Miselling of an Interest-Only Mortgage

jayb1985

Hi

I am after some advice on behalf of a relative in relation to potential misselling of an interest only mortgage. I have read several webpages and there are several points which would confirm this, however I understand that its not as easy at that. The mortgage was sold thorugh a broker under the name of Matrix Intermediary Mortgage Services which has now dissolved on Companies House.

I dont know all the details but will confirm what I do know. He had a normal repayment mortgage (i can get the company name) through this broker but after several months was approached again by the same broker to advise there was a better deal through a company called Rooftop Mortgages where he could reduce the payments. In addition to this, he said that it would be advisable to put all of his CC debt onto this mortgage which would reduce his monthly outgoings and save him money. (I apologise for the vague details but I dont know the full detail)

The mortgage has 7 years left and he has no repayment vehicle to repay this. He is adamant that the broker did not ask him about this and just told him that he has a good deal that would reduce his payments for him (he doesnt use the internet etc so isnt aware of the missell claims that people use like this one) I am also sure that the mortgage will also go past his 65th birthday.

I am really sorry for the vague details but would really appreciate some guidance. Do I put a claim into the FCSC as the broker is now dissolved and what information would they require? I want to all i can to help but dont know where to start.

Thanks in advance.

TrickyDicky101

When was this particular mortgage sold? I believe regulation for mortgages only started in 2004 so that might cause a problem if before this date.

magpiecottage

TrickyDicky101 is correct. The regulation of mortgages only began on 31 October 2004. So if the advice was given before then the FSCS will not cover it.

The firm was authorised until July 2010, though, so it is possible it was authorised at the time of the advice.

However, the FSCS will work on a strict liability basis. This means it is likely to apply any relevant time limits to a complaint.

This includes a limit that requires a complaint to be made within six years of the original event (i.e. when the advice was given) or when, with reasonable diligence, the complainant ought to have realised they had cause for such a claim.

The six year limit will be dependent on when the advice was actually given and may, or may not, have expired.

However, since 2004, all mortgage lenders have been required to produce annual statements which give very specific warnings of the need for a repayment plan if they are on a repayment basis. Since it must now be at least four years since the first such warning should have been sent, that option has expired. So a claim to the FSCS seems to depend on whether the six year limit has expired or not.

If those warnings were not sent for any reason, there may be a valid complaint against the lender - but that would not be something for the FSCS to consider.

jayb1985

I have just found out he contacted a claims firm called Neglect Assit who advised him to go to the FCSC as the broker is now dissolved. The FCSC took his details and have sent him a "claim pack" does that mean anything? SOrry I am new to all of this. Apologies, I have only just this second found this out.

Thanks for your responses so far

dunstonh

The FCSC took his details and have sent him a "claim pack" does that mean anything?

Its a set of forms for him to outline his complaint.

it should be noted that the FSCS only cover sales made after mortgage regulation. So, if this was an interest only mortgage before 2004, the FSCS wont consider it.

He is adamant that the broker did not ask him about this and just told him that he has a good deal that would reduce his payments for him (he doesnt use the internet etc so isnt aware of the missell claims that people use like this one) I am also sure that the mortgage will also go past his 65th birthday.

Where do you get information that there are missale complaints on interest only mortgages?

There are very few interest only complaints and the few that are mostly fail. This is in part because most were started before 2004 when mortgage regulation began (the last mainstream endowment provider pulled out in early 2004. So, you couldnt buy an endowment when mortgage regulation started. Plus, lenders for many years have given warnings with each statement (which allows a timebar to be applied).

Read the last couple of paragraphs of:
http://www.telegraph.co.uk/finance/personalfinance/comment/10090179/Why-interest-only-compensation-claims-will-struggle.html

“Most people who bought an interest-only mortgage knew what it was,” she told me. “We have a problem, but it’s not a mis-selling problem.” - that is from Natalie Ceeney of the Financial Ombudsman Service

The areas that do tend to result in success are post 2004 sales under advice where the person moved from repayment basis to interest only basis.

Whilst he may be adamant that was the case, the lender asks what the repayment vehicle or method of repayment is on their application. So, when the FSCS go to the lender and asks for a copy of that, how is he going to contend with that?

You mention he is using an ambulance chaser. You may wish to pass the following on to him:
http://www.theguardian.com/money/2013/may/02/interest-only-mortgage-claims-management-companies

jayb1985

Thanks dunstonh

Sorry what I was trying to say was that he doesnt use the internet so when he told me he was asked what repayment vehicle was in place, i was saying that he didnt get that statement off the internet and that he told me himself. I will find out the dates later but i do think it was pre 2004.

As for using the ambulance chaser he called the number in a newspaper who directed him to go to FCSC and didnt advise any further etc. I think it sounds like a lost cause to be honest, I am not sure what i can do to help

Thanks for your time

csgohan4

Perhaps also plan for how they are going to pay off the house in 7 years or consider selling the house to pay off outstanding mortgage.

I find it interesting when they agreed to an interest only mortgage they were not aware it does not pay the mortgage off. Just saying. Ignornance is not an excuse.

Ronaldo_Mconaldo

But the internet didn't tell them about it. This relation didn't have access to the wonderful world of MSE, now look at them. Boo hoo.

jayb1985

I have found out that it was a repayment mortgage with birmingham midshires moved to Southern Pacific mortgages Ltd
Start date 14.04.2005
Redemption August 2006
Then moved to
Rooftop mortgages Ltd
SEPTEMBER 2006 To present date.

Does this help at all??

dunstonh

Was the same broker used each time?
When did it (or did it) change to interest only?

Thrugelmir

Southern Pacific Mortgages was a subsidiary of Lehman Bros. This suggests that the mortgage was highly likely self certified and what are now called liars loans. My assumption would be that your relative wasn't in the best place financially at the time. As a consequence a repayment mortgage wasn't a viable option.

Given years of record low interest rates, the fact that your relative has received an annual statement every year and lenders have been writing asking how the debt is to be repaid. The likelihood of a claim for mis-selling seems unlikely to succeed.

Your energies may be better spent trying to focus on the options in the remaining term of the mortgage.