleared. The loan grew with all the court costs and was £4-6,000 on top of what they had originally borrowed. Wife now in full-time education re-training and husband still looking for work. They said they wouldn't never buy another home unless they could buy it outright. They would like to see changes in the law which made MPPI cheaper, and that made lenders tell people in plain English what practices they have and what happens during arrears and repossession.

After repossession, they spent a period of time in private-rented house, as the council housing they were offered was of a very poor standard. They are now in housing association home.

29. Family - couple with three children

Mr and Mrs X built their own home and did not have a mortgage on it. It was part of a new development that Mr X's company built. The entire development was used as a standard security on a business development loan facility that Mr X's business used.

Mr X had various disputes with the bank which resulted in the bank calling in the loan, which, under the law at that time, meant that the loan had to be repaid within seven days. As this could not be done the bank went to court to sequestrate the business. The business was eventually sequestrated and the new development of homes was taken by the bank. This meant that Mr and Mrs X and their family were evicted from their home.

This is an ongoing dispute as Mr X is suing the bank.

30. Retired couple

In 1981 Mr Y was made redundant and bought a newsagents with the redundancy money. This did well and so Mr Y bought a licensed grocery too. This one did not do so well and Mr Y was forced to sell the both shops which left him with outstanding arrears. He went back to work to clear his debts and sold his home as a means of releasing capital.

Under the advice of an independent financial advisor he bought a new property on an interest only mortgage. Things were fine until he reached retirement age in 1991. He retired for a period but realised he could not afford his mortgage and so went back to work. He finally finished work in 1999 which led to arrears being periodically incurred.

He has had constant contact with the lender who have arranged new payments for him. His children now pay his mortgage and he is waiting for a sheltered accommodation place to become available with his local authority, upon which time he will sell his house.

31. Married female, 40 years old + husband

First-time buyers, bought home for £25,000. They lived in house for less than 5 years when they were evicted. Arranged mortgage through private broker who advertised in paper. He fixed a mortgage for them with Building Society x, and also sold them many insurance polices (children had an insurance policy each). At the time they were totally satisfied with his advice, but with hindsight they thought they were 'green' and were sold too much insurance. It was a 100% endowment mortgage. They did not think house purchase was at all risky at time. The broker never explained it. They did not have any savings. They carried out many renovations to house, but financed it all from wages and did not borrow. The husband was in a full-time job earning under £10,000 and wife was at home looking after their two children. They leased a shop for £18,000 (this included stock which later turned out to be out-of-date), and re-mortgaged for this. They went back to the same broker to arrange the re-mortgage. Husband kept job for the first year and wife worked in shop, then husband gave up job and worked in shop too. The shop went under and they were declared bankrupt.

They got income support for the mortgage payments, and kept trying to keep up to date with their payments. In fact, for a short time they paid more, and so were ahead with the payments. Eventually, they fell behind as all their money was going to the mortgage and they did not have any money to live off. Their building society was taken over. They went in and spoke to the manager of the building society in their nearest town. They said they would try and pay as much as possible. He did not reduce payments or offer any help. They would have liked a mortgage holiday or even a suspension of the interest payments. They did not want anyone to know they were struggling and did not seek informal advice, and never thought of CAB at that time. They went to the council but were not offered any help from there.

After they were declared bankrupt, they were appointed a trustee from Ernst and Young. They were told they were not allowed to earn money and not have a bank account for 3 years. They owed £1,000 on the mortgage which they could have borrowed from family, however the Ernst and Young trustee told them not to pay as their other creditors would want to know where they got the money from. Their home was repossessed. The word 'EVICTED' was written in yellow letters across their home - and they found that the stigma of eviction terrible. They were housed in a homeless unit which was run like a prison. Their daughter who was 18 was treated as a single, homeless person and they were not treated as a family.

The couple said that if they had been allowed to work, they could have paid off the mortgage arrears in 3 years and would have got money from family but Ernst and Young advised them not to pay and be repossessed. All the 12 families they met in the homeless unit had all lost businesses.

They said they understood why people commit suicide as it is so stressful, for the children too, and that the stigma is awful.

Changes they'd like to see:

• Advice on what it means to be declared bankrupt
• Changes on rehousing policy of council
• Mortgage to rent or buy back policy so that council pays mortgage and they would have stayed in their home
• Court-appointed councillor just to speak to, to explain what happened ' …not a judge in a wig, someone human to speak to'.
• If someone had just paid half or two-thirds of their mortgage for a while, they never would have lost home.

The couple pointed out that there was a substantial cost for the public purse for the council to put them in homeless unit and all their furniture in storage for 8 months. They say it would have been cheaper paying half their mortgage for 6 months.

32. Couple, thirties

This couple bought house for £25,500, and had previously been in a public-sector home. They bought this home as an investment. They were both working and thought it was a better start in life. They got advice from broker who recommended Bank x. They did not receive any other advice.

They were first-time buyers and took out a 100% endowment mortgage. They did not think the house purchase was at all risky at the time and were satisfied with all the advice they had received. They did not take out MPPI because they thought it was too expensive.

After they bought they had two children. They experienced several changes in employment circumstances. The husband lost his job twice. The first time he was unemployed for 3 months while the wife was on maternity leave. However, the bank manger was great and allowed them to go into overdraft. The CAB was great and applied a debt management system. They successfully recovered. They had unemployment protection on their credit card which was paid.

A few years later, the husband lost his job again and wife was now long-term sick. This time their home was repossessed. The difference was that their bank manager had left and the bank was being run by 'accountants'. They had notified the lenders as soon as unemployment had occurred, however the lender offered no help at all. They received a letter which gave them two weeks to leave the house and that was as much communication as they received from the lender. As far as they can remember, their lender did not inform them they were taking court action. The length of time between the first arrears arising and formal repossession was 4 months. The lender did not give them a chance to sell their home themselves. However, even if they had done this, then they would not have got housed by the council. If they had the same bank manager that they had dealt with when they last got into arrears, they feel that they would not have lost their home. They had been in their home for 6 years when it was repossessed.

The husband got job a month after the repossession.

They cannot get another mortgage through a mainstream lender, although husband has been working 5 years and wife 3 years. The stigma and stress of the repossession has affected their health. They wanted to pay mortgage their mortgage but could not find money as on benefits. They had struggled through 15% interest rates and then still lost it later on.

Changes they'd like to see

• Lender to negotiate a realistic payment plan
• Automatic MPPI ie compulsory with every mortgage
• Changes to MPPI to make it kick in as soon as someone loses their job
• Lender to be more understanding of people's circumstances
• Slow down speed in which action can happen
• Communication with lender, not by letter but face-to-face
• Independent debt counsellor
• Change of law to give time period when debt problems are legally forgotten (soul destroying when high street lenders refuse you mortgage)

33. Couple forties

This was a single income family with two children buying an ex-council property for £21,000. They bought the property through an independent financial advisor who arranged the solicitor and their mortgage lender, which was Bank x.

Within one week of living in the property they discovered severe structural damage and tried to hand the property back to the seller which was Bank x. The seller refused to take the property back and informed the family that the house was previously repossessed and so normal rules did not apply. As a consequence, the family had to buy a new central heating system, new windows, completely rewire the house and buy a new boiler as the old one had been condemned as unsafe.

The couple had had enough of paying for so many repairs and decided to quit the house in October/November 2000. The are now in a sink council estate.

The family feel that Bank x should have sold a property that was structurally sound and should have informed them that the property had been previously repossessed. They feel that the survey should have picked up the structural faults. They also feel that the IFA set them up in conjunction with the solicitor and the Bank.

34. Widow and mother Thirties

At the time of purchase, the household consisted of a couple with one child. The male partner was a self-employed quantity surveyor and the female partner was a part-time secretary.

In 1995, they moved to a rented property. In 1998 the landlord decided he wanted to sell the property and gave them the option to buy. They had decided upon a capped limit of £80,000 and then agreed to buy the property for £86,000, even though it had been valued at £130,000.

They used the Bank x as their lender because the male partner had his business accounts there. The female partner had nothing to do with any household finances and so left all the purchase arrangements to her husband.

Events progressed smoothly until late 1999 when they received a mandate for £10,000 in unpaid council tax. The letter arrived unexpectedly while the female partner was at home and at this point she received the first evidence that things were not as they should have been regarding finances. They arranged a payment plan for this.

During this period, they had changed bank branches twice in order to shadow the movements of the individual dealing with the male partner's business account. At this time too, the female partner remembered signing various documents for her husband. She realises in hindsight that they were for loans to prop up the male partner's business.

In June 2001, the male partner committed suicide and left a file in the car beside him detailing the true level of household debt. It was at this point that the female partner discovered that the business had been sequestered six months previously and the level of secondary debt was threatening the house. The day after the male partner's suicide, a letter arrived from the lender concerning formal repossession of the house. After she contacted them, the lender immediately suspended the court action. At the time of interview, the lender had offered her three months in which to sell the property and settle the outstanding debts.

35. Gay couple twenties

This couple bought their first home together in 1999 for £42,500. After one year, the couple split up and both moved back in with their parents. They stopped making payments on the mortgage at this point. When the lender contacted them regarding the arrears and threatening repossession, the parents of one of the men stepped in and paid off the arrears.

He is now living in the house and wants to sell it but his ex-partner won't sign over his rights to the property. His ex-partner also wants a share of the profits if they were to sell the property which he does not want to give him.

At the moment he is clear of arrears, but his hands are tied regarding the sale of the property.

36. Couple forties

This couple were second time home owners who bought a property in 1993 for £31,600. Over the period of purchase the couple separated and the male partner remained in the house. He says that the break up had no effect on his ability to pay the mortgage.

He took on a variety of loans and credit cards, amassing a secondary debt of £33,000. After a while, he experienced a loss of overtime and a reduction in hours at work. This led him into arrears with the secondary debt lenders. He was threatened with repossession and so consolidated his loans with a debt management agency. This has staved off any action to repossess his house.

37. Couple fifties

This couple moved to Scotland and bought a farm outright for £148,000. In order to trade they took out a business overdraft facility with Bank x. From 1988 - 1990, the bottom dropped out of their market due to the BSE crisis. The Bank would not extend their overdraft facility and so they could not trade.

They took out a £74,000 mortgage with a non-prime sector lender for which the monthly repayments were almost £1100 per month. They have gone into arrears on and off which has resulted in two attempts at repossession by the non-prime sector lender which they have managed to stave off.

They are currently fighting an eviction order and are in contact with the National Association of Mortgage Victims. The non-prime sector lender, which has undergone several name changes, claim the couple now owe them £126,000. The couple are contesting this.

At the time of interview, the couple were hanging onto their farm and fighting the lender actions.

38. Widow sixties

In 1994 this lady bought a house with her husband on a new estate from a property developer. The house cost £45,500 and they put down a deposit of £15,500. In 1995 the couple separated although they still maintained close links. The female partner left the family home and her husband continued to live there with their grown up son.

In 1996 her husband's business was sequestrated although he did not lose the house. In 1998 he died. At this point, the female partner went to a solicitor and asked about the estate or what was left of it. The solicitor informed her that she was not responsible for any debts regarding her husband's sequestration and was not responsible for the house. He also told her that he would inform the necessary agencies of her husband's death.

The solicitor did not do this as she discovered when a sheriff's officer put a notice of eviction through the door, she had been trying to sell the house at this point and was not living in it. The eviction notice was in reference to her husband and so she contacted the sheriff's officer who had no idea that her husband was deceased.

She contacted the lender who informed her that a she had never been divorced and had never signed the house over to her husband, she was still liable for the mortgage. She paid off the arrears and still continues to pay the mortgage although it is her grown up son that resides in the property.

However, another twist to this story is that she has been trying to sell the property for years but cannot and her son only lives in the property to protect it against vandals. The house that they bought was in a new development and they were assured that it was a private development. However, the housing association for the nearby, notorious Ferguslie Park, bought a lot of the surrounding property and filled them with undesirable tenants. The police have said that at the last count there were thirty known drug dealers in the area. As a consequence of this, her property has depreciated from the £45,500 in 1994 to between £20,000 and £27,000 today.

She has attempted to sell the property to a housing association but even they are not interested in properties in this area. If she were to sell for a reduced price, she would be left with a shortfall of around £10,000, and given that she is 68 years old and retired, she knows she would struggle to pay this off.

As it stands, she is lumbered with a property that she is unable to sell and still has a long mortgage to pay. She has asked us to highlight her case to the Scottish Executive in order that they could consider the predicament of homebuyers that purchased property in Glencoats Park before the housing association tenants were moved in.

39. Family with two children (16 and 21 years old) Both adults unemployed

This family purchased their home under right to buy. They moved into the house in 1985 and purchased it in 1988. They owned the home for 13 years before it was repossessed. The discounted purchase price was £7,500. The advice the received was not independent and they did not shop around for a mortgage. A mortgage broker phoned them out of the blue and then came round to the house. He suggested it was a good idea to buy their home. They had not considered it before this point. The couple were in their late twenties when they bought their home. The broker they used proved to be dishonest. He arranged a £10,500 mortgage with Bank x and £1,500 of the extra money was supposed to go towards a new fitted kitchen. The broker took this money and never returned.

An additional £400 for the legal fees was also added on to the mortgage. They took out an endowment mortgage and did not get a choice with any other package. At the time they took out the mortgage the husband was working full-time and the wife was at home looking after the family. At the time of house purchase, they had an additional £3,000 loan with a secondary lender for a car. After the house purchase, a further £3,000 loan was taken out to put in central heating. Approximately a year after the house purchase, the husband lost his job through ill-health. During the following years, the husband took on additional debts. The family were in arrears on and off throughout the years. In 1997 after a telephone call from a broker explaining he could pay of all debts, mortgage and they would get a £5,000 lump sum, they remortgaged a non-prime sector lender. They had to pay the Bank x £15,000, substantially more than the £10,500 they had borrowed. They did not understand this and did not get a financial breakdown. The wife signed an agreement with a non-prime sector lender for £17,500 but then later the non-prime sector lender produced an agreement to say she had agreed to borrow £22,000 (plus £2,500 brokers fee) at an interest rate of 1.8% a month. The monthly payment was £449.16. According to the interviewee, the signature was forged on this agreement. The £5,000 lump sum was never received. As both partners were not working, they could not make the payments and quickly fell into arrears. The social security paid £134 a month and the non-prime sector lender wanted an additional £200 a month. They tried paying this for a few weeks but it was 'killing us'. The lender already had a court order from 1998/1999 and they implemented it in September this year. The family received a letter to say they had a fortnight to get their belongings out of the house. The family was offered a house in a horrible area from the council and chose to move into a private-rented home instead. The lender is now trying to sell the house. However, the house is going to be knocked down in 8 years and it is unlikely that it will sell.

Changes they'd like to see

More stringent controls of people offering money. At one time, this family had people phoning 2-3 times a week offering them mortgages. Bank x even phoned their son, 21 years old, offering him a loan.

40. Single person (early thirties)

Single, male first-time buyer bought flat for £44,000. He bought the flat as it was cheaper to buy and he had been working for 4 years (for the same organisation although it was all on temporary contracts). He shopped around and got a number of different quotes from banks and building societies. He chose Bank x as his family used this bank and it offered a good package. He took out a repayment mortgage and was offered a clear choice between endowment and repayment. He had a 30% down-payment and took out a 70% mortgage. He did not take out MPPI as he thinks insurance is a waste of money. His income at the time of house purchase was £9,000 a year and he had no savings. He had a guarantor for the first 5 years of the mortgage. Over the years he moved between various temporary jobs but the guarantor met any shortfall in the mortgage. He is now unemployed again and 4 months in arrears. The bank has informed him that they are taking court action in 3 weeks time but he has been too scared to contact them as he is unemployed and has no way of paying. A family member has offered to buy the home and keep it from being repossessed but the lender has not yet been notified of this.

Changes he'd like to see

• He would have liked the lender to offer an agreement rather than going to court. Offering him the opportunity to sell himself would have been good.
• He thinks the jargon used by the lenders in their communication with them is difficult to understand and you'd have to be a lawyer to understand it. He would like to see a readable full financial breakdown.

Reaction to Mortgage Rights (Scotland) Act

It depends on whether legal aid is obtainable, otherwise defending action would not be affordable. In any case, bank will always be able to get a good/better lawyer. The delay in court action would only be helpful if could guarantee the timescale in which you'd find a job.

41. Family with two children (4 and 11 years old) One adult working part-time, one unfit to work

The family were first-time buyers and bought an ex-council house for £32,500 (not one they were living in at the time). When they bought the home the male partner was working full-time and the female partner part-time and they had one child. They borrowed £33,250. The extra amount was to cover the cost of buying. They bought the home 7 years ago. The reason for buying was that they could not get a council house in this town and they wanted to move, as they thought this would be a better area for their son to begin school in. They did not shop around for mortgages but went straight to the Bank x. They knew the staff here as family business banked here, and thought it was less of a nervous experience to go to someone you know. They were in their early twenties when bought this home. They were poorly advised concerning MPPI, and thought they had taken MPPI out and would be covered in times of unemployment. However, in the event he discovered it was only death and critical illness cover he had (likely to have been referring to life assurance with endowment).

Critical changes

• After they bought their home, they had another child.
• They took on loans, one car loan for £4,500 from a secondary lender. They failed to keep up the payments on this and the car was repossessed and sold for a shortfall - so they still had to pay off this loan. They took on a second loan for a car from the Bank x and then had to use this loan for a family member's funeral costs. They took out an additional loan for £4,500 for new windows from a secondary lender.
• Male partner took voluntary redundancy.

Current situation

• Female partner works part-time time
• Male partner now unfit to work, since the stress of the debt
• Eldest child also been very stressed, developed ADT
• On a voluntary sale scheme of Bank x. However, lender surveyor has valued home for less than they purchased it for. Even if the sale goes through they are still facing a substantial shortfall.
• Want to leave house and be re-housed by council but cannot as on voluntary sale scheme

Changes he'd like to see

• Would like to see people shopping around looking at different packages with different banks.
• He would also advise people not to take out insurance with the same company that they have their mortgage with as it is much more expensive. He would like advisors to explain this to first-time buyers.
• Would want Banks to accept reduced payments or offer a consolidation service on loans.
• Lenders should offer people a get out clause or another option if their circumstances change
• Would like lenders to stop adding money onto the mortgage without borrowers authority. They have added so many financial penalties and so on since they were in arrears. Would want breakdown of these and a break from interest if in financial trouble, not extra charges.
• Young couples or first-time buyers are not clued-up on legal workings and need better advice
• National debt helpline needs to be a free call from a mobile as well as a landline. Many people do not have land lines as they ca not pay the bills.

Reaction to Mortgage Rights (Scotland) Act

It would not help their situation as they have no defence as unemployed and no chance of getting job as medically unfit to work. It would be very scary going to court.

42. Couple fifties

This couple bought a home for the first time in their early fifties. At that time they were the first people in their family to buy a house. They bought the council house that they had been living in for 12 years. At the time of house purchase, they had rent arrears and £4,500 of unpaid council tax which were added on to the mortgage. They had a poor credit rating. They bought the house as they thought it would be something for their retirement and be a chance to better themselves. At the time of house purchase, the husband was working full-time and wife was on incapacity benefit. They did not having any savings. The couple themselves say that they felt now, they should not have been given a mortgage: "we shouldn't have bought a house at this time of life".

Nevertheless, they obtained a mortgage with a non-prime sector lender. The discounted purchase price was approximately £12,900. The property was valued at £32,000. However, the loan was for £19,900. This included £2,000 broker's commission and the rent arrears. The couple did not shop around, nor get independent advice on house purchase. They went to one mortgage broker who explained they could not go to normal lenders as they had a bad credit rating and he fixed up their mortgage with a non-prime sector lender. They did not obtain any informal advice.

After a year with one non-prime sector lender, they remortgaged with another non-prime sector lender as they wanted a lump sum for a car and to give to their family. They already had a £5,000 loan from the second non-prime sector lender, who suggested that they also move their mortgage to them. The second non-prime sector lender paid the first non-prime sector lender £21,000, more than the £19,900 which they borrowed in the first place. They struggled to keep up with payments on this as the repayments were £600 a month. They also had a car loan with a secondary lenders. They fell into arrears the third month they were with their second non-prime sector lender.

Critical changes

• Secondary debt
• Remortgaging

This couple owned the house for less than a year and a half before the payments became unmanageable. This couple have moved out of their home and into a private-rented house. Repossession is imminent, as the notice of default has been served. They are going either for bankruptcy or a trust deed. The settlement figure the non-prime sector lender are looking for is £67,075.80 with the interest, arrears and loans. Now the wife is also working part-time so they are actually in a better financial position than when they took out the original loan.

Changes they'd like to see

• People should go to the right people for advice, and go to building societies and banks, not non-prime sector lenders. In retrospect, they thought the advice they received was risky and would not want someone else to get the same advice.
• Payment holidays
• Remortgage over a longer term to help people through a difficult time
• Stop lenders from freezing bank accounts and arresting wages. (If wages are arrested would lose job).

Reaction to Mortgage Rights (Scotland) Act

Positive reaction, but pointed out that court legislation is not good without the regulation of interest rates. "interest rates … that's the killer …"

43. Single woman - forties

This woman had previously owned a property with her then partner. They split up in 1993 and sold their house, splitting the proceeds. She then met a new partner and they bought a house together in 1996. She did not work but her partner worked full-time. At this point she was unaware that her partner had a drinking problem.

Six months after they moved in, they got into arrears with the mortgage but she was unaware of this as the mortgage payments came off her partner's bank account and she had nothing to do with the financial affairs of the household. She paid off these arrears with her visa card and they managed to get back on their feet.

Shortly afterwards, her partner lost his job and his drinking problems got worse. They tried to make a claim on MPPI but were told that he had not been with his current employer long enough. He became increasingly violent and over the years, she spent many periods in hospital with injuries including broken bones. The mortgage was being paid all these years by the DSS.

In October 2000, she decided to leave her partner and she got a council property for herself. He was left in the mortgaged property himself and did not sort out any mortgage payments through the DSS. As a consequence, arrears have accrued and a repossession order has just gone through the courts so an eviction is imminent.

She is still the partner on the mortgage but she received no notice of the arrears or repossession order, finding out instead from her ex-partner. He now has nowhere to live, having refused a bedsit from the council and she feels she may have to help him when the eviction occurs.

She thinks that the new Mortgage Rights Act (Scotland) will be a helpful change in the law but she does not think it would have helped their circumstances.

44. Couple - fifties

This couple obtained their council property in 1966 and decided to purchase it under the right-to-buy scheme in 1988. The price was £9,300 but they borrowed £12,500 to put in central heating. Three years later they borrowed £10,000 to put in a new kitchen and bathroom from the same lender.

The male partner, who was self-employed, was getting less and less work due to a slump in the trade he was working in. Eventually the work dried up completely and over the last ten years, he has had insecure employment. DSS payments covered the mortgage but not the loan, and over the years when work has been slow, arrears have accrued on the loan. At one stage in 1996, they were £2,500 in arrears with the loan. They went to see their bank manager who told them of a mortgage to rent scheme and asked them if they would be interested in it. They said that they would and several months later, Link Housing Association bought their home from the bank for £25,000 and they now rent it back to them. They think that this is the ideal option because:

• The neighbours do not know about their past financial problems, they still think they own the house, so it has protected their pride.
• They are still in the home that they have lived in for 35 years.
• All debts were cleared when the housing association bought the property from the bank.
• They feel that they have been given a new lease of life and another chance.
• Even if the male partner is out of work, they do not have to worry about the rent being covered.

She thinks that the new Mortgage Rights Act is good, useful and will help keep people in their homes, but it would not have helped them as her husband's employment was too insecure and sporadic.

45. Couple - forties

Dual income, self-employed couple who rented out two houses in Leith and bought a £125,000 town house in Edinburgh. Indication of business problems/money struggles.

Re-mortgaged by changing lender from Bank x to a non-prime sector lender in March 1999. Indication that business was struggling.

Business sequestered in December 1999. They were covered under MPPI for the period of January-March 2000 but then this was withdrawn by the lender.

Arrears accrued from that point. The couple owe their non-prime sector lender £172,000 on the mortgage now and are expecting a repossession order.

The couple negotiated with the lender to sell the property and they have three months in which to do this.

They are awaiting sale and expecting £225,000 which will cover the mortgage and business debts.

They expect to be homeless and in council accommodation soon.

46. Couple - fifties

Dual income, expatriate couple purchased country home to invest in before retirement. They purchased this in 1995.

In March 1997 the couple experience unemployment. The male partner takes on casual temporary contracts as a civil engineer.

The male partner continues to experience employment problems and the lender makes two failed attempts at eviction in February 1999 and April 2000.

The couple have come to a negotiated payment settlement with their lender. They continue to live in the property to the present day.

47. Single parent family

At the time of house purchase, this woman (Mrs B) was married with a small child. They bought a three bedroom flat for £16,000 on a 100 % endowment mortgage. Over the years they had three more children and although they were cramped, things were fine. Mrs B says that things began to go wrong six years ago in 1995. At this point she was pregnant with her youngest when her mother died suddenly, her husband's mother and father both died suddenly and then her husband was made redundant - all within a matter of months.

Since then, the family have had various experiences of arrears and charges accruing.

Last year, she and her husband split up. He moved out of the property and she remained there with her four children. She struggled to pay the mortgage and in October 2000 Building Society x took her to court to repossess. It was granted but her lawyer managed to stop the eviction from happening. Then she discovered that her ex-husband had cashed in their endowment policy while his parents were ill and Building Society x now said she had to change to a capital interest mortgage. No other lender was interested in renewing her endowment policy as there were only nine years remaining out of the 25 years the mortgage was to run.

Arrears continued to accrue and in July 2001, she was threatened with repossession again. This time it was carried out and at present she and her children live in temporary council accommodation.

48. Young family - twenties

This family bought a home in 1995 because the female partner was pregnant and the council said that it would take up to seven years to house them. Both partners were working and the flat cost them £37,750, which was manageable to them. After two and a half years, the female partner became pregnant again and they needed a larger house. They went to the council and told them they were overcrowded and obtained a council property.

They did not sell their flat but rented it out instead. This worked well when they had their first tenant but fell apart when they got their second. Until mid 2000, this tenant paid her rent and then decided to stop. At the end of the lease, they gave her a month's notice to leave the property, but she did not. For a few months they were able to cover the mortgage while they tried to resolve the situation but then could not. The arrears began to accrue and they are just being repossessed now. The tenant has just been removed by Sheriff's officers.

There was no change in employment circumstance for this family.

She thinks that the mortgage rights act sound useful and would have liked to have been able to explain her situation. However, it may not have changed their outcome unless they could have removed this tenant.

49. Male - forties

Mr X had worked for a company that involved moving from place to place. In 1993 he had the opportunity to move back to Scotland and remain in one place, so he did. He bought a property for £49,000 which was the upper limit that the lender would allow. He took an almost 100% endowment mortgage with Building Society x.

He was made redundant shortly after buying the property and was given a lump sum from the company. Fortunately he found another job within six weeks so his mortgage was unaffected that time. In 1997 and 1998, Mr X was suffering from ill health. Instead of going off on the sick, he took the time off as holidays as he thought that to admit to sickness would be detrimental to his career. In 1998 he lost his job; officially he was made redundant but he thinks it was due to his illness.

He went on sickness benefit and was struggling to pay the excess on his mortgage. He buried his head in the sand as he was finding it all too upsetting and it was exacerbating his illness. Finally, after many last demands on his utilities, and credit cards and the threat of repossession, he went to his sister. She took complete control of everything and negotiated with all the necessary people on his behalf. She paid off his arrears and renegotiated payments with the mortgage lender and utilities. He has now found another job, albeit with a much reduced salary but he is just happy to be employed again. His sister is currently helping him to do up the property to sell in the springtime as he will make enough from the sale to clear all his debts and get a much cheaper place.

Mr X thinks that people should not take out mortgages that are at the upper limit of what the bank will lend them and should ensure they get advice from a variety of sources before purchase. His sister thinks that the bank needs to take a much more pro-active approach. She says that if someone misses one or two mortgage payments, the bank should contact them with offers of counselling and advice.

50. Male - fifties

Mr Y bought his house from Scottish Homes in 1995 after an eight year tenancy. He had his own business at the time and this was doing well. This was the first property he had bought and he was the first person in his family at that time to own a property.

He took out a business overdraft and put his house as security on it. He took out a 100% capital repayment mortgage with no MPPI. He says that he was told nothing about MPPI and did not know of its existence. Things were fine until 1998 when work dried up a bit and he was struggling to obtain payments from people that owed him money. He went to the bank to explain his difficulties and they immediately froze his overdraft facility. At this point they just wanted money from him and told him he would have to sell his house. Around this time he had his second bypass operation and he says the pressure and stress he was under was making him more ill.

He folded his business and his local bank sent his details into their centralised centre in Edinburgh to recover the debt. It was at this point that the bank suggested a mortgage to rent scheme with Link housing association. He happily agreed to this and the process was put in action. He is now a tenant in his home and is delighted with the service provided by Link Housing Association.

Pros of mortgage to rent scheme

• It was set up so effortlessly. Link Housing Association handled everything. They dealt with surveyors, solicitors, the bank, etc.
• They negotiated with the bank to drop the shortfall debt after they paid the mortgage and some of the business debt
• He says that it reduced the pressure on him and prevented him from becoming homeless;
• They also wrote to Housing Benefit when they had bought the property in order to begin housing benefit payments
• They arranged for the housing benefit payments to go directly to themselves so he does not have to deal with anything
• He thinks it is a fantastic scheme that should be expanded

Cons of mortgage to rent scheme

• The only downside for him is that Link Housing Association is based in the central belt and he is not. This means that any repairs/maintenance that need to be done to his property take a bit of time to get done.

51. Single parent family - female in forties

This family previously lived in a house that was bought outright before the divorce of the female interviewed. She separated from her then husband in 1991. The house that was bought outright was threatened with repossession because of ex-husband's debts (£20,000) to Inland Revenue that she knew nothing about. The Inland Revenue forced the sale of the house in 1995. She divorced her husband in 1995 and moved into a new property worth £60,000. She put down a deposit of £48,000 from the sale of her previous home and took on a £12,000 mortgage. In 1997 she gave up her part-time job to look after her children. One child has special needs. She re-mortgaged her home in 1998 with a non-prime lender for £25,000 to pay off outstanding debts of £10,000. The lender moved for repossession in 1999 but was staved off by a £1000 payment. She entered into a 50/50 joint ownership arrangement with a local housing association. They paid £38,000 for this. She is currently living in the same house.

52. Male - Twenties

Mr X had been self-employed for several years when he bought the property in 1991. The business was becoming so successful that he employed a sales manager to attract new business and organise the work that needed to be done. He had complete trust in this sales manager but discovered later that he was redirecting the new business opportunities to himself and other people that he knew for a commission. By the time this was discovered, Mr X owed his suppliers lots of money for materials but had little money coming in. He stopped paying everyone because it was all getting on top of him. The business was sequestered and his property was repossessed. This was in 1996.

Mr X does not think that the new legislation could have been of any benefit to himself as he believes that his own youth and naivety let him lose this business and his home. However, for other people he feels it could make a valuable difference to their circumstances.

Mr X got married shortly after his bankruptcy and moved in with his wife. He now has a family and another job. He has a new home now but keeps everything in his wife's name only as she is a teacher and has a good, steady, reliable income.

53. Male - fifties

When Mr K. was interviewed it transpired that he had not experienced mortgage arrears or repossession personally but was acting as a representative of people who had. To this end, the interview was conducted to elicit his views on the new Mortgage Rights Act but there is no case study to report as such.

« Previous | Contents | Next »