Simon Read: The mystery of repossession?

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The Independent Online

In Franz Kafka's 'The Trial', the character of Josef K gets arrested out of the blue. He is never told what his crime is or, indeed, given a chance to defend himself. Peter Addyman is not a fictional character, but found himself in a similar nightmare to Josef K last year.

Peter is an architect and family man who lives in St Leonards-on-Sea in East Sussex with his wife and three children. The family has a £226,000 interest-only mortgage with NatWest and took out a new loan with the bank last March. So far, so ordinary.

But in September everything changed when, to their surprise and distress, they got a shocking letter from the bank. NatWest wrote to tell the Addymans it would no longer provide a mortgage for them, adding that "our decision is final and we are not prepared to enter into any discussion in relation to it".

Worse, the bank gave the couple only 30 days to find a new mortgage. The bank gave no reason for its decision and – in subsequent dealings with Which? magazine and the Financial Ombudsman Service – remains tight-lipped about what prompted its actions.

The Addymans set about remortgaging, but the housing market collapse has left their home worth less than the amount they owe on the mortgage. As a consequence, no other lender was prepared to help them out, forcing them to go back to NatWest and report the difficulties they were having finding another mortgage. The next communication they had from the bank was a letter – sent two weeks before Christmas – informing the worried pair that proceedings for possession would commence unless they repaid the mortgage within seven days.

By now the family were desperately worried about losing their home and being forced into bankruptcy. With their pleas at the bank falling on deaf ears they turned to their local Citizens Advice Bureau, which in turn put the couple in touch with Which?

The consumer body took up the fight on behalf of the Addymans, taking their case to the Financial Ombudsman. The move meant NatWest had to put its repossession plans on hold until the Ombusdman's decision. That came last week with the Ombudsman saying it was "not satisfied" by NatWest's order to repay the mortgage without giving an explanation. It said the bank had not treated the couple "fairly or reasonably". It then threw out an appeal by NatWest.

The cheering news means the Addymans won't be thrown out of their home. But the story should send a chill through homeowners across the country. It suggests that lenders are choosing to ignore government policy not to rush into repossessing homes.

With millions facing the risk of negative equity, the worry of repossession should not be following close behind. With no clue about the reasons behind NatWest's actions, we can only speculate. Sources suggest that lenders would normally only follow such a path if they were worried about a borrower's actions damaging the value of a property. For instance, if they discovered it was being used as a brothel or turned into a drug den. Neither is true in the Addymans case, which leaves me as puzzled as Josef K.

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