lender rejected me after changing stance on payday loans

binerds81

I am sat here almost in tears after just receiving an email from my broker telling me the lender rejected my application due a recent change deciding not to lend to anyone who has EVER had a payday loan.

I had some defaults on my file from 2011 which were discussed and fully disclosed to the lender at the AIP, and they also did a credit search on my call credit file and said still said yes providing all defaults were satisfied at the time of completion. (The payday account shows on my call credit file!)

I went ahead and checked all 3 CRA files and found 2 accounts that needed satisfying from the defaults in 2011 so rang and paid in full 2 weeks before my full application went in (was waiting on my current p60), and yesterday they questioned why there was a payment to payday uk on my back statement. I explained this was from a loan in late 2010 that defaulted in jan 2011 and I had been clearing my file as asked.

Today they have said they have declined the application because they have recently changed their stance and so will not lend due to the loan being a payday one.

What's upsetting is that had i paid this on a credit card it would not have shown on my current account statement and they would never have known it was a payday lender!

Has anyone else had an experience like this or know if there's anything I can do in the way of appealing? My salary is £21,500 asking for a mortgage of £39,960 at 80% LTV so everything else seems good except the mess i made on my credit file in 2010 :-(

Dave_Ham

Really interested to see who this lender is that has declined?

Should potentially fancy a solution still but depends on the absolute detail.

binerds81

Hi Dave
It is Dudley building society. I should also have said above that this is a shared ownership property which i know restricts the amount of lenders available. I have gone through a broker who do far has been really good and has replied saying he should be able to place this with someone else but I just can't believe that because I paid off an old debt that I'm now being declined! (And ive seen emails from the packager who say it is this showing on my bank statement that has caused this problem!

Dave_Ham

You are right I am afraid, the shared ownership component makes this double tricky.

This is why we will not use packagers as it dilutes your up to date knowledge of lender criteria and when things like this happen, I am not convinced they fight the clients corner as hard and with enough of the detailed facts.

From the limited information, I would suggest there are potentially 2-3 lenders only that may fit your situation.

Best of luck

binerds81

Thanks for the reply Dave, im really hoping that this will get resolved! I'm just so mad with myself for making that payment from my bank account i should have left it until after the application when it wouldn't have shown on statements but unfortunately didn't know this was part of their criteria.
To be fair though, the broker has sent me the lending criteria for DBS and it is not on there anywhere so they are not even giving out the up to date info themselves!
Like I said they ran a credit check and still said yes even though they would have seen that account on my file. I'm guessing they didn't really look properly which makes it doubly annoying!

ACG

I would be arguing that you applied based on one set of criteria, they can not then underwrite on different criteria... obviously they can, but I would be kicking up a big fuss over this and throwing my toys out of the pram. Has your broker just accepted it?

binerds81

Thanks ACG, my broker is currently abroad and has been communicating with the lender and me via email anout this issue today -(hence my panic and asking advice on here)!

he returns next week but has sent me a copy of a really strong worded email that he has sent them and will be on the case when he is back but I'm just not sure how much any lender would move on their own rules even if they've changed since I originally applied!

Annoying that their own lending criteria doesn't say anything about PD loans at all even looking at it online today. And when they say won't lend to anyone who has EVER had one, then they can only actually mean they won't lend to someone who has not had a PD loan within 6 years as after that they wouldn't know anyway!
I do understand if it was no lending within 24 months or even 36 months but when it is around 49 months old I would have thought the 48 months of good history would be enough to show them it was a one off mistake - but I guess they make the rules and not me ha ha!

Thrugelmir

binerds81 wrote: »

Annoying that their own lending criteria doesn't say anything about PD loans at all even looking at it online today.

For commercial reasons lenders never actually disclose their full lending criteria. Nor do they give a precise reason for the decline.

binerds81

I guess i can see why they don't disclose everything so they have a bit of wiggle room to do what they think best overall, just wish the whole process was a more transparent so you could know where you stood a bit more, but i suppose that's the murky world of mortgages

The reason they gave was pretty specific though for the decline and if they agreed in principle knowing the details it is frustrating to then have this reason given.

I'll hope that when my broker returns he will be able to help me, in the meantime I'm just goingto go take some nytol so i don't lie awake all night overthinking things!

Let_Us_See

Unfortunately, lenders rarely post their full lending criteria. Many AIPs are offered, and subsequently declined on application and full underwriting.

Personally, with any history of PDLs, I would initially contact the lender and specifically check their policy. Good luck with placing elsewhere.

binerds81

Just an update on this, the dudley building society head of credit and risk is now re-looking at my application on an appeal. To be honest I don't hold much hope of them overturning their decision but should find out this week, meanwhile the property went back on the market and they have had another offer so things don't look great for me!

However, just wondering if anyone here has had success with appeals, and with what reasons!

Situation:

The packaging company liaised with DBS over my inital enquiry as I was slightly over the amount of defaults they allowed - the limit was £2500 and mine totalled just over £3000. they agreed to look at it as they were all 4 years old. They then received my AIP form with a full statement from me breaking down the defaults and explaining the situation that caused them in 2010 where I specifically mentioned the payday loans. (as they requested)

They agreed the application looked fine and passed to Dudley BS who ran a credit check on me with call credit (where these payday loan accounts are also showing) and they issued an approved AIP.

I paid all outstanding defaults as they requested, and got the largest one for £1400 removed no now my total defaults fell inside their "normal" criteria. However was rejected as they said they do not lend to people with ANY payday history. the packaging company also stated that they knew this recent change in rules but said they didn't know I had used PD loans or would have advised at the point of AIP!

my appeal is that both the packaging company and the Dudley BS looked at my application with specific references in about pd loans and then have said the new rules mean an automatic decline, so why accept in the first place? If it is an error that the approval should never have been given, then that is 2 companies that have missed this information - They cannot say they didn't know as it was all on the form.

Also, we have asked that if the rules were changed in the month between aip and full application then can't they honour aips done in this time for a period of say 30 days?

they were also happy to look at me outside of normal criteria in the beginning and since then my credit files have been updated and put me back within their guidelines, so can they not apply the exception to the pd loans instead?

the rest of my application looks good, less than 2 x salary asked for, 80% ltv, mortgage monthly payments of 1/7 of take home pay, 4 years of good credit history so there shouldn't be anything else hindering me.

Like I said, I'm not holding my breath but if anyone has experience of appeals with Dudley, or anyone else I'd like to hear!