Mortgage Contract 'Void' loophole???

LHZ

Hello all. I was chatting to a friend the other day and he is in the process of taking his mortgage provider to court because he has been told that the 'contract' was void since the mortgage was never signed by both parties. Apparently this is a very common situation for many UK mortgages and he is convinced that once people get wind of this, there will be a rush towards litigation and profound consequences for the industry.

It was all very vague but from what I gather his legal representative is seeking to recover all of the money paid by him during the duration of the mortgage and from what he said, he will retain outright ownership of the property with nothing owed.

All sounds too good to be true to me but I wondered if anyone has an knowledge or understanding of what he may be doing? I've had a quick look online but I can't find anything. He did say that the early prosecutors are encouraging everyone to keep quiet about it and I believe he has signed a non disclosure agreement.

kingstreet

Was there no mortgage deed tying the loan to the security property?

That would be very unusual.

amnblog

You may find your friend is getting ripped off.

I assume he has already 'contributed' to the costs of this scheme?

LHZ

Sorry to be so vague but it was a very brief conversation so I'm limited in my understanding of the particulars (hence me asking here if anyone had come across this before). I do know that he has been paying his mortgage for some time but has stopped recently when he decided to take the legal action off the back of this supposed 'loophole'.

From what he said, the issue is that the contract wasn't signed by both parties so is not enforceable. He seems to think that this issue is very common in the UK and that many people who pay a mortgage could pursue the same legal action.

Caz3121

LHZ wrote: »

It was all very vague but from what I gather his legal representative is seeking to recover all of the money paid by him during the duration of the mortgage and from what he said, he will retain outright ownership of the property with nothing owed.

I think your friend will find that the courts will not agree with this approach and looking at the last paragraph this they would be liable for all the costs
http://www.hardwicke.co.uk/insights/articles/mortgage-get-out-of-jail-free-card-getting-short-shrift-from-the-courts
Stopping payments could end up in repossession, this is a dangerous game to play

LHZ

@Caz3121 Yep that looks to be EXACTLY the type of thing he was talking about. So, too good to be true then?

EDIT: For what it's worth, the Company who were taking legal action on his behalf sounded VERY confident that he will win.

kingstreet

If this was actually happening, there would be millions of success stories on here and all over the print media and TV.
Yes, TGTBT.

LHZ

kingstreet wrote: »

If this was actually happening, there would be millions of success stories on here and all over the print media and TV.
Yes, TGTBT.

He said that everyone was hushing it up and that people involved with taking legal action were told not to go to the press (none disclosure agreement).

amnblog

LHZ wrote: »

I do know that he has been paying his mortgage for some time but has stopped recently when he decided to take the legal action off the back of this supposed 'loophole'.

Sorry? He's stopped making payments? On whose advice?

amnblog

I suspect the conversation went something like this...

"There is no need to pay your mortgage."

"You don't owe what you borrowed because of a contractual loophole"

"It's our little secret - dont speak to anyone sensible about it!"

"Stop paying and give me the £500 this month instead and I will sort it all out for you."

LHZ

amnblog wrote: »

Sorry? He's stopped making payments? On whose advice?

On the advice of the Company who are taking his Mortgage Provider to court. Like I said before, they seem very confident he will win.