Mortgage Reclaim

The Financial Ombudsman have come out and criticised claims companies putting in interest only complaints. The FOS reject most of them. The FOS takes the position that until 2008, interest-only mortgages were acceptable under FCA regulation and having one is not an issue.

They have found against in a very small number of cases but with those, the person usually ends up with nothing. Most common outcome is that they compare to if you had rented. The interest only payment is usually cheaper or similar to rent. Then they look at the value of the property at purchase and current value. If you have gained in value (as most have) then you are not financially worse off.

In a recent case, they upheld the complaint but said redress would only be payable if the person sold their house in the next 12 months and sold it for lower than the purchase price. The person wasnt looking to sell. The FOS did it that way because it was viewed as a try-it-on.

The CMCs active in this area usually have upfront fees or introduce a fee after a few months (they tell you that you have a case and will be paid £x,xxx or sometimes even £xx,xxx but they need you to pay the solicitors to be able to take it further). That is where they make their money.

In a recent trend, crowdfunding has started to occur where firms try to attract funds saying they can put in mortgage complaints and take a cut of the redress. The more people they have signed up, the more attractive the crowdfunding marketing can be. So, the mugs putting in their money to fund these cases think they are going to get a return but in the end they end up losing all the money. The only winners are the directors of the CMC who have extracted the money out over the period.