Mis Sold Mortgage question??

WyrdMystic

Hi, what can constitute a mis sold mortgage? The reason I ask is that my wife an I took out a mortgage in a very complicated situation and I don't know if the whole thing was legitimate or not and would like to put my mind at rest.

Essentially, my mother was made bankrupt. We (my wife and I were living with her at this point and had near clean credit records) were then approached by a bankruptcy specialist who said they could sort everything out if we bought my mother's home. We agreed, they got my mum to take out a bridging loan until the mortgage could be arranged to cover costs. The mortgage was then arranged through another broker - the broker told us we had to self cert and we had to artificially inflate our income on the application form or they couldn't do anything. We completed the form according to what we were told (if we didn't we would be homeless) and then nothing happened and we were then told paperwork had expired and we needed to apply again - this time they told us to sign a blank form and they would sort it out. By this time the only reason we weren't homeless was because of the bridging loan. By the time it came to sign off on the mortgage, the offer we had made was definitely unaffordable for us, when we raised this and said there was no way we could do it the specialist said we either signed or would be taken to court to recover the bridging loan that (with interest) was now - due to the delay in papwerwork - defaulted at over £100k.

Since this the mortgage has become affordable due to the recession (but not sure how long for) - if interest rates go back up we are screwed.

Any thoughts would be greatly appreciated.

Annisele

If you signed a blank piece of paper, then it's very unlikely indeed that the whole affair was legitimate.

I'm also not certain that you've got events the right way round. You say your mother was made bankrupt, and then took out a bridging loan in her own name (after the bankruptcy)? That sounds extremely unlikely.

However - what are you hoping to achieve? You didn't have to "artificially inflate" your income; you chose to do it - and that sounds very much like fraud on the lender.

GMS

You have just admitted to committing mortgage fraud so dont see how you can claim mis-sold.

Was the bridging loan taken out to annul your mothers bankruptcy?

ILW

What are you hoping to achieve?

dunstonh

The mortgage was then arranged through another broker - the broker told us we had to self cert and we had to artificially inflate our income on the application form or they couldn't do anything.

Yes. That is a mis-sale but its also fraud. Fraud committed by you and the broker. So, any complaint can damage your just as much as it can the broker.

We completed the form according to what we were told (if we didn't we would be homeless)

Your motive to commit fraud was financial gain. i.e. keeping the house.

By the time it came to sign off on the mortgage, the offer we had made was definitely unaffordable for us, when we raised this and said there was no way we could do it the specialist said we either signed or would be taken to court to recover the bridging loan that (with interest) was now - due to the delay in papwerwork - defaulted at over £100k.

So one way or the other the house was going to be lost. Either straight away or later on when the interest rates rise.

Any thoughts would be greatly appreciated.

Put the property up for sale and sell it on your terms before you get into trouble and the lender sells it for you at a lower price in a falling market. Chasing mis-sale may cause the broker issues. However, it will create issues for you as well. There is unlikely to be any financial gain for you from a complaint as the mis-sale has resulted in you not losing the house. Plus the debt already existed. So, you have benefited from this fraud that you were complicit to.

I think you just have to face up to the reality that you wanted the mortgage. You got the mortgage and the victim here is no you but the lender. Your problems existed before and the problem hasnt gone away but just been put off.

WyrdMystic

Thanks everyone for your replies - couple of things.

One, I am not actually looking to achieve anything, I was curious. Two, I know the lender hasn't done anything wrong. Three, we did not have a choice but to sign - when the choice is sign or be homeless - there is no choice and by the time it got to signing the actual deal, we didn't want to, plus, having had no experience with finance ourselves at all the broker was very convincing in the beginning. Four, we didn't want the mortgage, we just didn't want to be homeless.

The bridging loan was to annul the bankruptcy. So order of events was, bankcuptcy, loan, mortgage application, attempt to pull out, mortgage deal signed. The lender didn't have any involvement at all, but I made sure that the specialist service, the broker and the solicitor acting on behalf were copied in on all the correspondence when we were sorting out the final paperwork.

Also, our income now matches the application form due to promotions etc.

We haven't benefited financially at all, we have a house for now, thats worth less than the mortgage and on interest only, with no way of paying it back we are going to lose it at some point most likely.

And again to clarify, I'm not looking to benefit now really or make a claim - I just wanted to know whats what - thanks for time!

Truthfully, we've made our bed yadda yadda, but my main concern is that there are brokers going round saying to desperate couples and I quote - 'this is common practice'.

Is there a way of raising the issue against the broker, without looking for any kind of compensation so the issue is investigated?

GMS

When did this happen?
If the house is worth less than the mortgage then you seem to have done really well out of it.

The bankruptcy would have cost the property anyway but this way the bankruptcy has been annulled and the property remains for now at least.

Is the mortgage payment similar to what rent would cost you?

WyrdMystic

Looking back I posted an error earlier when I said the bridging loan was 100k - My mum's original debt (incl previous mortgage was 45k) - the new mortgage was for 110k after paying of the 45k, the remaining 65k (all of it went on the bridging loan and fees, so no cash left over and the mortgage with the HLC ended up as 115k) - a house value from the surveyor as 120k, which is what the broker said it would need to come out as.

Currently (thanks to the recession) the mortgage is cheaper than rent, however before the recession the mortgage was almost twice want rent would have been and on interest only. The rate is 3.49% + LIBOR - which at the time added up to 9.49%.

House value is now around 90k, so for us all a net loss of 90k (65k from the mortgage money on the bridging loan etc and 25k in negative equity). So the only plus is the roof and the temporary cheap 'rent' essentially.

dunstonh

WyrdMystic wrote: »

Three, we did not have a choice but to sign - when the choice is sign or be homeless - there is no choice and by the time it got to signing the actual deal, we didn't want to, plus, having had no experience with finance ourselves at all the broker was very convincing in the beginning. Four, we didn't want the mortgage, we just didn't want to be homeless.

Please dont take this the wrong way but fraud is a crime. You had a choice. a) commit fraud or b) lose the home. You chose to commit fraud. Not a great choice but it was still a choice.

Also, our income now matches the application form due to promotions etc.

So, alls well that ends well?

We haven't benefited financially at all, we have a house for now, thats worth less than the mortgage and on interest only, with no way of paying it back we are going to lose it at some point most likely.

How would that compare to not having the house which was the other option when you made your choice?

Truthfully, we've made our bed yadda yadda, but my main concern is that there are brokers going round saying to desperate couples and I quote - 'this is common practice'.

Historically, the brokers role was to get your a mortgage. The brokers that got the mortgage were seen as good and those that were honest and told you the truth were seen as bad. Be honest with yourself, if you had seen a broker that told you that you couldnt have a mortgage and then another that told you that your could, which would you accept as best for you?

Yes, it was not the right thing to do but effectively you got what you asked for and you knew what was going on.

Is there a way of raising the issue against the broker, without looking for any kind of compensation so the issue is investigated?

No. The complaints process would involve an investigation. The lender would be made aware that you were party to a fraudulent application and that would have an impact on you.

Thrugelmir

WyrdMystic wrote: »

Also, our income now matches the application form due to promotions etc.

We haven't benefited financially at all, we have a house for now, thats worth less than the mortgage and on interest only, with no way of paying it back we are going to lose it at some point most likely.

You've managed to afford an interest rate of 9.49%. Then seen your income rise and interest rates drop, but failed to repay any capital owing on the mortgage.

Your time may be better spent organising your personal finances then attempt a spurious mis-selling claim. That as other posters have pointed out constitutes fraud and would certainly result in a life time black mark on your credit rating.

silvercar

Sounds like you were conned from the start. Any mortgage would be excluded from bankruptcy and bankruptcy doesn't automatically mean you lose your home. You can buy back the beneficial interest from the official receiver, easy to do if there is no equity. In your case if your mother had gone bankrupt you could have bought back the BI and she carried on living with you, her other debts written off in bankruptcy.

Someone somewhere persuaded you to pay off to get the bankruptcy annuled and no doubt got a fat commission out of it. Now you are saddled with an impossible secured debt that means you could lose your home or face bankruptcy yourselves.

Incidentally if you go bankrupt, with no equity you can buy back the BI and keep the home. If the mortgage is less than rent would be the official receiver wouldn't have a problem with it.