Will miselling of interest only mortgages be the next PPI misell phenomenon

Foraant
Foraant Posts: 24 Forumite
in Reclaim mortgage fees, council tax, etc
Will miselling of interest only mortgages be the next PPI misell phenomenon?

Just wondering anyone’s thoughts on borrowers claiming misold interest only mortgages and whether it will have the same attention as PPI has?

I believe there are valid cases from pre crisis times of 07-08, be it a lender not ensuring an appropriate repayment vehicle was in place and whether the mortgage was really affordable from the outset for borrowers to potentially claim they have misold there mortgage? Can it be proved someone is a mortgage prisoner? Are self ceritified mortgages a prime candidate for being misold? Improper loan to value ratios determined by lenders? Securitised mortgages sold to third party investors who hiked rates etc???

Have there been any recent cases anyone is aware of which might bring about possibly an avalanche of claims in the next decade or so?

Has anyone made a claim against their lender or broker about this??

Thanks

Comments

  • dunstonh
    dunstonh Posts: 116,296 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Will miselling of interest only mortgages be the next PPI misell phenomenon?

    No. It has been confirmed time and again by the FOS and FCA that it wont be.

    Mainly for four reasons.
    1 - Mortgage regulation started in October 2004. So, not a long window until they stop being offered in 2008.
    2 - The comparison used where people do complain is to compare to renting. Mortgages are cheaper and you gain in equity. So, in the vast majority of cases, people are better off with interest only mortgages compared to renting.
    3 - There was no regulatory requirement to have a repayment vehicle in place.
    4 - Many mortgages were arranged on a non-advised basis. i.e. they gave you what you asked for.
    Are self ceritified mortgages a prime candidate for being misold?

    You would have to admit to committing mortgage fraud and risk being placed on the fraud register.
    Improper loan to value ratios determined by lenders?
    Not a valid complaint reason.
    Securitised mortgages sold to third party investors who hiked rates etc???
    Absolutely irrelevant to a missale allegation.
    Have there been any recent cases anyone is aware of which might bring about possibly an avalanche of claims in the next decade or so?

    yes, some people have tried it. Most fail with the FOS saying that interest-only mortgages bought after 2004 and before the credit crunch were acceptable under FCA regulations. Those that succeed usually find they end up with nothing as the equity they have gained in the property puts them in a better off position.

    In a recent upheld case with the FOS, they said that the person would only get redress if the property was sold at the market price within the next 12 months and the value was less than what they paid for it.

    The FOS itself has actually criticised claims companies for encouraging interest only complaints and said that the only real area they have concern about is where people were sold subprime mortgages when they could have got prime mortgages.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Foraant
    Foraant Posts: 24 Forumite
    The usual crowd I see ��

    What about the following reasons below:

    The mortgage term ending after your retirement date
    You weren’t aware of the level of commission the lender would receive
    The advisor encouraged you to self-certify or overstate your income in order to borrow more
    You were advised to switch lenders without being made aware of the fees and penalties involved
    An advisor offered a fixed-rate mortgage and later told to remortgage to a better deal without being made aware of the penalties for leaving a fixed-rate mortgage early
    You were advised to take out an interest-only mortgage without a clear repayment plan, or understanding of the other options available
    An advisor told you to to take out an investment designed to pay off your mortgage when it finished, and later discover that you would not be paid out enough
  • [Deleted User]
    [Deleted User] Posts: 26,612 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Yeah, a "crowd" of responders who all work for banks (allegedly). ;)
  • Foraant
    Foraant Posts: 24 Forumite
    Lol no hard feelings
  • Foraant
    Foraant Posts: 24 Forumite
    The FOS itself has actually criticised claims companies for encouraging interest only complaints and said that the only real area they have concern about is where people were sold subprime mortgages when they could have got prime mortgages.[/QUOTE]

    Inerestingly, did the FOS not criticise claim companies before PPI become publicly criticised?
  • dunstonh
    dunstonh Posts: 116,296 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    The mortgage term ending after your retirement date

    has had some success in the past on advised mortgage cases but most brokers would have the risk warning in there. It is allowed to go past retirement. A risk warning paragraph is all it takes. Plus, since the increase in state pension ages, that has actually reduced the numbers.
    You weren’t aware of the level of commission the lender would receive
    Not a valid complaint reason as its fake (mortgage regulation introduced the requirement and the FCA set the layout).
    The advisor encouraged you to self-certify or overstate your income in order to borrow more

    If you can prove it and show you are financially worse off (i.e. house price hasnt gone up). Plus, you still risk being entered on the fraud register.
    ou were advised to switch lenders without being made aware of the fees and penalties involved
    Bit hard to claim that one post regulation as they appear on the key features
    An advisor offered a fixed-rate mortgage and later told to remortgage to a better deal without being made aware of the penalties for leaving a fixed-rate mortgage early
    Potentially yes. Probably a rare case though.
    You were advised to take out an interest-only mortgage without a clear repayment plan, or understanding of the other options available

    already covered
    An advisor told you to to take out an investment designed to pay off your mortgage when it finished, and later discover that you would not be paid out enough

    Mortgage advisers are not allowed to provide investment advice.
    Inerestingly, did the FOS not criticise claim companies before PPI become publicly criticised?

    The FOS criticised claims companies, not for PPi complaints but the false allegations many made due to template letters (which harm a complaint) and where no PPi was held (which is in breach of MoJ guidelines).
    The usual crowd I see ��

    Are you trolling or is there a serious side to this?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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