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    • Another Custard Cream
    • By Another Custard Cream 13th Sep 17, 8:19 PM
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    Another Custard Cream
    Single Premium Mortgage Risk Payment
    • #1
    • 13th Sep 17, 8:19 PM
    Single Premium Mortgage Risk Payment 13th Sep 17 at 8:19 PM
    This question may have been asked and answered and if so apologies however I wonder if someone might give me guidance on the following:-

    In 1996 Took out an interest only mortgage with Yorkshire Building Society. Repayment vehicle via 2 endowments. Standard at the time.

    At the time, YBS required additional security as the mortgage (at 90% LTV) exceeded their normal limit of 75%. The additional security was a Mortgage Risk Payment at a single premium of £928 which sum was deducted from the total loan amount given (therefore interest payable on the mortgage was also payable on that amount of £928 for the term of the mortgage with the MRP being for the benefit of YBS not the the borrowers.

    I understand that this was common practice but should we have offered the opportunity to insure the risk with another company? The mortgage offer was conditional upon us taking it out, benefits etc. where not explained and it is listed in the mortage statement for the first year as "Ins. Guarantee Prem". Was it right that we should have paid interest on premium throughout the term of the mortage? We were not offered the opportunity to pay for the premium separately and would have been able to do so.

    Any thoughts?
Page 1
    • dunstonh
    • By dunstonh 13th Sep 17, 10:29 PM
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    dunstonh
    • #2
    • 13th Sep 17, 10:29 PM
    • #2
    • 13th Sep 17, 10:29 PM
    The additional security was a Mortgage Risk Payment at a single premium of £928 which sum was deducted from the total loan amount given (therefore interest payable on the mortgage was also payable on that amount of £928 for the term of the mortgage with the MRP being for the benefit of YBS not the the borrowers.
    All quite normal there. So, no issues.

    I understand that this was common practice but should we have offered the opportunity to insure the risk with another company?
    No that is not correct. For two reasons.
    1 - The policy was for the benefit of the lender. Not for you. They just got you to pay for it. So, you had no choice.
    2 - For personal insurances (which this isnt) the requirement to allow people to buy elsewhere came in a number of years later and was obviously not applied retrospectively.
    Was it right that we should have paid interest on premium throughout the term of the mortage?
    You pay interest on it for as long as you borrowed the money. The MIG payment was in a sub account which could be repaid at any time. So, it was your choice.

    We were not offered the opportunity to pay for the premium separately and would have been able to do so.
    Lenders did give the choice. So, if you missed it, then there is nothing you can do about it now. You have 6 years from the event in question or 3 years from being reasonably aware of an issue to raise a complaint (whichever is longer). You are talking about 21 years year and an allegation which cannot be proven.
    • SheilaGKnox
    • By SheilaGKnox 5th Oct 17, 10:08 AM
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    SheilaGKnox
    • #3
    • 5th Oct 17, 10:08 AM
    • #3
    • 5th Oct 17, 10:08 AM
    Why isn't Mortgage indemnity Premium insurance illegal.
    People were made to pay for a policy that didn't cover themselves but covered the banks, then to have the insurance companies claim back their money from the person who paid the policy. I still can't believe that they got away with it.
    • SheilaGKnox
    • By SheilaGKnox 5th Oct 17, 10:17 AM
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    SheilaGKnox
    • #4
    • 5th Oct 17, 10:17 AM
    • #4
    • 5th Oct 17, 10:17 AM
    I paid this premium. Then my relationship ended because of violence. I had to leave the property. 2 visits to crown court to try and distance myself from this mortgage, but couldn't. He defaults. THe Mortgage insurance pays the bank for part of their loss, I pay the bank for the rest. 27 Years since I left the property I am still paying the insurance company what they paid the bank. I thought the reason for insurance was to cover you in misfortune. How can it be legal for them to claim money back when they have taken a premium to cover you?
    • dunstonh
    • By dunstonh 5th Oct 17, 11:09 AM
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    dunstonh
    • #5
    • 5th Oct 17, 11:09 AM
    • #5
    • 5th Oct 17, 11:09 AM
    Why isn't Mortgage indemnity Premium insurance illegal.
    Because there is no reason for it to be.

    People were made to pay for a policy that didn't cover themselves but covered the banks, then to have the insurance companies claim back their money from the person who paid the policy. I still can't believe that they got away with it.
    You had a choice. Either save more or go to a different lender.

    I thought the reason for insurance was to cover you in misfortune.
    And had you bought personal insurance you may have been covered for that.
    • phillw
    • By phillw 5th Oct 17, 12:11 PM
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    phillw
    • #6
    • 5th Oct 17, 12:11 PM
    • #6
    • 5th Oct 17, 12:11 PM
    Because there is no reason for it to be.
    Originally posted by dunstonh
    All the people that I know who paid it, were mis-sold.

    Either because they were told that it was for their benefit, or because it was a hidden extra fee that wasn't in the headline advertised rate.

    But sure, if someone is able to honestly and openly sell that insurance then it's up to the buyers. It's never happened yet & I doubt it ever will.
    Last edited by phillw; 05-10-2017 at 12:16 PM.
    • zx81
    • By zx81 5th Oct 17, 12:13 PM
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    zx81
    • #7
    • 5th Oct 17, 12:13 PM
    • #7
    • 5th Oct 17, 12:13 PM
    I don't believe MIG was EVER mis sold.
    • phillw
    • By phillw 5th Oct 17, 12:16 PM
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    phillw
    • #8
    • 5th Oct 17, 12:16 PM
    • #8
    • 5th Oct 17, 12:16 PM
    I don't believe MIG was EVER mis sold.
    Originally posted by zx81
    What you believe contradicts what I know.

    Maybe you're being pedantic over what constitutes mis-selling? It's not cut and dried as Plevin highlights.

    Requiring the insurance to be provided by themselves or a named company would indicate that it was mis-sold.
    Last edited by phillw; 05-10-2017 at 12:25 PM.
    • zx81
    • By zx81 5th Oct 17, 12:22 PM
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    zx81
    • #9
    • 5th Oct 17, 12:22 PM
    • #9
    • 5th Oct 17, 12:22 PM

    But sure, if someone is able to honestly and openly sell that insurance then it's up to the buyers. It's never happened yet & I doubt it ever will.
    Originally posted by phillw
    It was certainly openly and honestly sold to me, alongside a 100% mortgage. Perhaps you're thinking of something else?
    • phillw
    • By phillw 5th Oct 17, 12:26 PM
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    phillw
    It was certainly openly and honestly sold to me, alongside a 100% mortgage. Perhaps you're thinking of something else?
    Originally posted by zx81
    It sounds like you were mis-sold but are now in denial. Most people are unaware when they are mis-sold.

    Did their insurance quote beat all of the other quotes you got? Can they demonstrate whether the insurance premium was related to the risk?
    Last edited by phillw; 05-10-2017 at 12:31 PM.
    • zx81
    • By zx81 5th Oct 17, 12:32 PM
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    zx81
    It was a very small amount overall and not one that worried me. Given I wasn't in a position to save more, I was pleased with the overall package.

    Certainly no denial here. I prefer to make my own decisions and then stand by them. Though I accept that's somewhat unfashionable.
    • IAmWales
    • By IAmWales 5th Oct 17, 12:35 PM
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    IAmWales
    All the people that I know who paid it, were mis-sold.

    Either because they were told that it was for their benefit, or because it was a hidden extra fee that wasn't in the headline advertised rate.

    But sure, if someone is able to honestly and openly sell that insurance then it's up to the buyers. It's never happened yet & I doubt it ever will.
    Originally posted by phillw
    Can you point to FOS decisions that support your assertion please?

    I had a MIG on my first mortgage, I was aware of it when I took out the mortgage and it was detailed in the paperwork that I took the time to read. Can you explain how it was missold to me?
    • dunstonh
    • By dunstonh 5th Oct 17, 12:37 PM
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    dunstonh
    All the people that I know who paid it, were mis-sold.
    It is impossible to be missold MIG.

    Either because they were told that it was for their benefit, or because it was a hidden extra fee that wasn't in the headline advertised rate.
    MIG hasnt been around for about 25 years. There was talk about it coming back after the credit crunch but the economic situation didnt require it in the end.

    It was impossible for it to be a hidden extra. you either paid for it up front or you added it to the mortgage and the offer letter showed the borrowing increased because of it. Back then, everyone went to see the conveyancing solicitor and the terms of the mortgage were explained to them.
    Maybe you're being pedantic over what constitutes mis-selling? It's not cut and dried as Plevin highlights.
    Plevin has nothing to do with misselling.

    Requiring the insurance to be provided by themselves or a named company would indicate that it was mis-sold.
    no it wouldnt.

    Most people are unaware when they are mis-sold.
    Because they were not.

    Did their insurance quote beat all of the other quotes you got?
    Are you getting this mixed up with something else? You seem to be arguing a position for a consumer insurance. MIG was not a consumer insurance. Indeed, it wasnt really an insurance in the sense you think it was. It was a risk premium where the lender took the risk, not an insurer. The bank may have reassured the risks but that was internal. It was effectively a fee rather than an insurance policy.

    It was not possible to buy MIG on the open market. So, a consumer could not get quotes elsewhere.
    • phillw
    • By phillw 5th Oct 17, 12:37 PM
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    phillw
    It was a very small amount overall and not one that worried me. Given I wasn't in a position to save more, I was pleased with the overall package.

    Certainly no denial here. I prefer to make my own decisions and then stand by them. Though I accept that's somewhat unfashionable.
    Originally posted by zx81
    Most people who were mis-sold were happy with the deal at the time, or not in a position to take a different product.

    It seems you want to redefine what mis-sold means to meet your own morals, but your view point doesn't even seem to match the courts definition of mis-selling. If you follow your argument then it would seem impossible for anything to ever be mis-sold.

    Arguing that you're not in denial is pretty pointless.
    • zx81
    • By zx81 5th Oct 17, 12:40 PM
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    zx81
    Asserting that I am in denial, if you are in denial that I'm not, would seem equally so.
    • IAmWales
    • By IAmWales 5th Oct 17, 12:46 PM
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    IAmWales
    Most people who were mis-sold were happy with the deal at the time, or not in a position to take a different product.

    It seems you want to redefine what mis-sold means to meet your own morals, but your view point doesn't even seem to match the courts definition of mis-selling. If you follow your argument then it would seem impossible for anything to ever be mis-sold.

    Arguing that you're not in denial is pretty pointless.
    Originally posted by phillw
    The courts have ruled on this?

    Now I am intrigued!
    • dunstonh
    • By dunstonh 5th Oct 17, 12:48 PM
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    dunstonh
    It seems you want to redefine what mis-sold means to meet your own morals, but your view point doesn't even seem to match the courts definition of mis-selling. If you follow your argument then it would seem impossible for anything to ever be mis-sold.
    Please name a single court case to support your allegation.
    • Moneyineptitude
    • By Moneyineptitude 5th Oct 17, 1:40 PM
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    Moneyineptitude
    Fun discussion
    • Nearlyold
    • By Nearlyold 5th Oct 17, 5:04 PM
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    Nearlyold
    All the people that I know who paid it, were mis-sold.

    Either because they were told that it was for their benefit, or because it was a hidden extra fee that wasn't in the headline advertised rate.

    But sure, if someone is able to honestly and openly sell that insurance then it's up to the buyers. It's never happened yet & I doubt it ever will.
    Originally posted by phillw
    Don't think FOS would agree with you as this typical extract from an Ombudsman decision shows:-

    Mortgage Indemnity Guarantee
    Ultimately it’s for Manchester BS to decide the terms on which it lends money to customers. That’s a business decision for it to make.
    I understand Mr and Mrs C had to take out a mortgage indemnity guarantee, at their own cost. That was a condition of them getting the re-mortgage. Although this condition was imposed by Manchester BS, I don’t think it was unfair for it to do this in this particular case. The purpose of the indemnity was to protect Manchester BS in case Mr and Mrs C’s home had to be repossessed and sold for less than what Mr and Mrs C owed Manchester BS at the time it was sold. The indemnity guarantee would’ve paid any shortfall.
    I’ve looked at the mortgage valuation report for the house they were re-mortgaging in 1990. The value of the house in the report is less than the estimated valuation Mr and Mrs C put on their mortgage application. According to the valuation report they were borrowing 75% of the property value – not 65% as Mr and Mrs C have said.
    So, the loan to valuation ratio for that time was quite high. And because of this I don’t think it was unreasonable for Manchester BS, as the lender, to insist on the extra security of an indemnity being taken out.
    • zx81
    • By zx81 5th Oct 17, 5:17 PM
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    zx81
    That's only because the FOS are also in denial.

    I bet if you asked them, they would even deny that too.
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