Secured Loan not Discharged by Solicitor on Sale of House

Thrugelmir

silvercar wrote: »

If the terms of the unsecured loan are as good as or better than the secured loan terms then he would be better off.

There are other considerations. Should have OP been hassled? Should he have had a demand for payment in full? If th OP is now in real financial difficulty, would the options have been different? With a mortgage you can extend the term of the loan. Would OP be able to claim on his PPI? His OP also talks of a refund of PPI after 5 years, will that still happen?

The assumption I would make is that the insurer was "forced" to settle the debt to remedy the situation.

The loan agreement was a matter between the lender and the borrower. The insurer had no influence or control over this matter. The lack of progress in discharging the debt ultimately would have caused the insurer to react. As any default on the part of the borrower could have resulted in the charge being enforced. Therefore causing the sale of the original property.

In this instance the insurer would have been liable for the financial loss caused to the purchaser of the property. This shouldn't be overlooked.

DVardysShadow

silvercar wrote: »

I don't think of the insurer as meddling. The in-laws solicitor notifies their professional indemnity insurer that there is a claim against them ie they failed to ensure all charges were removed on purchase. The insurer then pays out whatever it takes to settle the claim - in this case to pay off the loan to give in-laws clear title.

So the insurer, having failed to persuade lender to transfer loan to new property, clears the loan as a final settlement, the charge is removed, in-laws have clear title and the insurer has covered the negligence of the solicitors.

So far, it is not meddling. If they cleared it and went away, they would not be meddling.

silvercar wrote: »

This could be the end point, but the insurers now want to reduce their costs, so they see if they can get something out of the original loan taker (ie OP).

This is where it becomes meddling

silvercar wrote: »

There is no contractual relationship betweent these insurers and OP, so its a bit of a try on. Yes the OP should have had a loan secured on their new property, but its not OPs fault they don't. There is only so much unravelling that can be done.

If I was OP I would either:
a) tell insurers that the loan was covered by PPI and you would by now have claimed and therefore the PPI would be paying the loan. Let the insurers take on PPI if they want.
b) require proof of a contractual loan agreement between the insurers and OP (of course there is none).

Agree. The insurer should not have a leg to stand on here, primarily because of the lack of consultation.

silvercar wrote: »

Thinking again, I wonder if the insurers have bought the loan off the lender rather than just settled it. This would mean that they are more than likely have paid less than full value to clear it and given them the right to chase OP.

If the Insurer paid off even a penny less than the full amount outstanding, that is fine, as long as the OP is released from the debt. But if they now pursue the OP, it stinks. The OP should get the benefit of anything discount the Insurer got. If the debt was bought with rights from the original lender, that stinks to high heaven - if that is the case, it looks like they have setup the OP to default and then sue him.

MissMoneypenny

DVardysShadow wrote: »

The OP should get the benefit of anything discount the Insurer got. If the debt was bought with rights from the original lender, that stinks to high heaven - if that is the case, it looks like they have setup the OP to default and then sue him.

The OP had told the insurers before that he wanted the payment "on the same terms", but has failed to adhere to that agreement by not paying anything.

The OP has been asked by the insurers to make payments on his loan. They quite rightly threaten court for the full amount as he hasn't paid any of his repayments for a year, but then ask the OP to sort out a payment programme.

IMHO, the OP should not have the benefit of any discount the insurers may have received for early repayment, nor should he have any penalty charge incurred for any early repayment of his loan. Often fixed loans have early repayment penalty charges and we don't know if this is what happened in this case.

The OP has asked for a breakdown of the amount owed.

If the OP has put his last years loan payments to one side and can pay this amount to the insurers, then I don't believe he should have to pay any added interest for these missed payments, if they failed to contact him. IMHO he should however, be charged interest for the missed years payments if he cannot pay his missed payments immediately. Just my opinion.

Cannon_Fodder

What a great forum!

Where else could someone get 7 hours of analysis of a complex issue, for free.

Great effort guys. Keep it up.

Hope the OP appreciates it.

Thrugelmir

Cannon_Fodder wrote: »

What a great forum!

Where else could someone get 7 hours of analysis of a complex issue, for free.

Great effort guys. Keep it up.

Hope the OP appreciates it.

We can all learn with intelligent discussion and debate.

DVardysShadow

Cannon_Fodder wrote: »

What a great forum!

Where else could someone get 7 hours of analysis of a complex issue, for free.

From the finest minds. Don't forget that bit.

DVardysShadow

MissMoneypenny wrote: »

The OP had told the insurers before that he wanted the payment "on the same terms", but has failed to adhere to that agreement by not paying anything.

He was told that the insurers paid the loan off and he has accepted that in good faith

MissMoneypenny wrote: »

The OP has been asked by the insurers to make payments on his loan. They quite rightly threaten court for the full amount as he hasn't paid any of his repayments for a year, but then ask the OP to sort out a payment programme.

It is not 'rightly'. The insurer has no standing to take this to court [as I see it] because the insurer has no contract with the OP

MissMoneypenny wrote: »

IMHO, the OP should not have the benefit of any discount the insurers may have received for early repayment, nor should he have any penalty charge incurred for any early repayment of his loan. Often fixed loans have early repayment penalty charges and we don't know if this is what happened in this case.

Eh? Insurer is not entitled to make benefit out of their client's mistake. Certainly if lender were prepared to offer terms to the insurer, they will be benefitting

MissMoneypenny wrote: »

...
If the OP has put his last years loan payments to one side and can pay this amount to the insurers, then I don't believe he should have to pay any added interest for these missed payments, if they failed to contact him. IMHO he should however, be charged interest for the missed years payments if he cannot pay his missed payments immediately. Just my opinion.

Again, OP has acted in good faith. He has been told that the loan has been paid off and it seems that he has not been involved in any consultation about his own responsibilities

Reading between the lines, I am now wondering whether it is the solicitor who has paid off the loan, which allowed the claim on the insurer to be quantified and the claim is being made by the solicitor in the name of the insurer as an alternative to making a claim on their professional liability insurance

silvercar

Reading between the lines, I am now wondering whether it is the solicitor who has paid off the loan, which allowed the claim on the insurer to be quantified and the claim is being made by the solicitor in the name of the insurer as an alternative to making a claim on their professional liability insurance

Could be right as a claim on PI will effect next years premium.

So if the solicitor settled the loan by buying it off the lender, has the solicitor the right to seek repayment from the OP?

I would have thought the answer is a qualified yes in the same way that other lenders sell on debt, the solicitor could have bought the debt. I'm saying "qualified" because I agree with DVardyshadow that the solictor shouldn't be able to profit from their own mistake.

dicky-dicko-2009

Thanks all for your comments they are hugely appreciated, it is also nice to receive comments from both points of view. Sorry I haven't been able to respond as yet but lost my email facility over the weekend. I have some more info which may shed some light on some comments and open the debate further.

I agree morally the debt was mine, and if it had been dealt with correctly at the right time the lender would more than likely have transferred to my new property. The mistake was only discovered by the solicitor 6 months later after completion when they tried to register my in-laws interest (why this took 6 months I don’t know) meanwhile I am still paying believing it had been transferred. These six months made a huge difference as the credit crunch hits and lenders all change their lending criteria.

PPI is not claimable as still in work but have had a large pay cut, have lost nearly all equity in house.

Although at beginning I requested that if transferred all terms are kept including PPI, this was asked several times, insurer never entered into discussion other than saying I would not be out of pocket, I stated it would have to be the same terms or better So no agreement had been made with the insurer. Several weeks went by with no communication from insurer despite me continually asking about terms. Then I receive notification from lender confirming that loan had been cleared and that the Direct Debit for payment had been cancelled. I chase insurer as I had no idea this was happening to again ask what is happening and what happens next. I receive a reply only confirming loan cleared. I again request what happens next a couple of times and receive no response.

364 days after loan cleared with no correspondence in between I receive letter from negligent solicitor acting on behalf of insurer to claim for full payment. I have since refused to deal with this solicitor and its firm and the insurer appear to have appointed a different firm to act on their behalf.

Original loan amount = £85,000
PPI Cost = £21,000
Total Borrowed = £106,000
Payment Amount = £990pcm
Payments made (no late or defaults) = £22,770

Insurer claims they settled at £107,000 (This cannot be right, proof requested, not received yet) they also state that the PPI is a matter between me and the lender!!

I am really concerned that if they push for this I will loose my home as I will have no choice but to apply for bankruptcy as I could not afford more than £200pcm and this will leave me struggling. I have tried to consolidate existing finance to free up more money for payments but have been unsuccessful, so could only afford £200pcm.

I never failed to adhere to any agreement to pay; I requested an agreement which was never forthcoming despite several requests. The insurer had never asked for any payment since them clearing the loan until 364 days later when instructing solicitor to recover full payment and how I intend to pay. It appears to me that only with the current financial climate have they decided to pursue this to recover their costs. I am the innocent party yet it appears I will end up the one loosing everything.

silvercar

I always find it helpful to separate the issues. My take on this:

1. There is a case for arguing how you have been treated. I would consider telling the insurerer that you are not happy and you want a letter of deadlock. This just confirms that you can't reach agreement. You then take this letter of deadlock through the complaints procedure. I can never remember if it is the FSA or FOS, but one of them will examine the case and make a ruling.

2. PPI. This generally is separate from the loan. If you would never have been eligible to claim then it could possibly have been missold. Otherwise it is a legitimate insurance package designed to pay the loan payments should you qualify. Find out if this is still with the lender or where it is. I doubt it is secured on the original property (though the money to pay it may have been part of the loan). Its terms should be intact. Again this could result in a referral to an ombudsman.

3. Your current finances. Lets be honest here, if the loan had been transferred to your current property, you could well have found it impossible to keep up with payments and therefore faced the risk of repossession. The fact that it isn't secured makes it easier to deal with. You now have the option to consider bankruptcy. Don't think this means losing your home; bankruptcy will get rid of your unsecured debts. Your mortgage payments will be allowed by the Official Receiver and the OR will take the beneficial interest in your home. As you are nearly in negative equity, this can be bought back from the OR for a relatively small amount of money (as low as £1 plus £2-400 legal costs). Obviously bankruptcy requires careful consideration, but the loan being unsecured means it is an option you can now examine. In fact telling this debt holder that you are considering it (leaving them with nothing) may make the negotiations easier.

I offer my thoughts with no legal or insurance background, so don't attach any weight to them other than for discussion/ consideration.