Mortage company problem!

Toon_Army

Apologies if this is entirely inappropriate, but I am struggling to know who to turn to in this matter. I have tried in a couple of forums to no avail and scouring the web is yielding equally otiose results. I feel there is only one to start this, so I will tell the story:

On the 1st of September 2003, I and a friend took a joint mortgage out with Amber Home Loans (AHL), which included a high percentage advance fee (HPA fee). It was our understanding that the mortgage was based on the Bank of England base rate and sure enough, every time the BoE rate rose, so did our mortgage within the month.

In April 2004, my future wife bought out my friend from his share of the house. His name was removed from the mortgage and replaced with hers and a re-mortgage for an additional £10,000 was carried out. AHL attempted to charge us for another HPA fee, despite this being an exercising of the portability option on the mortgage which should not have carried this fee. Our solicitor challenged AHL and they agreed to refund half of the HPA fee as ‘a gesture of goodwill’. Personally, I felt our solicitor should have proceeded to retrieve the full amount at this point, but we were already exhausted with all the hassle of arranging this that we took their advice.

On the 6th September 2004, we received a letter telling us that our mortgage had been sold to Future Mortgages Limited (FML) but that there would be no change to the terms and conditions of our mortgage. I thought this was odd that I appeared to have no say, but as there was going to be no change other than not having to deal with AHL’s incompetence anymore, it seemed fair enough. Nine days later, a letter from FML arrived confirming the exchange and the unchanged T&Cs.

At this stage, all seemed well – aside from the crippling SVR mortgage we were on. Then in December, it all changed.

We received a letter from FML that said:

“Since taking out your loan with us, there have been a number of interest rate changes that as a company we have decided not to pass onto our customers. You have therefore experienced a sustained period where you have benefited from an artificially low monthly charge.

As promised when taking out your loan, we now rite to you the required notice of this change and advise you that the interest rate on your account will be increasing to 7.09%.”

As the BoE rate has not altered since August 2004, we were naturally a little surprised by this. So I phoned to query this apparent anomaly. I was told that our mortgage was not calculated against the BoE rate but against the LIBOR rate. My anger aside, this would explain how there could have been a ‘number of interest rate changes’ in the period if this was true. I rang back to seek clarification on this point and to have something in writing to be told by an admin manager that I was on the BoE and not LIBOR. When I then asked to what interest rate changes the letter referred to given that there had been none, she replied that there had been a rise in October and that their treasury had instructed it. I demanded a full explanation of what had happened to my account since the transfer from AHL in writing.

A couple of weeks later, I get a form letter explaining how much my new direct debit was going to be, addressed by the Head of Customer Services, one David Ferguson. As you can guess, I was none too impressed and sought out this man. It is now mid-February and I am convinced he does not exist as no-one in the organization has a phone number for him – this the alleged head of Customer Services. I rang back to challenge this information, convinced as I now was that my mortgage was being calculated against LIBOR and that this represented a change to my terms and conditions. The admin manager stood by her story and, after a bit of legal threatening, I was promised a letter from the firms’ solicitors explaining how there had been no change to my T&Cs.

After a few more phone calls to chase this up, I received said letter at the end of January.

From the admin manager.

It read:

“I am sorry that you have felt the need to enquire about the interest rate on your account. I can assure you that the rate change is correct and in line with the terms of your account.

Your contract states, so long as you are on the SVR, that the rate will not exceed BoE base rate by +3%. As the BoE is currently 4.75%, the maximum we can charge you on your account is 7.75%. We are currently charging 7.09% (well within the cap allowed on your account).”

Unsurprisingly, it failed to address any of my concerns that my T&Cs had been altered, although I was amused by their definition of well within – all 0.64% of it!

Now for the crux. I know for a fact that FML use LIBOR as the standard for all of their loans and that AHL use BoE. The fact that my mortgage changed every time the BoE base rate changed proved this. The fact that my rate changed, allegedly due to interest rate rises, post August 2004 strongly indicates that my rate is now based on LIBOR. The fact that AHL’s current SVR is 6.84% compared to FML’s 7.09% clearly shows a change in my mortgage handling. I believe this constitutes a breach of our original agreement and I would like to use this as an opportunity to get out of this current mortgage without facing the penalty for early redemption, which does not expire until September 6th 2006. However, a solicitor has advised that the T&Cs that I currently hold do not give enough clarification that it is definitely tied to BoE – even though it clearly is. I have been trying to procure full documents from FML/AHL but am having no joy (they seem strangely reluctant. I wonder why…), so am finding it difficult to attack this from a legal perspective. I know I am being screwed, I know FML are lying to me in the hope that I will go away and I know my mortgage has effectively changed – after all, if my mortgage was still with AHL, I would be paying 6.84% and not 7.09% as I now am.

Given the long history of dodgy dealings and downright lies, is there an avenue I can pursue through consumer rights people that can sort this ugly mess out? All I want is to leave this crooked mortgage company and move to another one without incurring a redemption penalty. As they have already charged me 1½ times for an HPA fee, sold my mortgage without option to decline, lied to me about my T&Cs and refuse to give me anything tangible in writing, I feel this is not too much to ask! If in their original letter, FML had told me they were just putting my rate up, I would have had no recourse. The fact that they are claiming rate rises which have not existed on BoE and that depending on who I talk to at FML I’m on BoE or LIBOR, just proves that they are cheating me and no doubt many others like me. FML specialize in giving loans to the sort of people who would traditionally struggle (as I’m sure you know) and I’m sure rarely complain about their mortgage, being under the belief that they can’t get one anywhere else. I want to get away from these crooks and also highlight to others how dangerous and conniving they can be – but I need the help of others to do this.

If you could give me any idea of what to do about this, or if you know anyone who would be willing to take up the battle on our behalf, it would be hugely appreciated. We are due to get married this summer and could really do without a) the crippling monthly mortgage payments at 7.09% and b) the hassle and grief this is causing us. We are good customers you know! We pay our bills on time and have excellent credit ratings and feel this whole mess is distinctly unfair.

In the words of Princess Leia (sort of): “Help me Obi-Wan Forumites, you’re our only hope.”

payless

Its not something I could take up- and if you are ceratin the original deal was based on BofE tracking ratherr than LIBOR (with a BofE +3% cap)
then of course you should follow it up
I believe Amber are part of Skipton- perhaps they could confirm the original basis.

Also was a broker involved- he would have been paid and so woudl have thought another good starting point.

Did conditions change when there was a name change?

Why did you end up using this firm? as opposed to a mainstream lender?
( not a lenbder I have had much need to use- can't say I remember any particular great rates ??)

Are you locked in?

Toon_Army

Fairly certain about BoE but cannot get them to cough up the terms and conditions paperwork, so struggling there.

A broker weas involved, but he would say one thing, and then AHL would say something else, so not a reliable contact source.

As the quote says, no change to the terms and conditions is meant to have occurred, although this is clearly not the case and what I am trying to contest.

Why did I use this firm? Because I and a friend were buying together and had to self-cert, so options were limited. Mainstream lenders (at the time) were cautious of dealing with our sort of case. Now of course, they do them every bloody day of the week, but there you go!

Yes, tied in until 06/09/2006 as far as redemption penalties go.

And if you cannot take this up, perhaps you could give me some idea of who could or where I should go?

thanks,

payless

If you feel your letters are not being answered, why not call FSA Consumer Helpline - 0845 606 1234

( they took over mortagge regulation on 31/10/04)

whilst they might not want to get involved yet- they may be able to offer some guiadance
--

Although I would really be going back to your original illustration/ papers/ broker recommndation letter /offer - and if you do not have them ask the broker he should have copies of most!

Toon_Army

After writing to FML to get them to explain details and give us T&Cs, I have now received a letter telling me that the T&Cs (5 pages) is all I get and that I am on the SVR (Bank of England).

Given this information, what is the best thing to do? I now have a letter telling me my rate was increased in December due to rate rises when there has not been a change and now a letter confirming I am meant to be on BoE.

Please bear in mind that I am trying to use this mis-handling as a means to escape this company!

Toon_Army

<bump>

westernpromise

Toon_Army wrote:

After writing to FML to get them to explain details and give us T&Cs, I have now received a letter telling me that the T&Cs (5 pages) is all I get and that I am on the SVR (Bank of England).

Given this information, what is the best thing to do? I now have a letter telling me my rate was increased in December due to rate rises when there has not been a change and now a letter confirming I am meant to be on BoE.

Please bear in mind that I am trying to use this mis-handling as a means to escape this company!

You have a problem if you can neither remember nor prove what the original terms of your mortgage were supposed to be. This fact alone makes me suspect that you haven't understood your AHL mortgage's T & Cs properly. It looks to me like FML are simply exercising a contractual right (which you aren't aware of) to decide how much more than base rate you have to pay.

Even if FML do base everything off LIBOR while AHL base everything off BoE, FML can simply take over AHL's mortgage book and apply its own approach to the old AHL mortgages, i.e. a LIBOR based rate. As long as the outcome of its LIBOR-based rate is within the terms of your AHL mortgage, they are not in breach of contract.

Eg let's say AHL's terms were that your rate will never be more than BoE plus 3%, while FML's are that their rate will be LIBOR plus 2%. As long as LIBOR isn’t more than BoE plus 1%, they can charge everybody their standard LIBOR plus 2% and still be in agreement with the terms of all the mortgages they hold, including yours. You'd be paying BoE plus 3%. As long as the outcome of the maths is within terms, it hardly matters how they've got there.

It’s thus kind of academic whether you’re now on a LIBOR mortgage or a BoE tracker. If the T & Cs you signed up to allow the mortgage lender -- whoever that might be -- to vary the differential over the BoE rate at their discretion, then they are not in breach of terms.

If your credit status is better these days, you might be better off paying the exit penalty. No way should anyone with normal credit be paying 2.34% over base rates. Assuming you can get a mortgage at 5%, you'll save 2.09% versus the rate FML wants to charge you. There are 18 months left on your mortgage, so the total savings to you from remortgaging is 3.14% of the potential new mortgage advance.

How much is the redemption penalty from FML? If it’s less than that, you know what to do.

hth

WP

Toon_Army

westernpromise wrote:

Even if FML do base everything off LIBOR while AHL base everything off BoE, FML can simply take over AHL's mortgage book and apply its own approach to the old AHL mortgages, i.e. a LIBOR based rate. As long as the outcome of its LIBOR-based rate is within the terms of your AHL mortgage, they are not in breach of contract.

How much is the redemption penalty from FML? If it’s less than that, you know what to do.

hth

WP

Like I said, had they told me they were just upping the rate, there would have been nothing I could have done. However, I have written evidence of a lie (i.e. interest rate up as a result of several interest rate rises that have not happened) and confirmation that I am allegedly on BoE. It is this angle that I am looking to capitalize on. The fact that I have in writing that I am on BoE is extraordinary as FML only use LIBOR, so I am baffled at this admission.

I concede that there is, by the letter of the law, a technicality that suggests they are not breaching the T&Cs. However, I have proof of lies, deceit and incompetence and this is why I want to leave. As for the penalty, I have already looked at this and there is a negligible gain for moving under the penalty and as I refuse to give them more money for theft (please read first post for full details of the twice charged HPA fee), I will not move unless it is without penalty.

If this information helps, please drop me a line as I am really at my wits end with what to do about this.

westernpromise

Toon_Army wrote:

However, I have written evidence of a lie (i.e. interest rate up as a result of several interest rate rises that have not happened) and confirmation that I am allegedly on BoE. It is this angle that I am looking to capitalize on.

I'm not convinced this adds up to much, TBH. Lenders' SVRs do not and need not change only when interest rates do. Sometimes base rate rises and cuts are passed on immediately; sometimes they are saved up and passed on in one hit.

The fact that I have in writing that I am on BoE is extraordinary as FML only use LIBOR

Surely that proves they don't only use LIBOR? If they buy another lender's loan book, it doesn't automatically follow that all the loans in it change to FML's basis. They have to honour the existing T & Cs of those agreements, which means that if you were previously on BoE-plus-something, you still are.

What I think you will find is that they can vary the 'something' from time to time at their discretion. This is normal even among legit high-street lenders; their SVR can be whatever they feel like, and need not change only when rates do.

I concede that there is, by the letter of the law, a technicality that suggests they are not breaching the T&Cs. However, I have proof of lies, deceit and incompetence and this is why I want to leave.

If they have breached specific clauses in the T & C, you need to point this out to them, calculate what this has cost you, and ask for it back. If they haven't I don't see there's much you can do.

as I refuse to give them more money for theft (please read first post for full details of the twice charged HPA fee), I will not move unless it is without penalty.

Sounds like you're not moving then...

MarkyMarkD

Toon

I get the impression you don't understand a few of the terms of your mortgage.

My reading of it is as follows:

(1) you have an SVR based mortgage. The original lender varied their SVR according to changes in BoE base rate - as many do. The new lender varies them whenever they feel like it - as many dodgier consolidated lenders do. They are entitled to do so - if your Ts & Cs state that the rate is capped at 3% over BoE base rate, they can charge you up to 7.75% if they feel like it.

(2) you talk about a "portability" option on the HPA fee. I don't see how this has any relevance to a further advance, and I would expect any lender to charge a HPA (or similar) fee if you were borrowing more money over and above the 80% or 90% or whatever threshhold they charge a high percentage loan fee on. So your assertion of "theft" is mistaken.

You've bought a duff mortgage, with duff conditions - you'll have to live with it, I'm afraid, and remortgage when the redemption penalty expires unless you think it's worth incurring the penalty now.