Mortgage Repossession on an Inflated Debt Caused by Bank Errors

Domsjo

where to start! My mortgage matured in 2024-I believe the balance is inflated, none of the figures match up, credits into the account are ledgered but not deducted from the balances, fees were capitalised unjustly, and overpayments were not applied to the capital when the endowment crashed - though it is written in the contract that they should be if it became insecure. I was mis-sold the mortgage in 1998 with a linked endowment, this was a DIYSO scheme, you had to be registered homeless to be eligible. (The endowment missell payout was £50). The account was mismanaged throughout - eg they manually altered my name then refused to change back until very recently. If the correct balance had been presented at maturity (16-17k), I would have been able to pay it off in cash settled.

I was directed to gain permission from all parties to remortgage to pay their figure (23k), which I began the process for in good faith in 2024. My ex-partner is named, but the name used was not their legal name - any co-authorisation without proper supporting documentation for change of name at this stage would put us both at risk. The bank knew and their legal team have stated several times this is not relevant to the case - but it became a material issue as it effectively blocked remortgage, or sale. When discussing possibilities with the landlord, I was issued a form to transfer ownership to be able to manage the account and remain legally compliant. But the form had a slightly different title to the form I was being advised on - I asked the bank to ratify the form, and instead they began legal action for repossession. I tried to negotiate and was ignored. Land Registry confirmed the form was for a forced sale by repossession order and not a transfer of equity. Although there are KYC, CDD and AML protocol they are meant to adhere to regarding accurate record keeping and customer verification - everyone seems dismissive, I think its quite serious? In one of their legal statements the bank said they outsourced the underwriting to my solicitor - which wasnt true.

I have continued to pay interest on the inflated balance throughout the litigation process. They have added legal fees and admin charges to the balance, and then notified me twice of fees escalating due to the 'complexity of the case' - it is complex through their own mishandling. At the first hearing they presented an incorrect loan amount in their witness statement. In the second hearing I was told by the judge that even if I win I have to pay all their litigation costs that are between 70-100k. The judge ordered mediation and I offered 15k settlement, which was refused. The bank and I were ordered to choose a mediator together, their legal team gave me 4 days notice to verify their pick - I had until 4pm today. I received a letter this morning asking me to call them immediately - which I did, and was 'booked in' for a callback, the booking details (time/day) were not divulged. At 12pm today the banks legal team wrote to the courts to inform them I had not cooperated with choosing a mediator - 4 hours before the deadline - but honestly I have no option but to agree as I have no idea about this stuff. 

I have worked through their 32 page raw data of figures - luckily the past 2 years I have worked in a job where I work with complex balance sheets daily, so I was eventually able to understand it and calculate what the compound interest should be. They used their false loan amount to balance the final amount, adding bits of interest to make the mortgage and the capital match. Their witness statement says randomly added fees (that are logged as recredited) were capitalised - intimating thats partly why the balance is inflated - but their own evidenced balance sheet says the opposite. This is heading for repossession, and bankruptcy as there is not enough equity in the property to cover the huge legal bill.

I think they want me to settle into another form of payment arrangement with them, Im wary as nobody appears to be regulating their behaviour and inflated balances, trapping me in a cycle of spiralling debt with them where they can just inflate balances and add fees on a whim - any legal challenge results in extra legal costs added to the balance, I feel like Ive been groomed by a criminal gang not a high street bank, its nuts! i also feel this would prolong this same process happening again later down the line. Im currently in work and in a better position than if I wasnt - which is a possibility 12months down the line due to industry cut backs.

Is this normal? Do all banks fudge balances and its an accepted true debt if its near enough give or take 10k? Feels off that they can repossess on a false amount and the courts and ombudsman have no powers because the start of the mortgage was out of scope?

Note: over the years I have approached 20 legal representatives unsuccessfully. In the end it was just easier to be litigant in person, even the banks legal team do not appear fully understand the accounts and the implications, based on some of the information in the witness statements.

QrizB

I do hope your litigation is better presented than your post above.

How much did you borrow? On what terms? I get the feeling (although you haven't said) that this was an endowment-backed mortgage?

Did you get annual statements? Did these show that the endowment was going to cover the principal when it matured? If they showed a shortfall, what did you do about it?

fatbelly

Am I reading this correctly?

This is a possession claim over a 23k mortgage that had reached the end of its duration and you did not pay off

You have caused them 100k in legal fees that you are now liable for.

You are seeking to settle the whole thing for 15k

silvercar

A few comments on snippets of your post.

the endowment miss-selling looks done and dusted. You were awarded £50. That closes the case. You then had the option to use the proceeds (£16-17k you say) to reduce the outstanding mortgage. You could have taken this option which would have reduced the outstanding balance, did you do this?

Is your ex-partner still on the mortgage? And the deeds? If so, what is their opinion on this?

Who is the “landlord”? 

How far into the complaint stage are you? Undoubtedly this will end up with the ombudsman, so I’d be doing everything I can to hurry that process along.

(Are the legal fees in-house legal fees of the mortgage company? If so, I do wonder how manufactured they are and if an ombudsman can reject them.)

I may be missing something, but a £23k mortgage with an endowment that only covered £16k should have left you with £7k on the mortgage. From your side I would have continued to pay that at my same monthly payments as before the mortgage was reduced by the endowment, in order to clear the mortgage. At the same time as pursuing the injustice. That way the mortgage would be cleared eventually. I’d also take the same view with the lender, why spend £100k on legal fees for a mortgage of £23k?
If it gets to the ombudsman, I can’t see anyone coming out of it smelling of roses.

sheramber

If the correct balance had been presented at maturity (16-17k), I would have been able to pay it off in cash settled. 

I was directed to gain permission from all parties to remortgage to pay their figure (23k), which I began the process for in good faith in 2024.

Why did you not pay off the £16/17k that you could, leaving only the balance payable? 

Domsjo

sheramber said:

If the correct balance had been presented at maturity (16-17k), I would have been able to pay it off in cash settled. 

I was directed to gain permission from all parties to remortgage to pay their figure (23k), which I began the process for in good faith in 2024.

Why did you not pay off the £16/17k that you could, leaving only the balance payable? 

Because I only just found out. This figure only came to light when they submitted the full account balances as evidence, and i had them audited. Their end balances show 3 different figures and reconcile against an incorrect loan amount

Domsjo

silvercar said:

A few comments on snippets of your post.

the endowment miss-selling looks done and dusted. You were awarded £50. That closes the case. You then had the option to use the proceeds (£16-17k you say) to reduce the outstanding mortgage. You could have taken this option which would have reduced the outstanding balance, did you do this?

Is your ex-partner still on the mortgage? And the deeds? If so, what is their opinion on this?

Who is the “landlord”? 

How far into the complaint stage are you? Undoubtedly this will end up with the ombudsman, so I’d be doing everything I can to hurry that process along.

(Are the legal fees in-house legal fees of the mortgage company? If so, I do wonder how manufactured they are and if an ombudsman can reject them.)

I may be missing something, but a £23k mortgage with an endowment that only covered £16k should have left you with £7k on the mortgage. From your side I would have continued to pay that at my same monthly payments as before the mortgage was reduced by the endowment, in order to clear the mortgage. At the same time as pursuing the injustice. That way the mortgage would be cleared eventually. I’d also take the same view with the lender, why spend £100k on legal fees for a mortgage of £23k?
If it gets to the ombudsman, I can’t see anyone coming out of it smelling of roses.

Sorry, my original post is very unclear.

The endowment crashed in 2004 it was linked and intended to cover the whole amount but didnt cover any of it. Challenges during the 'endowment scandal' required co-signatory cooperation, and my 50% share at its peak would have won back 3k. I would not have had control over the other persons share. As it transpired the co-borrower and main account holder on the endowment had not used his official birth name, and had reverted to his birth name a few years after leaving the property. His payout options hinged on a paper trail of name changes which might be why there was no incentive to cooperate.

At maturity, if I had known the balance was 16-17k I would have just paid it. The bank claimed it was 23k and encouraged me to remortgage - I began the process but needed permission from all other co-signatorys. I tracked down the c-borrower and presented options including payout, transfer or full control. A few months back and forth revealed that the paper trail of name changes did not exist, and so options for refinance and restructure were blocked, I kept the bank updated in full transparency (I thought it was really serious and was genuinely worried - but it turns out its not a concern of the lender, it just stops any practical options)

I didnt pay in all my savings at this point as nothing was secured, the whole scenario was messy with no clear outcome, and if repossessed I'd need this money to rehouse. 

The bank took me to court for repossession. Their legal fees are escalating because of my defence (their claim for repossession had a false loan amount in the witness statement, and the evidence bundle had mismatched and incorrect end balances due to poor record keeping) - there was no clear and consistent figure that matched their own records.

Its not that I didnt make attempts to resolve prior to the mortgage maturing, I did multiple times and met various obstructions: my income, co-authorisation, and my own mismatched ID (they altered my name on the records, they eventually amended following a number of complaints over the course of 20 years).

Much of my defence is that the account was mishandled, with a pattern of administrative failures and systemic accounting errors - all of which is evidenced. If I didnt have a plausible and evidenced defence, it would have been repossessed at the first hearing.

I tried to settle to avoid court in November 2024. And keep trying to avoid further court costs - their costs, as litigant in person I dont have associated costs from my side. Im offering as near to the true calculated figure as I can get, but paying for legal and mediation is eating into that available fund. At the second hearing, it was the judge that forced disclosure on the true legal costs I would face if this went to full hearing.

They were a bit nonchalant I guess they think they'll claw it all back from the sale of the property. Thats a huge risk, as theyre only entitled to 50% through the shared ownership, the property is run down and would need repairs for resale, and property prices are much lower than the national average in my area. Plus I expect the resale of a SO is more protracted than a regular repossession. Ive gone off on another tangent here, but it puts it into context. Repossession for me = loss of home, potential bankruptcy. Repossession for them at best = recovery of the sum their pursuing, but there is a risk theyll make a financial loss

Domsjo

fatbelly said:

Am I reading this correctly?

This is a possession claim over a 23k mortgage that had reached the end of its duration and you did not pay off

You have caused them 100k in legal fees that you are now liable for.

You are seeking to settle the whole thing for 15k

No, thats not correct. They claim the oustanding balance as now being around 25k. At the time of maturity they claimed 23k, but the actual statements and balance sheets had a lower amount. They also showed overpayments had not been applied to capital (it says in the contract they should be, and said in the statements they were). Fees had been incorrectly applied and then corrected on the same day, they show as added to the balance but not corrected from the balance when re-credited. All of these corrections take the mortgage end balance down to 16-17k - which I could and would have paid. I wasnt given access to the account balances until the court ordered it. 100k is not yet owed - thats what I have been told I will need to pay extra if I continue a defence.

Domsjo

QrizB said:

I do hope your litigation is better presented than your post above.

How much did you borrow? On what terms? I get the feeling (although you haven't said) that this was an endowment-backed mortgage?

Did you get annual statements? Did these show that the endowment was going to cover the principal when it matured? If they showed a shortfall, what did you do about it?

I tried to speak to them on the phone. I turned up at the branch. When they wouldnt/couldnt engage without a co-signator I made overpayments towards the capital inline with the contract directions if an endowment becomes insecure. They didnt apply the overpayments to the capital.

sheramber

Where did they apply the overpayments?

MWT

Domsjo said:

I made overpayments towards the capital inline with the contract directions if an endowment becomes insecure. They didnt apply the overpayments to the capital.

Typically the overpayments would be applied to the capital or the accrued interest (either for that month or due to prior non-payments), if they were not applied to the capital where did they go?