Bank's court threat shakes homeowner: A woman's pounds 600 a month towards the mortgage failed to ward off the risk of repossession. Sue Fieldman reports

NATIONAL Westminster Home Loans, the mortgage arm of National Westminster Bank, threatened to repossess the home of a divorcee who had offered to pay her mortgage arrears in full.

Ann Day, a barrister's clerk, feared that she and her family could be homeless even though she is happy to continue making a pounds 600-a-month mortgage repayment. Any sale by the lender would not raise enough money to discharge the outstanding borrowing on the property.

Marriage breakdown is one of the main causes of couples having problems with their mortgage. Mrs Day and her husband split up about two-and-a-half years ago. They had a loan of pounds 110,000 from National Westminster Home Loans, and a second charge in favour of National Westminster Bank secured on their semi-detached house in Essex.

Mrs Day said: 'There was a financial problem when we first separated - arrears built up. At the time the mortgage repayments were about pounds 1,400 a month. We did tell NWHL we were trying to sort it out.' The couple amicably tried to resolve their predicament. Mrs Day is paying towards the mortgage and Mr Day is dealing with the second charge.

Mrs Day says: 'I now pay pounds 600 a month - the actual monthly repayment is about pounds 900. NWHL has always accepted my repayments.' The couple have tried to keep NWHL and NatWest Bank abreast of their plans. On 21 December she wrote to NWHL. She referred to her earlier conversations and correspondence about the mortgage account, and made various suggestions to try to resolve the long-term position.

These included cashing in the endowment policies linked to the mortgage - the lump sum of pounds 9,000 would be enough to pay off the arrears and some of the outstanding capital.

Mrs Day also asked if she could have a new mortgage - a straight repayment mortgage over 25 years at a fixed rate. Enclosed in her letter was her cheque for pounds 600 for her customary monthly mortgage repayment. The cheque was cleared through her bank account. She expected a reply from NWHL commenting on her proposals, but heard nothing. Instead, out of the blue last week she received a letter from NWHL's solicitors. They had been instructed to commence action to repossess the property. The possession proceedings would only be withdrawn upon receipt 'within 7 days of full repayment of the arrears outstanding on your mortgage loan account (pounds 5,516.82) or provision of acceptable proposals for repayment of the arrears'.

Mrs Day was devastated. 'What is the point of them repossessing while I am paying and am happy to keep paying,' she said. 'They will not get all their money back. The outstanding mortgage is about pounds 115,500 and the second charge is about pounds 26,000. At current values the house is worth about pounds 120,000, and if it is left empty for any length of time the value will drop even lower. Several people have told me to just hand the keys over and walk away. But I would not do that - I want to keep a roof over my family's head.

'If this is how NWHL treat people who are paying the mortgage and trying to sort out the arrears, then how do they treat others who do nothing.'

A spokesman for NWHL said: 'Mrs Day should have had a customer letter in advance of the solicitor's letter. We are instructing our solicitor to take no further action until she has had an opportunity to respond.'

NWHL was not trying to repossess the property, he added. 'We are seeking to formalise the financial arrangements so that she and her ex-husband could come to some arrangement through the court.'

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