Mis-sold mortgages

kawookey

Hi I have a number if buy-to-let mortgages, (38) in 2006/7 we spoke to our lender to ask if we could move a number (21) of our mortgages to a better rate mortgage, they said it was possible and we were moved to a fixed rate tracker. We did sign a form saying we consent to be moved to the new mortgage.

We did not however get any information of what the new mortgages contained, and causes, or recieve any information relating to the change or terms and condiitions. In fact we only got the required information 2 years later when I insisted on it in a complaint to the MD.

In 2008 when interest rates were at the peak, we were in a situation when the rental from the properties did not cover the mortgage payments.

Our original mortgages had a clause in then which said we could have a 2 month payment break, because we were finding it almost imossible to cope at that time we asked them to take this payment break. They refused saying this was no longer avalible on the mortgages as it is not avalible on the ones we changed over to. I did complain that we had not been informed that this option would be taken away should we changed, else we would not of taken the new mortgages.

Our arguments were ignored, and we did get into trouble we missed a number of mortgage payments totalling about £30,000 Our payments at that time was about £22,000 per month.

If we had been able to take the payment holidays, we would have been able to have a security blanket of approx £45,000, becuase this was denied us we did fall behind, (although brought the arrears back up to date since). I am very annoyed because during this period of time we almost went bancrupts. I have had to stop paying my personal debt's (but since made offers to pay most of them, some are sorted), but it has left my credit file in a dreadful mess. If we could have taken our payment break we would not be in the situation we are in now, our credit file would still be good, and I would hopefully of been able to get other mortgages.

Although I complained to the lemder BM in 2008, I got no joy they said I signed to change the mortgages, (I beleive they charged me for the privilage.

I have since heard that to change my mortgage with out at least sending me the KFI or informing me of the changes, to terms and conditions or even recieving the product details constitutes as the mortgages being mis-sold, as I did not have all the facts and could not make an informed discision, and therfore was not treated fairly by BM.

I have fallen behind on the mortgages since but only by 1 month on some of them, the lender have said that if I fall 2 months behind they will send there own people in to run my houses for me, and also take all the rents.

I want to ask can they do this without taking me to court.
Also because I was not given the contract, terms and condition changes or the KFI, can I claim these mortgages have been mis-sold to me and that therefore they are not legal.

I have no intentions of not paying the mortgages, but my lender is so unflexible, and I can not affored to to loose the properties, as this is a full time job for me, and the income from them allows me to feed my 7 children.

I am hoping I can claim the mortgages were mis-sold in order to use that to get my lender to be more flexible (re the 2 month arrears thing if this is true, I do not know). and also if I am able to get back some of the extortionate fees they are charging me for arrears letters etc, or even some compenstion for the unfair treatment this would be great and go a long way to ensuring I can continue my business, and be able to provide for my children.

We do not claim any benefits and this is my only source of income, which is why this is so important to me.

Any advise will be much appriciated.

kingstreet

Did the process which resulted in you accepting these products involve advice from the lender or an intermediary?

If they simply gave you details of a product and you chose to accept it and proceed I don't see you having a case.

In addition, such products are unregulated, so the usual consumer protection arrangements do not apply. The only way you can challenge the terms is in court.

vectistim

Buy-to-let is generally treated as a business-to-business environment, rather than business-to-consumer, therefore protection levels are considerably less. Having 38 dwellings with mortgages is hardly the consumer level - ie: a court would expect you to have operated in a business like manner.
Why did you sign for the transfer of 21 mortgages without finding out what you were agreeing to in the first place?

holly_hobby

Hi

OK ... you are a professional landlord, having a total of 38 properties, with at least 21 of them held with 1 lender (which is astonishing given their exposure .. as Lloyds Banking Group have a max 3 property (£2m) ceiling .... but I digress).

You wanted a more competitive rate, and they offered you a move to a tracker product ....

You say you received a document to sign - in essence authorising the transfer of product, but did not request nor did you obtain any details re the product itself, inc KFIs.

It is only when you fell into financial issues that you discovered, that payment holidays, available on the mge terms prev held, where not applicable under the new contractual arragangement - and that is the crux of your complaint, which you say your lender has wholly rejected as unjustified.

As already stated, BTL mortgages are larely unregulated finance under FSA regs - one of the main issues being that there are not the same stringent requirements as regulated finance.

Secondly, if you were given a list of products to chose from, this is information/execution only sale - and it was up to yourself to determine (apart from the lower payrate) that the new t&cs were acceptable to you and your requirements.

Thirdly, as the owner of a quite a substantial portfolio of 38 properites, and having chosen prev mges with a payment holiday option, that it would not be unreasonable to expect you to have validated prior to switch, that the terms of the new product (not just the advantageous rate) for 21 units, remained wholly suitable for your business needs - it appears however that you were purely rate driven at this point and failed to conduct any review of the revised t&cs that you signed to accept in respect of your business.

I am genuinely sorry that you have faced arrears and finanical issues as a result of the change of mge t&cs - but from the data I have assessed, I have to agree with your lenders findings - and would also reject any complaint on the basis raised.

FOS won't review this, so it would be a court review if you wished to pursue this matter .... my own view it would be money and time ill spent.

Hope this helps

Holly

dunstonh

I have since heard that to change my mortgage with out at least sending me the KFI or informing me of the changes, to terms and conditions or even recieving the product details constitutes as the mortgages being mis-sold, as I did not have all the facts and could not make an informed discision, and therfore was not treated fairly by BM.

That is not correct. Do not confuse the rules for residential mortgages which are regulated with buy to let mortgages which are not regulated. Plus, not all features on mortgages are written into the contract. Things like portability and payment holidays are usually discretionary and can be withdrawn or changed.

Plus, the rules for advised mortgage and non-advised are different. If you don't use an adviser then you will not get the same level of disclosure and risk warnings that you get on information only/non advised basis.

If you are going down the legal route, then you need a solicitor as at the moment, your arguments are weak and I suspect you don't have a case. The cost of such legal action and low odds of success would probably see a solicitor advise against such action.

kawookey

Thanks for the comments, We were not purely rate driven, hence we had a payment holiday built in, when we contacted the lender to find a more appriate mortgage they did not inform us of any changes other than the rate, and never sent us any contract to look or sign. I guess I was niaeve in thinking that the fact that we received no notification of any changes to the terms and conditions, that none had taken place. I thought we had to be informed if there were going to be any changes.

The change was done over a phone conversation only.

dunstonh

when we contacted the lender to find a more appriate mortgage they did not inform us of any changes other than the rate

They are not required to. Even if you used an adviser, something like authorised arrears would not be something you would expect to be mentioned unless you bring it up.

and never sent us any contract to look or sign.

Lenders do not typically change deals on buy to let mortgages without a signature. Are these actually buy to let mortgages or secured business loans?

I thought we had to be informed if there were going to be any changes.

Not on things which are not part of the contract.

Mrs_Z

If you are struggling, surely you can sell one or two of your properties and use the equity to bring you up to date with your financial commitments???

poppy10_2

Mrs_Z wrote: »

If you are struggling, surely you can sell one or two of your properties and use the equity to bring you up to date with your financial commitments???

But it's his pension, innit?

holly_hobby

kawookey wrote: »

Thanks for the comments, We were not purely rate driven

But you said in your first post .. "we spoke to our lender to ask if we could move a number (21) of our mortgages to a better rate mortgage.

That's someone rate driven.

kawookey wrote: »

hence we had a payment holiday built in

,

The payment holiday under your prev arrangement, would have been part of the general mge t&cs and operated under the tacit agreement of the lender, and not a personally negotiated facility on your particular group of mges held.

kawookey wrote: »

when we contacted the lender to find a more appriate mortgage they did not inform us of any changes other than the rate, and never sent us any contract to look or sign

But this again contradicts your initial comments .. " they said it was possible, and we were moved to a fixed rate tracker. We did sign a form saying we consent to be moved to the new mortgage

This "form" would have been your agreement to the t&cs of the product.

kawookey wrote: »

The change was done over a phone conversation only.

Not according to the above

.

kawookey wrote: »

I guess I was niaeve in thinking that the fact that we received no notification of any changes to the terms and conditions, that none had taken place. I thought we had to be informed if there were going to be any changes.

Revised contractual terms would have to be agreed - but a payment holiday is not a contractual term, but a purely discrectionary facility offered by the lender.

Further to which, and from a professional evaluation of the matter, I wouldn't call a 38 property portfolio landlord financially or contractually inexperienced. And as I said earlier, on balance it would be reasonable to expect an experienced landlord and professional investor, to examine any business contractual arrangement they were entering into, including any preferential faciliites reqd such as repayment suspensions - before signing and entering in to agreement.

Indeed the fact you switched 21 of your properties purely to obtain a more advantageous mge rate, in fact shows good business acumen and cost awareness ... the situation of your subsequently falling into arrears despite the reduction in payrate rate, is unfortunate, but not a fault of the lender.

Indeed any payment holiday facility offered under any mge t&cs (inc regulated lending) will ALWAYS be at the discretion of the lender, so even if this was within the new t&cs of your revised product, BM would not have been legally obligated to agree any submitted holiday request.

I know that you may find my comments disappointing, and they are of course only based on my own professinoal opinion of the matter (although BM have also rejected your complaint - could you advise full details of the basis upon which they rejected your complaint ?), and to be brutally honest I do feel any court action will be cited as frivilous and vexatious by the lender and duly fail on merit.

So right now you need to deal with your situation and where appropriate restructure your portfolio (which may include reducing your exposure) in order to manage your losses, which don't forget are a permitted tax deduction - which may be the only benefit of your current situation.

Hope this helps

Holly

Thrugelmir

kawookey wrote: »

The change was done over a phone conversation only.

Did you sign any paperwork agreeing to the change of product ?