Another Mortgage Credit File Clean-Up Success

MissVintage

Further to my last post, the FOS have also found in my favour regarding my complaint about NRAM. Please see the letter below:

complaint
Miss F has complained that NRAM plc has continued to hold her responsible for a mortgage for which she is no longer liable, and it has recorded information about that mortgage on her credit reference file.

background
I issued my provisional decision in March 2015. A copy of my provisional findings is attached to this final decision and forms part of it. In my provisional decision I explained why I was minded to uphold Miss F’s complaint. I invited both parties to let me have any further submissions before I reached a final decision. Miss F accepted my provisional decision. NRAM didn’t respond on this case, but it did make some comments on a linked case also brought by Miss F. That case, inadvertently, duplicates the issues I’m considering here. So for completeness I have considered those comments when reaching this final decision.

my findings
I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. NRAM has said that the Insolvency Act only covers unsecured debt, so the act doesn’t cover secured mortgage loans. It says this means it has the right to chase Miss F for the debt, and to register information on her credit record.

To clarify, the Insolvency Act covers secured as well as unsecured debts. The main difference is that most unsecured debts will be written-off as there’s no asset the creditor can take into possession to recover the debt. With a mortgage (or indeed a loan secured against any asset, such as a car for example) the lender can repossess the item the loan was secured against – in this case a property – to repay some, or all, of the debt. This doesn’t mean secured debts don’t fall within the Insolvency Act. Just that the lender has an additional level of security as there is an item it can take possession of so it doesn’t just write-off the debt. This is the difference between the right to enforce its security over a property, and the right to require a borrower to repay the debt. NRAM doesn’t have the right to chase Miss F for the mortgage as under the terms of her bankruptcy NRAM no longer has the right to require her to repay it. But the consequence for a consumer of not making payments to any secured debt – even in bankruptcy – is that the lender may decide to take possession of the asset (in this case the property). It’s up to NRAM to consider whether it now wishes to look to enforce its security by taking possession of – and selling – the property the mortgage is secured against. This is a slightly unusual case in that Miss F’s ex-partner is also named on the mortgage, and as part of their divorce proceedings took a beneficial interest in the property. It may be that Miss F’s ex-partner is maintaining the mortgage to a sufficient extent that NRAM chooses not to enforce its security over the property. But that doesn’t mean it can contact Miss F about the conduct of the account.

If mortgage payments aren’t made a lender can look to take possession of a property, even if the borrower has been made bankrupt. It can also contact the borrower at that time if it’s required for the purpose of enforcing that security. What it can’t do is contact a borrower to chase mortgage payments and record any missed payments on their credit file.

my final decision
For the reasons I’ve given I uphold Miss F’s complaint about NRAM plc. For clarity I’ve slightly amended the wording of what I require NRAM to do, but this doesn’t change the actual requirements:
- mark the entry on Miss F’s credit record as ‘partially satisfied’ or ‘partially settled’ as at the date Miss F was discharged from bankruptcy,
- mark the account as having defaulted as at the date of Miss F’s bankruptcy order on her credit record,
- not contact Miss F regarding the mortgage except insofar as this is necessary for the purpose of enforcing its security,
- stop providing information about the mortgage in respect of Miss F to credit reference agencies,
- pay Miss F £300 in respect of the inconvenience it has caused her.

Under the rules of the Financial Ombudsman Service, I’m required to ask Miss F to accept or reject my decision before 26 May 2015.

Julia Chapman
ombudsman


I have suffered harassment for months from NRAM, Platform and Mortgage Express. They have sent me numerous letters, sent debt collectors round (I was always at work!), got hold of my ex-directory landline number (I had to block almost all incoming calls). At least now this harassment will come to an end!!! In all this time I completely refused to deal with them in any way other than in writing. I sent each letter by recorded delivery to ensure I had proof of all contact. They attempted everything to get me to speak to them but I refused. This has been so mentally stressful but I was so angry with them that I would not give in.

I would suggest anyone making a similar complaint to the FOS copy this letter as they must surely be consistent in their responses. Initially they did not find in my favour, I had to escalate the complaint to the Ombudsman. I got nowhere with the ICO and would suggest contacting the FOS rather than the ICO.

I have received a provisional decision the same as above regarding 2 Mortgage Express accounts and the final decision will be issued next month. I have now got 2 final mortgage companies to write to which hopefully should produce quicker results now with the FOS if necessary as I have a precedent. They have no choice to find in my favour (hopefully!)

I am now saving for a 25% deposit and in 4 years time will hopefully be able to buy a house!! Bankruptcy is not the end... it's the beginning of a new and better life.