Friend signed a no win no fee agreement for a mortgage claim, help needed.

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  • Thank you all for your help. I had already read that thread before posting here, I just wanted to see if there was any possible way out but it doesn't appear there is. I've suggested that they leave it to run its course and that it will most likely go nowhere. I have also told my friend to make sure they provide everything that is asked for promptly, such as signatures and any information asked for.

    Thank you all again, hopefully they will now just send a letter to say that the claim cannot go any further and it will all be over with.
    Change the way you see things and the things you see will change
  • What I would say to your friend is as follows:

    I have seen a number of these 'mortgage audit' style claims presented to my clients over the years and they are nearly always templated standard form 'expert reports' or 'forensic audits'. Mortgage Audit Bureau (and the legal entity that prepares the 'audits' Mortgage Audit Services Ltd) both seem to have arrived on the scene around 4-5 years ago and specialise in the 'forensic audit' variety.

    I would suggest to your friend (and indeed anybody reading this post) that he requests a copy of the 'audit' once it has been prepared - before pre-action letters are issued to his lender on his behalf. I would also suggest that he requests confirmation of the interest rates the audit has used in reconstituting the balance, and, what management charges have been excluded (and why).

    I would also encourage your friend to compare the rates used in the audit and the rates quoted in his mortgage offer letter (a copy of which MAB should provide to him). If he has any trouble in working out what rate his lender should have used (often the SVR will be linked to 3month LIBOR or the BR) then I'm sure somebody in this forum will help you out.

    In my experience this sort of claim system (and I am in no way implicating MAB or MAS in this) exists to do the following:

    1 - A CMC or salesman will have bamboozled a small (usually PI) firm into believing that some special software they have access to has discovered the next PPI style scandal and the firm should buy up mortgage leads.
    2 - The entity that prepares the 'audit' or 'expert report' takes instructions from the law firm that has bought up new claims and the auditor or 'expert' is paid up front by the firm themselves or a litigation funder. Alternatively the CMC might sell the claim packaged to a law firm with their report included as part of the price.
    3 - The law firm buying the claim runs on a CFA/DBA ('no-win no-fee') which necessitates the involvement of an After the Event Insurer to cover the clients disbursements (the audit or report) should the claim fail.
    4 - If the claim the law firm has bought is utterly spurious and fails shortly after proceedings are issued (or pre-action) the ATE provider then foots the bill for the client's disbursements.
    5 - Generally by the time the law firm has cottoned on to the fact that they have bought a portfolio of bogus claims and used their litigation funder to fund the payment of the disbursments, the CMC has moved on to another ex PI law firm with access to another litigation funder and ATE insurer.

    As you might gather, the whole scheme is often a confidence trick (though I am not implicating MAB or MAS) but the only looser is really the law firm running the claim and the ATE provider who has underwritten the venture - not the, generally, the client.

    I would therefore advise your friend that he is probably not really at any risk and if his claim fails he'll only have wasted his time.

    There is a risk however that if his claim fails then the lender will still add around £800 - £1,500 in legal costs to his mortgage account as a consequence of having to instruct their own solicitor to respond to the pre-action letter and inspect the audit/report. The ATE provider might not cover this (depending on the agreement they have with the law firm) and I would therefore specifically request confirmation in writing that the ATE provider will pay.

    What really worries me, and this is why I have written this post, is that the CMC now seem to be trying to attract private funding from the public, dressing up the scheme as an alternative 'investment'. It is not FSCS protected, despite the CMC's claims.

    If you are reading this because you have been contacted regarding litigation funding investments - think very carefully about parting with your money. I have never seen one of these reports being successful.

    It's no wonder that FOS and the FSCS are not paying our on any mortgage claims because of the sheer volume of 'expert' reports they are receiving.
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