The public health implications remain serious but there will also be a wider impact on the economy with businesses still trying to recover and rebuild. We are also yet to see the full effect the crisis will have on jobs.
On 17 November the FCA issued further guidance to mortgage firms making it clear that they may commence or continue repossession proceedings against customers but may not enforce possession orders already obtained until 31 January 2021.
This follows an automatic stay on almost all possession proceedings and all proceedings to enforce a possession order across England & Wales, Scotland and Northern Ireland from March to October 2020.
So what happens now?
Well for England & Wales the Working Group convened by the Master of the Rolls published a detailed note on overall arrangements for possession proceedings – this augmented the numerous existing changes to the Civil Procedure Rules and Practice Directions.
In brief, lenders will need to undertake a number of steps to proceed with existing standard possession claims. The actions are fairly substantial but they include:
Reactivation Notice – a notice requiring lenders to explain they wish to continue and provide information on the impact of the virus on the borrower.
Review date – this provides a new opportunity for the borrower to obtain, free of charge, duty scheme advice and for the lender and borrower to reach agreement along with the duty adviser.
Substantive (S) Hearing – at the S Hearing all parties must attend and the Court will decide the claim or give further case management directions
Listing Priorities – written listing priorities have also been published, prioritising certain types of cases in the listing of court hearings.
Mediation Pilot – a case may be referred to a mediation pilot scheme which is free of charge and will require attendance of the parties for up to one hour for a voluntary telephone/video mediation.
In Scotland, ongoing possession proceedings have been sisted (stayed) at the court.
Through discussions with the Scottish Courts and Tribunal Services, the Courts have agreed that the following steps should be undertaken by lenders:
Request – ongoing possession proceedings can be “restarted” at the request of the lender. There is no prescribed form of request and in some instances a formal motion to recall the sist may be required.
Hearing – a hearing date will be set which will need to be intimated on the customer in the usual way.
Currently, there are no specific requirements to provide the Court with information as to the circumstances of the borrower with regard to Covid. The test for granting will be a reasonableness test.
As for Northern Ireland, with effect from 19 October 2020, the Court will divide cases into ‘stayed actions’ and ‘new actions’. A stayed action is an action which was brought on or before 19 October 2020 and includes actions adjourned generally by the court. A new action is one brought after 19 October 2020.
Key actions
Among some key actions, mortgage lenders need to be aware of the following:
Reactivation Notice – prepare a notice which confirms that the party lodging it wishes the case to be listed, relisted or heard.
Affidavit – 21 days prior to the Initial Review or first hearing date, the party reactivating the action must file and serve an affidavit explaining what knowledge they have as to the effect of the pandemic on the defendant and their dependants.
Initial Review – the Master will review the case remotely without the attendance of the parties and issue further direction at a list hearing.
New actions – the position is that new business can be issued, however, at present, hearing dates may only be sought in urgent cases.
So whilst the UK and devolved authorities are still trying to manage Covid on a regional or local basis, there is no doubt that lenders will need to begin preparing for the future, and ultimately a resumption of activity, in particular with regard to possession claims.
As we move to the end of the year and in to 2021, there will not only be a substantial backlog to manage, but also many new cases.
Throw into the mix that many newer lenders we’ve seen emerge since the financial crisis will not have gone through a normal economic slump, never mind an environment which is certainly uncharted territory.
There is no time like the present, and if lenders are to be on the front foot, and in a position to deal with the challenges ahead and ensure fair outcomes for their customers, the time to start proactively managing unaffordable mortgages is now.
Thomas Lillie is partner and UK head of legal, lender services at Aberdein Considine
