Bank accepted mortgage application from unauthorised broker

GMS

Are you certain you have had 100% of the story from your friend?

Somewhere along the line here they must have known what they were agreeing to. As has been mentioned earlier there would have been a surplus of funds over and above the purchase price/valuation which your friend has used to repay more expensive debts??

Your friend may well have had a rogue broker and I would support any action against anybody who tarnishes our industry. However the broker does not hold a gun to the head of the client. A solicitor would also have expleined what was on offer prior to any mortgage deed being signed.

If the unsecured element reduced unsecured debts it is possible ( and I am not saying it is the case) that the funds were used to prevent action from creditors which could stop any CCJ's, charging orders and ultimately bankruptcy.

You clearly want an answer from somebody which suits what you want to be said. There are people here who have tried to give you an honest assessment of the situation yet you deem their responses to be unhelpful, rude and an assassination of character.

I hope your friend gets the resolution they are looking for but you have not indicated what this is. If it is to write off the debt then this will not happen.

If there was a case to be considered then a claims management company would take this on for you in their usual no win no fee manner. How much use they would be is debatable but you may feel better with somebody on the case.

Good luck to your friend but somewhere along the line they need to take some responsibility.

Jessikita1983

Occident wrote: »

The responses in August were not unhelpful - things have moved on since then, hence the new thread. FSCS can only deal with firms who were authorised. You are not being obstructive and you weren't aggressive or bloody rude like some of the other posters. I asked for advice and ended up with my friend's character getting ripped to shreds. Never again.

Take no notice of the horrible replies/posts. I have been on here about a month and am shocked by the nastiness/sarcasm/negativity and self importance of some of the posters. Just no need for it in most instances!

Occident

Is that what you tell people who were mis-sold a mortgage - they must take responsibility for it? She is telling me the truth and has never been pursued for debts. She has an excellent salary and is very comfortable. That doesn't mean she is entitled to be duped by a rogue broker. The advice has been helpful. The aspersions on my friend's character were uncalled for and cannot be justified by on the grounds of just giving advice and trying to be helpful. She has no intention of going to a claims company and she accepts she may never be compensated for the mis-selling but she is entitled to glean as much information as she can about what may or may not be possible. It is fairly obvious the disdain in which brokers hold clients.

GMS

Occident wrote: »

It is fairly obvious the disdain in which brokers hold clients.

Shocking statement. I and the vast majority of brokers operate with professionalism and respect for their clients.

I have bever dealt with a mis-selling claim thankfully and dont intend to in the future.

I was merely stating that there may be somebody to deal with the case on your friends behalf.

You say your friend accepts they may never be compensated but if there is a case to be made then why should this be correct?

Occident

There is a case to be made but it may have to be abandoned because it cannot be proceeded with and that she has accepted. There is no point in taking the broker to court - he is penniless. The FSCS cannot deal with a claim because he was unauthorised. She may have a case for a service complaint against Northern Rock but if that is possible that is as far as she can go. After that she will chalk it up to experience and never deal with a mortgage broker again.

holly_hobby

Ok thanks for the details.

If I understand, what you are saying is that in essence your Friend is unhappy that NR accepted her mortgage application from the "broker", and feels that if they had rejected this (due to his registration status), this would have resulted in her using an alternative broker and possibly an alternative morgage provider, that she would now consider more attractive.

Additionally, she recd funds in excess of the purchase price, and used the funds to reduce or redeem personal borrowings held at the time.

But, it is inferred that her application and accepting of the excess funds, was done so under duress, and was something that she neither required or wanted (nevertheless utilising the said funds to offset personal borrowings held at the time.).

To which she now feels, that converting the debt from short term/rolling borrowings to an effective mortgage term was actually overall a pretty expensive way of repaying the debt.

She is unhappy and states that she had no idea that by effecting a mortgage in excess of the property purchase price, it would place her immediately into a negative equity situation (where she remains today).

I hope that I have evaluated the issues correctly ?

Firstly, fundamentally what your Friend appears to be asking for, is for NR to effectively withdraw their mortgage facility, as her asertion is that she should not have been offered any facility with them in the first place, if they had correctly validated the brokers FSA reg number at the time of application.

I am unclear as to how that will benefit her ? As to achieve this she will have to refinance with a new lender, which could open up a whole other set of issues with regards to if she would now qualify for a mortgage, or achieve the borrowings reqd (notwithstanding the negtive equity issue).

Secondly, her FTB status and the extra borrowings (not required by her, but used in any event to redeem existing financial commitments held at the time), taking her into neg equity and costing more over the term than if she had retained her personal borrowings (which it is claimed she wasn't aware of at the time).

Her FTB status has no relevance here, and I don't believe that a complaint regarding this has any merit - as FOS will argue that it is simple mathematics, that if you borrow on a mortgage more than the purchse price/value of the property, you are effectively in negative equity from outset. The only basis whereby this could be challenged, and I mean this quite genuinely, would be if could be argued that she had/has limited (mental) capacity to understand such a equasion or the impact of such borrowings i.e she would be essentially classed as a vunerable individual.

As a side issue on this, only 95% of the finance was written as a secured mortgage, the extra (albeit having the benefit of being charged the same rate as the mortgage), is un-secured, and as such may be left un-redeemed on mortgage redemption and in effect treated as a personal loan (with the interest rate accordingly having a loading applied to it). So she is able to change lender, leaving the extra borrowings with NR until able to fully redeem.

Her mortgage offer and docs issued, would have clearly illustrated both the amount of mortgage being provided and the terms of such -and if unhappy with anything documented she had full ease to contact the lender to discuss, or indeed cancel the application at the time. (this does not excuse the fact that the broker apparently did not complete a fact find, and failed to provide an IDD, KFI or illustrations to her in support of his recommendation - which can't be pursued for the reasons you have stated)

From reviewing your Friends complaint and the basis of her concerns, I have to be completely honest and say that I don't believe there is any merit to the complaint with regards to the amount of mortgage borrowings, or the basis upon how she achieved the mortgage. And I would be surprised if FOS have a different view (unless as I say your Friend would be classed as a vunerable indvidual, and was unable to adequately comprehend the legal contract into which she was entering).

NR as already stated, are not responsible for any mortgage advice provided by any introducers.

The fact that NR accepted an application from an individual that appears to not have held any FSA registration, is a different matter - and whilst not directly having an impact on your Friend (argument re she definately wouldn't have gone to NR or effected a Together mortgage being rejected, as without in my opinion any proof of basis, esp when the extra funds were used to reduce unsecured borrowings), is really in respect of the compliance and verification procedures of the provider (which would be an FSA issue and not a FOS issue).

I know that the contents of this response are not what your Friend will wish to hear, but I believe (as others have stated), that it is kinder to be honest with professional opinion, and although sorry your Friend is now unhappy with her arrangement and her adviser/brokerage is no longer trading so no POS docs or possible response from them, I don't believe in the circumstances, there is any real possability or chance of success on the points raised.

Sorry for any disappointment, but do hope this helps

Holly

opinions4u

Jessikita1983 wrote: »

Take no notice of the horrible replies/posts.

Please highlight them. I can see some challenging the validity of the case. I can see some playing devil's advocate. I can see some trying to work out what it to be gained.

But I don't see anything horrible.

_Andy_

88 miles per hour!

kingstreet

I would contact the solicitor who handled the completion stage of this transaction. He/she may be able to shed light on the documentary section of the mortgage and loan.

IIRC, the mortgage offer and unsecured loan documentation had to be fully explained by the solicitor before completion could take place.

Call it a secondary/final check to ensure the borrower was fully aware of the implications of the terms of the agreement they were entering into.

On the intermediary issue, have you tried the CCL route, rather than the "P" number? To submit business, the intermediary should also have a Consumer Credit Licence number.

Occident

Holly Holly, thank you for taking the time to give such an in-depth reply - it is very much appreciated. My friend won't be disappointed because she has no expectations.This was just an avenue to explore and she has accepted that there is no comeback on NR for accepting an application from an unauthorised broker.

Kingstreet - we discussed the solicitor angle some time ago and she said the solicitor was more concerned about a disabled lady she looks after and who lives with her - what would happen to her if anything happened to my friend? Once everything had been drawn down, the "broker" phoned my friend's solicitor and asked for his fee. This was the fee he was charging my friend. It was on the second last page of the Offer of Loan in small print. There was no KFI from either the "broker" or NR so the Offer of Loan was the only place the fee had been mentioned. The solicitor's reply to him was "What fee???" - so she clearly hadn't gone through the offer in depth and certainly didn't discuss it with my friend. She called my friend to inform her.

The "broker" had a CC Licence as a Sole Trader. Let's say the licence's trading name was "Caramel Mortgage Services". No such firm ever existed and he didn't trade as Caramel Mortgage Services - he traded as "Caramel Mortgage Solutions." There were two entries on the FSA register for Caramel Mortgage Solutions. One was an insurance network who were not authorised as a mortgage network and it was their name and number he had on his business card. The other was a Sole Trader authorised in her own right. Both are now defunct. The insurance network is scheduled to be struck off at Companies House.

I did this research for my friend who is constantly busy and I am retired but I am afraid it didn't get anywhere.