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  • FIRST POST
    • LVHAVA
    • By LVHAVA 10th May 18, 6:12 PM
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    LVHAVA
    HELP - mortgage repayments incorrectly calculated and arrears letter!
    • #1
    • 10th May 18, 6:12 PM
    HELP - mortgage repayments incorrectly calculated and arrears letter! 10th May 18 at 6:12 PM
    My partner suffered a severe spinal injury last year and has been left with nerve damage from the waist down. Due to a combination of him not being able to go back to work, me having to take time off to look after him and having to pay to have the house adapted for his needs, our mortgage payments began to slip. We have been working to resolve the issue and A&L are fully aware of our situation. Even so, they continue to send us threatening letters weekly.

    Today, we received a letter from them which stated, 'we have made an error with your mortgage repayments'.
    Following a review of our account, they found that they had calculated the monthly repayments incorrectly and they stated that they 'would like to put this right'. Their error meant that the monthly repayment amount we had been paying, was insufficient to cover the mortgage balance and therefore, come the end of the mortgage term, we would still have had an outstanding balance on the account. They had therefore calculated how much our mortgage had been underpaid by, to date, and had written this amount off our current mortgage balance (happy days! Right?). They had then recalculated our monthly repayments going forward. The letter stated that their recalculation 'puts your account back in the correct position'. The new, slightly higher, monthly repayments will ensure the mortgage balance is repaid, in full, by the end of the term.

    The letter then stated, 'Your arrears balance is £**** however, we have recalculated your monthly repayments to ensure arrears are not included going forward'.

    This, to me, sounded as though the account was 'now in the correct position' and that it was no longer in arrears. I thought this was possibly due to part of the balance being written off and/or due to the slightly higher monthly repayments. I had heard of mortgage companies absorbing arrears into the remainder of the mortgage term and increasing the monthly repayments accordingly, so I assumed by their statement, that this was perhaps what they had done.

    The letter did not mention that an arrears amount remained outstanding nor did it refer to how or when they expected any arrears to be repaid. There was nothing to say that separate payments would need to be made to an arrears balance nor did the letter urge us to contact them to discuss our proposal for repaying any arrears going forward. For a second, I felt elated, thinking that they had recalculated the monthly repayments to cover the arrears and get the account back on track. I thought a weight had been lifted but I decided to call them to clarify the position.

    They said that the portion of the balance they had written off (due to their error) did not reduce the arrears balance in any way, and that the arrears remain outstanding on the account. I argued that the letter was very ambiguous and reads as though the account is 'now in the correct position' i.e. it is showing the correct outstanding balance and is up to date. Their response was, that the account IS now in the ‘correct position’, but only in terms of it showing the correctly calculated outstanding balance and monthly repayment amounts. The advisor informed me that this statement did not mean that the account ‘overall’ was in the ‘correct position’. Again, I find this part of the letter very misleading.

    I then questioned the wording of the sentence 'Your arrears balance is £**** however, we have recalculated your monthly repayment to ensure arrears are not included going forward'.

    This doesn’t sound right to me. It reads as if they are doing us a favour by not including the arrears in the repayments. Why would a company do this? Why do they want to ‘ensure’ that the arrears are not included in the repayments? If they are aware of the arrears, then why wouldn’t they take them into consideration when recalculating the repayments? Are they trying to make repaying the arrears more difficult by not including them in the repayments? Have they ensured arrears are not included in the new monthly repayments because the account is ‘in the correct position’ and therefore there are no arrears, the new monthly repayments will simply keep the account up to date? It really isn’t clear.
    I stated to the advisor, that this sentence didn’t read well and could lead to misinterpretation, as it had in this case. However, the advisor denied that the sentence was misleading, and felt that it very clearly stated that the outstanding arrears had not been included in the new monthly repayment amount and therefore remained due. However, the advisor did agree that the letter doesn’t actually state that following the recalculation there will still be arrears are outstanding which will require payment, separate to the monthly repayment amount.

    I would like your opinions on this matter because it really does feel misleading. To be in a position where we are constantly worried about our mortgage being in arrears, to then receive a letter that reads as above, it gave us a false sense of relief. For a company to be sending such poorly worded letters to vulnerable customers seems wrong on all levels.

    Or am I the only one thinking this because of the position I am in?
Page 1
    • jackomdj
    • By jackomdj 10th May 18, 10:45 PM
    • 2,864 Posts
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    jackomdj
    • #2
    • 10th May 18, 10:45 PM
    • #2
    • 10th May 18, 10:45 PM
    From what you have said they were requesting lower monthly values than you should have been paying, so they have written that element off. But not your arrears due to you not paying. See eg below
    Monthly pmt you were asked to pay 500
    monthly pmt you Should have paid 520
    Actual payment made nil
    In this example they would have written off the £20, you still owe £500 for that month. This needs adjusting for however many months/years you were being 'asked' for the wrong value.
    They have recalculated the monthly payments (excl arrears due to you not paying the asked for value) so next month you pay the £520 or you would be back in the arrears (due to them not asking for enough) situation.
    • Xbigman
    • By Xbigman 11th May 18, 7:05 AM
    • 3,131 Posts
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    Xbigman
    • #3
    • 11th May 18, 7:05 AM
    • #3
    • 11th May 18, 7:05 AM
    They were taking too little so theoretical arrears were created by their error. These arrears have been written off.
    Your actual payment arrears have not been written off. Referring to both underpayments as arrears is confusing but fairly straight forward once you realise what they are talking about.


    Darren
    Xbigman's guide to a happy life.

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    • Westminster
    • By Westminster 11th May 18, 7:46 AM
    • 876 Posts
    • 529 Thanks
    Westminster
    • #4
    • 11th May 18, 7:46 AM
    • #4
    • 11th May 18, 7:46 AM
    Nice clear explanation from jackomdj
    Hi. Martin has asked me to tell you I'm a Board Guide on the following boards: Mortgages & Endowments, Mortgage-Free Wannabe, House Buying, Renting & Selling, Small Biz & Charities' MoneySaving and Charities.

    I'm a volunteer to help the boards run smoothly, and I can move and merge posts on there. Board guides are not moderators and don't read every post. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
    • davidmcn
    • By davidmcn 11th May 18, 10:27 AM
    • 8,492 Posts
    • 8,948 Thanks
    davidmcn
    • #5
    • 11th May 18, 10:27 AM
    • #5
    • 11th May 18, 10:27 AM
    I would agree it is misleading wording to send to customers who might also have "normal" arrears - but I can't see that you've suffered any loss because of it.
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