Claiming compensation for incorrect default

jules106

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I was wondering if anyone could offer some advice regarding a compensation claim for an incorrect default placed on my file.

In February I applied for a shared ownership mortgage and was rejected. On obtaining a copy of my credit report I found out I had a default on my account since 2005. As a result I had to obtain a sub-prime mortgage with the associated higher interest rates. (just before the credit crunch and didn’t want to let the property go as it is a shared ownership and not many around at the time). While my mortgage application was going through I disputed the default notice issued from HFC. First letter they sent said it was correct. I knew it was wrong and continued to dispute. Cut a long story short, I have finally had a letter saying it was a mistake it will be removed and it was a system error! Although this is great news, as a result of their mistake I am now left with a higher rate mortgage as well as the additional costs of mortgage arrangements fees associated with a sub-prime mortgage.

In light of this, do you think I have a case to claim compensation. I would like to move my mortgage (don’t move into property until 20th June 08) so there will be significant penalty charges as well as claiming for the extra costs involved. It is a 100% shared ownership mortgage.

Thank you for any advice you may be offer.

standupguy

This is a difficult one.

How sure are you that the only reason you did not get a prime mortgage was the default? Were there other factors that were taken into consideration also?

If you are certain it is the one and only thing that stopped you then you could write to the Managing Director of HFC detailing your complaint and state how your losses are made up and the amount you are requesting in compensation.

You would have a final recourse to take the matter to court but that is where it will start to cost you with no guarantee of success

Troubled_Joe

There's a very interesting Scottish case on this matter. From memory it involved the purchase of a PC.

I'll try and find a link for you.

dunstonh

It is a tough one as there was an error but HFC are not responsible for your choice to proceed with a tied in sub prime mortgage before the error was resolved. Also, a small default does not mean you have to go sub prime. Near prime or even prime is often available, even with defaults.

Had you gone with the a prime mortgage whilst you got the error resolved then you would not be in the position now. In which case, you could quite easily expect and understand HFC rejecting any complaint about compensation.

jules106

Thank you all for your replies, the reason my mortgage application was rejected was due to my credit rating... ie the default. There is nothing else on my credit report untoward. No late payments etc.

I was unsure if the default would be removed hence i went ahead with the sub-prime mortgage. Taking into consideration, when i first wrote to them they reply said it was correct. If at that point they admitted it was a mistake i would not be in the situation I am now. I cannot go to a standard lender now as that would delay the completion date of 20th June and have enormous affect on a chain of seven.

I understand HFC didnt make me take a sub prime mortgage, if i had defaulted then i would of been willing to pay over the odds for a house i really wanted for a couple of years but dont see why I should when I never deserved the default. At the end of the day, a default being issued has a huge affect on the individual for 6yrs, so with that carries the responsibility from the issuer, if they are placed incorrectly.

If you could find the link for the scottish one that would be really helpful.

Many thanks

jules106

I have drafted the letter below, if anyone has any pointers or comments that would be great... thanks very much


Thank you for your letter dated 2nd June 2008

Firstly, may I thank you for your investigations and the very pleasing result of the default being removed from my file.

However, if I may I correct you, you state in your letter that I that I received a default notice on 9th February 2005. This is not the case, I was merely quoting the information you sent me in a previous correspondence, to re-iterate, I have, at no point been in receipt of a default notice from you.

Unfortunately, the good news of the default notice being removed has come a little too late. As a direct result of the inaccurate default notice being placed on my file I have faced considerable financial constraints and limitations, namely my recent mortgage applications.

The reason I obtained a copy of my credit file in the first place was because a mortgage application had been rejected due to my credit rating. As a result I had no option but to obtain a mortgage through a specialized company who deals with adverse credit applications. Through no fault of my own but HFC’s systems, I have incurred additional mortgage application costs as well as an increased loan rate associate with this kind of product. In addition, the mortgage rate I was offered at the time was on the proviso I did not have adverse credit of which I was confident I did not. This product has since been withdrawn from the market.

I originally telephoned HFC in February requesting an explanation of the said default and was passed from pillar to post. I then wrote to you 4th March 2008, if at the time of my first letter you agreed to remove the incorrect default I would have been in the position to obtain a standard mortgage product and not an adverse credit mortgage which I currently hold.

In light of this I have no option to file a compensation claim with you. I will be looking for you to compensate me for the following:


>Mortgage arrangement fee for adverse credit mortgage.
>Valuation fee through a packager for adverse credit mortgage.
>Early penalty fees for leaving my adverse credit mortgage lender and obtaining a
Standard mortgage.


May I thank you in advance for you continual co-operation regarding this most unfortunate matter and look forward to hearing from you in line with your customer complaints procedures.

standupguy

it looks fine but I would put the amount of claim you are looking for in each section.

I know that it would cost them £400 if you took this to the Financial Ombudsman - so if you were claiming say £350 they may just pay it to get rid of a complaint.

However if you are claiming, say £35,000, they have an idea how to proceed.

I think you need to give them a clue of how much you are after in compensation so they will then know how to respond best?

jules106

For those of you that remember my incorrect default compensation claim, I have so far had the default removed and continued with a compensation claim and have now been offered £2500 (final) great news but this is based only on the calculation of the increased rate and includes £250 for inconvenience. I do not think this is adequate and it does not cover additional mortgage fees etc and any product that was available to me at the time (shared ownership). Does anyone know if it is worth going through the FOS ? and if this failed would i loose the initial offer??

Many thanks in advance for your help

dunstonh

have now been offered £2500 (final) great news but this is based only on the calculation of the increased rate and includes £250 for inconvenience.

That is good news. Clearly the information did increase the rate.

I do not think this is adequate and it does not cover additional mortgage fees etc and any product that was available to me at the time (shared ownership). Does anyone know if it is worth going through the FOS ?

The FOS would probably consider a goodwill gesture of £250 quite reasonable. Its one of the most common payment amounts for these.

They would also look to see if the base offer (£2500) covers the costs. You say it doesnt. Have you given them figures back of the extra costs you have paid in addition to this?

and if this failed would i loose the initial offer??

No. However, you will end up waiting 9-14 months for the FOS to deal with it.

jules106

Thanks for reply Dunstonh,

I did give a breakdown to HFC, which included 1k mortgage arrangement fees, on a previous KFI (if i did not have a default) I wouldn't of had to pay. HFC in their offer letter stated it was a complex complaint, and that further information i made available was not substantiated. I dont want to push my luck but, the product that was available then is not available now, so when it comes to a remortgage, I will certainly struggle. I understand this is not HFC fault, but... if i could not get another mortgage and reverted to the STV, this would be certainly lower and managable if i obtained a lower mortgage rate initially. Hope that makes sense. I also requested early penalty fees for my existing mortgage, I could of switched last month and again, been able to manage the lenders STV if i could of switched.

Thanks

dunstonh

I see where you are coming from. It really depends on how strong your evidence is and your belief you will get more by going to the FOS and that its worth the wait. I really am not joking on the timescale at the moment. They are snowed under with people trying it on with bank charges and PPI and the genuine complaints are getting swamped.