Positive result - challenge upheld on affordability rules

BrummieL

Not sure if right place to post but wanted to share some positive news re my mortgage.
For various reasons, I am financially downsizing. Wanted to sell my £220k flat, pay £35k off my mortgage retaining £20k and buying a £150k house. But because I am now self-employed following redundancy in mid 2015 I was informed by Coventry BS back in January that I would not pass the current affordability rules - the guy I spoke to painted a very negative picture and as a result I felt I would be wasting my time and damaging my currently good credit rating, filling out a new mortgage application. I had naively thought as I had a transferable mortgage I would not need to jump through the affordability hoops.

But I felt that as my plans would release the risk to the Coventry as well as ensuring I felt more financially secure it seemed illogical to force me to be trapped with a currently unaffordable mortgage for another 18 months at least till I would have the requisite 2 years verified accounts. So I sent a complaint addressed to the CEO, including quotes from Financial Conduct Authority’s ‘Responsible Lending Review’ of May 2016 which I'd discovered via this site.

Two months went by and I had heard nothing - but meanwhile had accepted offers on my flat and found a house to purchase that I could just afford with no mortgage at all. This subsequently fell through so a little mortgage cushion would be helpful to give me a bit more flexibility in my searches. So I finally chased my complaint and suggested I might go to the financial ombudsman. Within an hour I had a phone call - agreeing with the points I had raised, promising to investigate, and arranging a call back from a mortgage advisor. Had a very straightforward conversation with the MA and within a couple of hours my request to 'port' £20k of my mortgage to new property had been approved by the underwriters under 'transitional arrangements'. I'm reducing the LTV from the current 25% to 14% so they're happy - and I can reduce both the monthly payments and the term so I'm happy.

And an investigation into various aspects of my complaint about customer service has resulted in both an apology and £200 as a goodwill gesture. So very pleased I didn't let it rest - and will definitely stand my ground in future if I feel let down by service providers.

jessnat995

very good to hear!

well done for following through, many people these days do not complain, if no one complains then the service would never be upheld to the highest standard it should,

well done

kingstreet

The October 2012 transitional rules were replaced by the MMR in April 2014 and again by the EMCD in March last year. Lenders were told they couldn't do any mortgage without carrying out affordability checks even when they already held a bigger and more expensive mortgage.

What you've seen here is the rock & hard place lenders face with the Treasury acting as high-level regulator on one hand and the consumer protection FOS on the other.

Unfortunately, each borrower is going to have to employ pretty much the same tactics to get what they want rather than lenders working with the regulators to frame a sensible policy in which they can all operate.

Thrugelmir

BrummieL wrote: »

So very pleased I didn't let it rest - and will definitely stand my ground in future if I feel let down by service providers.

As you were downsizing and borrowing less. Then the lender has a responsibility i.e. a duty of care, to assist you. While the regulations are fairly onerous. A degree of common sense needs to be applied to cases such as yours. Though each is individual in nature. All depends upon the actual circumstances.

AnotherJoe

Good for you. Yes the lenders have some affordability hoops to jump through but it's nonsensical when they over interpret the rules to mean they cannot decrease the size of someone's loan.

BrummieL

Thanks to all for comments above. I knew instinctively that I had a case - and then used info from this site to research the current rules on affordability and their applicability to my own situation.
Today I got the compensation cheque and a long letter of apology addressing the issues I had raised. I am happy at the outcome and give due credit to the Coventry Building Society for the way in which they handled my complaint.
The irony now is that the house I was hoping to buy has fallen through because the vendors are themselves falling foul of the tightening up of the affordability rules (commission earnings) and now discover they're in their own mortgage trap - with the Coventry Building Society