Reclaim Mortgage Arrears Charges. NEW CAMPAIGN.

dunstonh

One other thing. Does anyone think i should try to fight the £15000 penalty for early redemption (one year early)? It was 6%. If I paid my payments for a year it would have beeen less than that. It is robbery but what can I do. I was forced into the sale due to illness.
Will GMAC have details of my F/A. I have no contact details for him...

Its not robbery. It is a contract event you agreed to. It is legal, fair and not something you can challenge with success.

Tripledrop

dunstonh wrote: »

Its not robbery. It is a contract event you agreed to. It is legal, fair and not something you can challenge with success.

This, I agree with!

If you wanted a deal with no red pen, then they are available, but the rates are higher (in general). Finance companies need to be able to make their money back if you pay the mortgage off in the special rate period

homer_j_3

dunstonh wrote: »

Its not robbery. It is a contract event you agreed to. It is legal, fair and not something you can challenge with success.

Who says its legal? I am not being picky here dunston but the banks call it an admin fee but that doesn't count for anything - it is what the law determines it to be.

My wife's employer could say that she has to wear red socks to work in her contract but it doesn't make it legal.

I am not sure whether it is or not and I don't think anybody on here has the power or the ability to say for certain either way.

homer_j_3

Tripledrop wrote: »

This, I agree with!

If you wanted a deal with no red pen, then they are available, but the rates are higher (in general). Finance companies need to be able to make their money back if you pay the mortgage off in the special rate period

Firstly, not everybody who gets into arrears with their mortgages are in cahoots with sub prime lenders.

Secondly, the process for every lender will be more or less the same (although some will be more aggressive than others). You will find that the interest that is accruing whilst payments are being missed is still earning them money as it has to be repaid. The whole argument here is whether these charges, in the eyes of the law, are justified admin charges or penalty charges.

Lynz has confirmed that she has already put a claim in and the case has been stayed as a result of the bank charges case with the OFT. I believe this will be the exact same roadblock everybody who tries to claim will now face.

If anybody has successfully had their mortgage arrears fees reclaimed following the decision of the OFT/FSA etc to put a hold on all claims until case is argued in the courts, then let them speak up and come forth.

If not, well there is no point in doing anything at the moment as guidance will be given when the court case has been heard and I am sure that guidance will be announced on how the banks should retrospectively reimburse their customers - assuming that the OFT win.

dunstonh

Who says its legal? I am not being picky here dunston but the banks call it an admin fee but that doesn't count for anything - it is what the law determines it to be.

You accept the tie in because of the terms of the deal. You sign a contract to agree that tie in and both sides agree to honour that contract. However, there is an agreement that allows you to break the contract with you paying the charge.

When you look at most mortgage deals, such as discount and cashback you tend to find that the cost over 5 years (or the deal period) is little different. Its just a different way of giving you extra money. You cannot expect to get say 1% a year discount for 5 years without a 5 year tie in existing. The lender has to finance/cost that deal and you breaking it would cost them.

If you get rid of the ERC, then you get rid of every fixed rate, cashback and discount mortgage there is.

Unless it falls under the unfair contracts ruling then it is legal. A penalty which is similar to the benefit being received if fulfilled is hardly going to be considered unlawful.

Tripledrop

It is legal. You do have the option to take a mortgage without an ERC (early repayment charge), but if you choose a better mortgage, then you accept the ERC. Some banks give very attractive rates, and would lose money if you paid during this time. So they have an ERC. These are not charges that you pay if you miss payments etc (so could be seen as penalties), but part of the mortgage.

http://www.netloans.co.uk/glossary/Early-Repayment-Charge-44.aspx

This explains why banks charge these, and if they didn't, they obviously wouldn't offer promotional fixed or discounted rates etc.

If you don't want to pay this charge, take out a (normally much more expensive) flexible mortgage.

homer_j_3

I just posted but it seems to have disappeared. Must be one of those glitches that are happening.

Firstly - your opinions are just that as mine are mine. My opinion is that nobody on here can say with any authority as a legally qualified person in contract law that the banks are legally acting or not. Our job roles do not stretch that far. Lynz has pretty much confirmed the fact that the law is treating mtg arrears and bank charges very similarly.

You accept a tie in and the ERC is priced into the deal you get - I completely agree with you. Can you show me a deal where the offer no charges for missing payments?

Can you show me a deal that states that if the lender alters any of the admin charges which are in place at the start of the contract, they will allow a customer to move their mortgage to another company without paying the ERC?

The argument here is simple. Are mortgage arrears charges a penalty charge or a justified admin charge. How do we determine the difference. For every argument you give me, there is a counter argument and for this reason, I will say it again - who can say that the banks are acting legally - not you, not me and certainly not martin.

It is being argued in the court of law and any claim will go into the back log, which will get sorted when the case has got a verdict. No point trying to put people off saying theyt are legal, just as there is no point in telling people to chance their luck. When the OFT has had their case heard and a judgement has been made, I am sure Martin will be there with a free guide and templates on what you need to do, IF there is a claim to be had.

dunstonh

mortgage arrears admin charges are different to early repayment charges.

mortgage arrears charges are a grey area because many do present them as admin charges. Whether or not they get away with that or not we will no doubt find out. However, ERCs are a totally different thing. ERCs are OT for this thread but Orrible did raise the subject.

Contracts exist to protect both parties. Could you imagine Chelsea b/s giving out their 6% cashback if they didnt tie you in for 6 years. Every other month you would be remortgaging back and forth between them and another to get 6% each time. Discounted rates are just cashbacks in a different form and fixed rates are financed often against borrowing by the bank themselves or by the bank using money markets or other instruments to be able to offer that rate. So, there is a tie in for the bank there (or a penalty to them if they withdraw).

Lets just say the OFT did rule that contracts were not allowed to have any clause that protects a party should the other withdraw (not that they are looking at that). It would bring economic chaos and make the UK a laughing stock. No-one would do business here because contracts would be unenforceable. You could sign a contract, get what you want and pull out without the other side getting their side of the contract.

Tripledrop

So VERY different to mortgage arrear charges! You also have the choice to get a mortgage without ERCs...

homer_j_3

The OFT are not looking to rule on protecting parties to withdraw from the contract.

What they are looking is if the conditions are fair and meet contract law.

I wasn't sure where the ERC conversation had come into this tbh but I understand that the ERC will determine the price of a product and if you want to get out of the contract then it is fair for lenders to charge this as the consumer had a choice not to accept the ERC before entering the contract.

It is to my limited understanding that because it is not illegal to charge fees for the cost of processing amendments, missed payments, because of variable costs involved and the lengths of some contracts, it is reasonable to expect that a company should be able to amend the cost of these charges without having to offer the contract to be terminated.

However, as a result of the law allowing this, the law states that should any of these charges be deemed as excessive or a penalty charge then the other party has a right to challenge these. And that ladies and gentleman is what is happening.

I personally think that if it is deemed a penalty charge, it will mean that lenders will build in clauses that if you go into arrears, your interest rate will increase aswell as a nominal fee for the administration.

All I am saying is that you and I cannot say for certain whether its legal or not as the court has to determine their interpretation of at what point the cost is deemed excessive and a penalty charge.

Mortgage arrears charges are different to bank charges in the sense that your mortgage company doesn't get your salary paid into it each month (apart from those with CAM's). The level of £12.50 may be deemed higher with mortgage companies due to this fact alone. Who knows?