Retention / dropping LTV = 1 disgruntled FTB

roehan

Hi,

Hoping somebody can give me a bit of advice. I'll try to explain the whole situation so please bear with me!!!

I am a FTB and recently found a house, this seemed to be a good deal compared to other similar properties in the area/street. it was a 2 bed house and I had an offer accepted for 83,000. It required a lot of work doing, but other 2 bed properties on the street were selling for 110-120k.

The surveyor pointed out the following:
*roof needs attention
*garage needs replacing due to asbestos
*damp proof course
*2000 retention
He asked for specialist reports on the above before he would give a value.

The damp proof course came back at 1500. Upon advice of a general builder to replace the garage was 2600, who also stated the roof needed no repairs.
After reviewing these documents the surveyor recommended a 4000 retention.

Now to the mortgage:

I had a mortgage approved for 90% LTV, the rate went up on this product by 0.50% during the early stages of the application but was honoured at the lower rate.

As my base salary is 19.5k and a requirement for the mortgage is 20k it seemed to cause problems with the automated application but was approved without further comment when I proved that the previous 2 tax years I had earned over this including overtime & bonuses and also that the current tax year I had earned enough in OT to take me over this again.

So the application was approved @ 90% LTV subject to valuation.

As stated above the valuer recommended a retention, as soon as the Building society was advised he was recommending this they dropped the LTV to 85%.

At the application stage of the mortgage I was looking at putting in 8,300 deposit which would have left me plenty to do the works required.

However after the valuer recommended a 4000 retention and the building society dropping the LTV I was looking at 16,450. Plus needing to spend the 4100 in order to get the retention back. Meaning as a first time buyer with limited capital I was expected to raise £20,550!

The building society were very slow at processing things despite me regularly chasing, it took them 7days to essentially take a fax off their fax machine and to forward to the surveyor.

I explained to the building society that I couldn't proceed with both the drop in LTV & with the retention. I could do one or the other but not both. However I felt that if they were adding the retention then there was no need to drop the LTV and vice versa. After speaking to numerous idiots who couldn't understand what I was trying to say I spoke to a manager who agreed and went back to the underwriters.

At this stage the underwriters decided my income was now a problem, and that it was for this reason that they were dropping the LTV rather than the condition of the property.

I unfortunately eventually had to pull out of the house which has since completed. I was extremely disappointed with the poor customer service that I received, and almost feel that the building society didn’t want the application to proceed bearing in mind the lower rate I had approved.

So I decided I wanted a refund of fees and raised a complaint. The final letter on the matter from the building society confirms the drop in LTV was due to income and because of the additional reports that were required.
I have had the arrangement fee returned, minus the cost involved for valuation, homebuyer report & non refundable deposit. I am also out of pocket for the solicitors fees.

I want to know whether anybody else thinks I have been treated unfairly here?
Does anybody think I would have a reasonable case if I were to go to the ombudsman in getting a full refund including the solicitor’s fees??

opinions4u

My view?

You were buying a house in poor condition that required several thousand pounds of work while looking to borrow at the extremes of the lender's income criteria using income other than basic salary.

They took their time because it was an awkward case and they assessed things carefully at each stage.

Unltimately they chose not to lend, which is their right.

You chose to instruct you solicitor before you got an offer of mortgage. You chose to pay a non-refundable deposit. You paid the valuer and got a valuation.

You have every right to pursue the lender's complaints process and, if they refuse to pay you anything, take it to the ombudsman.

But depsite a long post, I see nothing that says that they have been unreasonable. Lenders have been slated for poor quality lending. Your application was a difficult one to assess and as each bit of information came in it caused more questions to be asked. In the end they decided that they didn't want to proceed.

I suspect I'd have made the same decision.

From what's been posted the Ombudsman is unlikely to back you.

Mrs_Bumble

You were looking for over 4 times basic salary.

The property was in poor condition, which you knew at outset from your own viewing but the surveyor has discovered issues quite serious in relation to the property being adequate security and so the lender imposes a retention to ensure that the property is put right and made an adequate security.

As spending money comes into play on the property underwriters reviewed the case and decide it is a little more risky than first thought and so they lower the loan to value as is the lender's perogative, reducing the risk to them.

Some lenders at this point would have just declined but the building society gave you a shot at it, requiring that you put your own funds into the project but they didn't say no.

It was your decision to withdraw from the purchase not theirs.

I personally think it is a very generous decision on their part to return any fees as most would have told you no.

I agree with the above post and my personal opinion is that you won't get anywhere with the ombudsman.

_Andy_

As per the above posters, all looks fair to me. From the sounds of the property you're probably better off having pulled out.
You won't get the solicitors fees etc back.

roehan

I suppose if i look from the outside in then i can agree with your comments and ultimatley with the view of the building society.
Can't help feeling frustrated however that the application would no doubt have gone straight through had it have been a couple of years earlier, and at the time and money lost in the process. Particularly with the poor service received.

Hey ho we live and we learn, lets hope the market crashes again and prices come down a bit more!!

Thanks all for your time taken to read & respond.

Mrs_Bumble

roehan wrote: »

I suppose if i look from the outside in then i can agree with your comments and ultimatley with the view of the building society.
Can't help feeling frustrated however that the application would no doubt have gone straight through had it have been a couple of years earlier, and at the time and money lost in the process. Particularly with the poor service received.

Hey ho we live and we learn, lets hope the market crashes again and prices come down a bit more!!

Thanks all for your time taken to read & respond.

I doubt very much that even pre crash that a property requiring the work that this one did would have sailed through either.

You may feel that it was poor service but the lender processed the information and didn't come back to you with a straight no, so I still don't think that was poor service.

If the society concerned was Britannia then it is well documented that processing times have slowed because of the merger and popularity of some of their products, very few lenders in at 90% LTV.

If it was one of the other smaller societies then again with few lenders operating at the 90% LTV makes processing times slow.