Bad advice Nationwide - should we complain?

hedgebets

Hi,
At the risk of appearing to be a total plank, but buoyed by the kind advice given on another matter on this site (it's my lucky week!) I thought I'd post the following issue...

OK, I'll try to keep it brief.
We have a m/g with Nationwide since May 2007. The property fell into negative equity over the last 2 years and when we sold last month the shortfall was almost £6k. Now, when we decided we wanted to sell, we took advice from NWide who agreed that yes we can port our m/g of £134K to our new house, value £149K. So naturally we asked what happens to the neg equity as the house was sold for £128K? I know this sounds ridiculous, but the (young boy) advisor was adamant that as we were moving our exact m/g and topping up with £15k deposit, we didn't have to find this £6k - I won't go into it, but somehow his explanation was convincing and we checked several times to make sure.

Being desperate to move (personal reasons) and having a buyer almost immediately, we just wanted minimum hassle so continued with the Nwide.

OK, one week before completion, the solicitor advises us of the final bill to include her fees, estate agent fees and so on... suddenly the mysterious £6k appears. Even the solicitor commented that she "thought the amount was more than she expected" (not the world's best solicitor, I will grant you).

Anyway, we had to take a loan very, very quickly to meet the total and now have a loan of £6k to repay completely out of the blue.

I realise we may have been foolish, but we followed the advice we were given so convincingly and sometimes you just trust these money people to get it right. Interestingly, but not surprisingly, the advisor hadn't been returning our calls towards the end of the process and when we had the final bill and left a message on his answerphone explaining what had happened and how we desperately needed to speak to him - no reply. This was on a Friday evening one week before completion - that was an interesting weekend let me tell you.

We have completed and moved but have incurred this unforeseen loan due I think to Nwide's bad advice. Am I right to think we have a complaint here? I don't really know where to start.

Sorry, that wasn't so short, but really appreciate any thoughts - not too insulting though please

Thrugelmir

hedgebets wrote: »

Hi,
At the risk of appearing to be a total plank, but buoyed by the kind advice given on another matter on this site (it's my lucky week!) I thought I'd post the following issue...

OK, I'll try to keep it brief.
We have a m/g with Nationwide since May 2007. The property fell into negative equity over the last 2 years and when we sold last month the shortfall was almost £6k. Now, when we decided we wanted to sell, we took advice from NWide who agreed that yes we can port our m/g of £134K to our new house, value £149K. So naturally we asked what happens to the neg equity as the house was sold for £128K? I know this sounds ridiculous, but the (young boy) advisor was adamant that as we were moving our exact m/g and topping up with £15k deposit, we didn't have to find this £6k - I won't go into it, but somehow his explanation was convincing and we checked several times to make sure.

Being desperate to move (personal reasons) and having a buyer almost immediately, we just wanted minimum hassle so continued with the Nwide.

OK, one week before completion, the solicitor advises us of the final bill to include her fees, estate agent fees and so on... suddenly the mysterious £6k appears. Even the solicitor commented that she "thought the amount was more than she expected" (not the world's best solicitor, I will grant you).

Anyway, we had to take a loan very, very quickly to meet the total and now have a loan of £6k to repay completely out of the blue.

I realise we may have been foolish, but we followed the advice we were given so convincingly and sometimes you just trust these money people to get it right. Interestingly, but not surprisingly, the advisor hadn't been returning our calls towards the end of the process and when we had the final bill and left a message on his answerphone explaining what had happened and how we desperately needed to speak to him - no reply. This was on a Friday evening one week before completion - that was an interesting weekend let me tell you.

We have completed and moved but have incurred this unforeseen loan due I think to Nwide's bad advice. Am I right to think we have a complaint here? I don't really know where to start.

Sorry, that wasn't so short, but really appreciate any thoughts - not too insulting though please

So why didn't you check with your solicitor during the sale / purchase process?

Ian_W

I'm not an expert on mortgages or mis-selling but take Nationwide and negative equity out of the equation for a moment.

You sold for £128K and bought for for £149K, a difference of £21K. Where did you thnk the the £6K shortfall between that figure and your £15K in cash would come from? What's "mysterious" about it? It was the diference between your sale and purchase prices.

As far as NW were concerned you wouldn't have to find £6K, as the difference between your outstanding mortgage and the purchase price was £15K, the fact your sale price didn't cover the outstanding mortgage was known to you when you agreed a selling price for your old house and a purchase price for the new one.

The NW advisor may or may not have given you bad advice, I really couldn't say, but I would have thought the fact you'd need to find £21K to complete the purchase was fairly obvious - given NW were not lending you any more than your existing mortgage.

opinions4u

hedgebets wrote: »

We have a m/g with Nationwide since May 2007. The property fell into negative equity over the last 2 years and when we sold last month the shortfall was almost £6k. Now, when we decided we wanted to sell, we took advice from NWide who agreed that yes we can port our m/g of £134K to our new house, value £149K. So naturally we asked what happens to the neg equity as the house was sold for £128K? I know this sounds ridiculous, but the (young boy) advisor was adamant that as we were moving our exact m/g and topping up with £15k deposit, we didn't have to find this £6k - I won't go into it, but somehow his explanation was convincing and we checked several times to make sure.

So somewhere along the line you're saying somebody got their sums wrong?

Why won't you go in to it? It's clearly the central reason for your problems.

OK, one week before completion, the solicitor advises us of the final bill to include her fees, estate agent fees and so on... suddenly the mysterious £6k appears.

I'm not sure how it can just "appear". If you know your settlement figure and fees, and know how much you are selling your house for, it was there all along.

I realise we may have been foolish, but we followed the advice we were given so convincingly and sometimes you just trust these money people to get it right.

Possibly there is an element of blame on the adviser, but I'm not totally convinced. I could be wrong but I think the regulation of mortgages provides a safety net for being sold the wrong product. I'm not sure that it covers being sold the wrong amount.

Interestingly, but not surprisingly, the advisor hadn't been returning our calls towards the end of the process and when we had the final bill and left a message on his answerphone explaining what had happened and how we desperately needed to speak to him - no reply. This was on a Friday evening one week before completion - that was an interesting weekend let me tell you.

I think you need to include this in your complaint to Nationwide.

We have completed and moved but have incurred this unforeseen loan due I think to Nwide's bad advice. Am I right to think we have a complaint here? I don't really know where to start.

It's borderline, because I actually think you have been unbelievably negligent in managing your own affairs here.

Yes, I think you should pursue a complaint with Nationwide. Be clear as to what you are claiming for though.

I don't think that they are liable for the £6,000. That was always your responsibility. Unless the detail that you "won't go in to" changes the complexion of the situation. I can't see how it would though.

Perhaps they are liable for the difference in interest on your personal loan and what they would have charged you on a bigger mortgage. If there was a big product fee on the mortgage though, it's possible that a shorter term loan with no fee will charge you less interest than a longer term mortgage at a lower rate. But if they couldn't lend you more than £134k (which is around 90% of the PP) then I can't see that there was any other route forwards anyway.

Perhaps it's an ex-gratia payment for a misunderstanding and a failure to return calls. Somwhere between £25 and £50?

I still find it extraordinary that you didn't sit down and do some simple sums before accepting/making offers on properties and seeing a mortgage adviser. You really should have known how much you needed to borrow ahead of the game.

hedgebets

We asked the question of Nationwide directly and were specifically told that the figures for our m/g hadn't changed. It's always easier afterwards to maintain that the error was obvious but it really wasn't explicit at the time, I've just simplified the story. We asked the questions explicitly of the person advising us - including how the neg eq was to be managed.

hedgebets

opinions4u wrote: »

I still find it extraordinary that you didn't sit down and do some simple sums before accepting/making offers on properties and seeing a mortgage adviser. You really should have known how much you needed to borrow ahead of the game.

(We did 'know' - we asked and checked the paperwork).
I guess that's why sites like this exist; to teach us knowledge that isn't innate and help when we are naive, unsure or make mistakes.

opinions4u

If you'd known that you needed the extra £6k at the outset, and known that you couldn't raise it on the mortgage, what would you have done?

hedgebets

I'm not sure; part of the requirement for us to be eligible to take (the same) m/g with Nwide to a new property was to ensure we had no other loans or credit card balances.

I've been mulling over what you have written and berating myself for being a financial moron but on kinder reflection, I have to conclude that I am an ordinary person with a reasonable education and regular range of experiences. I've made good and bad decisions in my life as we all have. In this case, we were wrong not to pursue our initial concerns to the nth degree; I'm bright enough to recognise and learn from this. What I feel strongly about is that the wrong advice was most definitely given and repeated (that is a fact) to the point where I felt that we were the idiots not understanding the way the new m/g worked. Someone else may fall even more foul of this kind of serious error.

opinions4u

hedgebets wrote: »

I've been mulling over what you have written and berating myself for being a financial moron but on kinder reflection, I have to conclude that I am an ordinary person with a reasonable education and regular range of experiences.

My apologies if my posts perhaps made you feel this. Not the intention. My words were perhaps "stronger" than they should have been.

I've made good and bad decisions in my life as we all have.

That's true. Guess who lost a five figure sum in bank shares?!!

In this case, we were wrong not to pursue our initial concerns to the nth degree; I'm bright enough to recognise and learn from this. What I feel strongly about is that the wrong advice was most definitely given and repeated (that is a fact) to the point where I felt that we were the idiots not understanding the way the new m/g worked. Someone else may fall even more foul of this kind of serious error.

And this does, ultimately, make me think that you should pursue the complaint.

Again, I'm not sure what you should be asking for by way of compensation as I'm not totally clear that you're out of pocket. Perhaps start by asking for £6k and working backwards could get you something back .

But if a mortgage professional working for Nationwide is misleading customers making siginficantly sized transactions then that needs addressing.

It may be a basic training need that can be easily handled, or it may be the 4th such complaint that now needs an employment terminating.

Radiantsoul

I agree with what Opinionion4u has said. It is probably worth knocking out a letter of complaint to see what happens. I suspect you might get a smallish cash sum which should cover at least some of the interest on the £6k.

I wonder why your solicitor didn't spot this, I can't see you have a complaint per se against them. But I wouldn't want to use them myself!

hedgebets

opinions4u:
It's ok, we're experiencing some problems with a secondhand car dealer at the moment so I'm feeling particularly vulnerable and financially idiotic.

It may have taken this thread for me to crystallise exactly 'what' I'm irritated with the Nationwide about and to unpick this from where I realise we have been foolish.

Although I don't want to pursue an individual (ie the advisor), I do feel this is an experience that should be brought to the attention of the Nationwide. I would find it satisfactory if NW acknowledged the error and perhaps agreed to include the shortfall in the m/g which we could better afford than the current short term loan - I guess this is unlikely. I'll have to give some careful consideration to how I word the letter.

Radiantsoul - I feel like a wrung out dishrag dealing with what initially appeared to be a very straightforward sale/purchase (all happened very quickly) and I can't quite put my finger on where the solicitor hasn't helped but I know that we felt we were flying solo on this one! Some of the problem was that this has been a very difficult and emotional time of our life for reasons beyond property so I expect we haven't been at our sharpest. It's not an excuse, I just recognise it.

I greatly appreciate the listening ears - thanks.