We took out a £53,000 remortgage with The Mortgage Corporation (TMC) in 1989. In 1992 we fell behind with repayments. When we were some 3 months in arrears they issued a possession order (I think that's what it was). I attended the court and a Mortgage Corporation solicitor shuffled me to one side before we went in. "Can you agree to keep up this revised payment" he said "and the procedure in there will then just be a formality", he smiled. I verbally agreed that of course we would try our best to maintain a slightly reduced monthly repayment schedule. In court for about 5 minutes, all agreed rubber stamped etc., i.e. I continue to make payments as agreed and TMC would take no further action. I kept in contact with the TMC but after making some payments we just couldn't keep up, so I went to a solicitor who said, "don't worry, they can't repossess without going back to court first". I wasn't convinced and we started looking for alternative rented accommodation for our young family (wife and 3 sons under 10). Sure enough a few days later we had an eviction order through the door giving us 14 days to vacate the premises.

TMC then wrote and phoned us in 1994 stating that we owed them a shortfall of £16,057. One TMC employee, told me over the phone that the shortfall was made up of outstanding interest charges and included a figure of £7,370 for improvements needed to the property in order it could be sold quickly in such a depressed market. These improvements included a fitted kitchen, cooker etc., and landscaping the garden. We didn't live too far away from our old home and could see that nothing had been done to the garden and it was apparent that no work had been done inside either. The selling price of the property was apparently still below market value at £52,000. So the shortfall is almost entirely made up of interest upon interest upon interest charges and the "improvements" of £7,370. In 1998 Eversheds picked up the stick to beat us with.

I had to give up work some years ago to look after my disabled son as my wife couldn't cope. She has suffered with very ill health ever since our eviction. We have been on benefits for a few years now and live in rented, furnished accommodation. I have completed I&E forms in the past plus sent them copies of benefit books etc., (OK I know that was stupid now but with a young family I was frightened by Eversheds threats of High Court Writs and the thought of Bailiffs taking away what little we had left i.e. a few sticks of old furniture and the TV). Ten years on and Eversheds continue to hound us for these erroneous amounts, wanting regular I&E forms and lump sum offers "or else". Well I snapped this year. Now my lads are all old enough not to be worried by courts, bailiffs and the like, and myself being older, wiser and with a couldn't give a f**k attitude, the worm is turning.

I start digging and almost every day produces a surprise. I have been asking Eversheds to send documentary evidence of the improvements and a breakdown of the interest charges for the last 4 years anyway but as they have never produced these I begin to realise that an act of fraud may have been committed back then. In 1992 when I noticed no work had been done, I assumed that it would be at some stage and in my naiveté assumed that no one was trying to pull a fast one.

A search of the land registry shows that the property was transferred to Cavendish Home Investments No. 2 PLC on 23 December 1992. A search of Companies House reveals the address of this company as the same as that of TMC and their last annual report shows they are a wholly owned subsidiary of TMC. Apparently they then rented out the property for the next 7 years when they sold it to a private person in Dec 99 for £74,995.

A solicitor I spoke to said that technically this is not illegal but its both very unethical and immoral.

Has this happened to anyone else? I would really be interested to hear from anyone at the email address below.

Thinking further ahead, I now believe that because I was never formally told of the sale, that a transfer of the property within their own group of companies does not constitute a sale and therefore, when it left the group at a sale of £74,995 in 1999, I am now within my rights to use their own figures of the original shortfall breakdown and request the sum of £13,423 being the difference between what they claim I owe them and the sale price. I may be prepared to reduce this figure and pay for the improvements of £7,370 if they can produce the invoices for them. And being 1999 I am still within the 6 years for making such a claim. Any thoughts?

-- Simon Hensby (simon@adders.org), May 04, 2002

Answers

Actually I think your solicitor may wish to think again about his advice. A sale of a property by the mortgagee in possession has to be an "arms length" transaction, if the security against the mortgage is to be subsequently enforced. What you describe is not an "arms length" sale and TMC are probably in breach of their duty of care to obtain the best possible sale price. Surely even Evershafts can see the red flags flying on this one? With regard to the legality of the sale to Cavendish, a corporate group can have a number of compnaies within it and sales between them are legitimate sales. For group accounts purposes, the balance sheets are consolidated, but you can break them down. The title to your property would have transferred to Cavendish upon the sale by TMC in possession. Yes, it's disgusting, but they are able to do what they did, if the Court agrees that that the price realised for the property was "reasonable".

-- Too scared to say (iwasduped@yahoo.com), May 05, 2002.

Thanks very much for your answer and very useful info. My last paragraph was a little tongue in cheek. Re Solicitor's advice, I guess when I can afford to pay for specialised legal advice rather than have to rely on freebies from solicitors then I should be able to get a more authoratitive response from them, though that's probably wishful thinking.

I think the important point here is that TMC specifically set up this and several other companies to act as leasing/managing agents for repossessed properties, so I can't be the only one they did this to. The information which led me to discovering who bought it, is not publicly available, so I think many others are not aware that such a transaction took place. After obtaining the details of who currently owned my property by applying to the Land Registry Office and paying £4, I was told I could apply in writing using the EX reference number to the Land Registry Office nearest to my old property and ask them very nicely if they could tell me who became the registered owner after me in 1992. They don't have to give the info but may do if you can provide a reasonable explanation why you want it. There are probably other ways of finding out but if anyone wants more details of how I went about it, then let me know.

On another point, other interesting info I found out was that TMC are part of two corporations based in the Cayman Islands, namely Zophonus and SeaHorse Ltd and even though they were reported in the press as having been "bought out" by First Active now Britannic Money, they are still listed as an active company at Companies House. All the aforementioned have the same address in Epsom and many employees of TMC apparently have joint contracts with Britannic Money.

-- Simon Hensby (simon@adders.org), May 05, 2002.