Bullying tactics of some mortgage lenders

Subprime bullies

I have been working since 1990 saving peoples homes from repossession and I have  found that some lenders, especially the subprime lenders, use bully tactics and treat people harshly.

When a client is in financial difficulty these lenders demand unaffordable monthly amounts or a large lump sum towards arrears which just means that they spiral into debt again a few months later.

They tell the borrow that unless they pay off their arrears in full then they will lose their home which according to the MCOB rules that are not allowed to do and a borrow can put a complaint in to the FSO if they receive communication along these lines.

They show little consideration of how much the borrower can afford and what effect these tactics have on their health and well-being. Many people I meet are depressed and want to just throw the towel in and give up.

In their situation they feel they have no where to turn and end up going to loan sharks or selling their home for under its true value, renting it back only to find themselves evicted a few months down the line.

The collection tactics and arrears management procedure of many sub-prime lenders flout mortgage repossession law and choose Repossession as their first choice when it should only be used as a last resort.

Related articles

• Another case won from repossession (homesavingexpert.wordpress.com)
• Let’s Hear it for GMAC (homesavingexpert.wordpress.com)
• Banks expect increase in repossessions (telegraph.co.uk)
• Lenders can turn new arrears rules to their advantage (payplan.com)
• Number of repossessions rises amid cutbacks (telegraph.co.uk)

Mortgage Rescue Scheme overspent by £34m

In this recession the UK government has over spent on the Mortgage Rescue Scheme by as much as three times.

The scheme had predicted that each household would cost £34,000 when the reality is that it is costing £93,000 despite it only being taken up 2,600 instead of 6,000 as expected. This is an overspend of £34 million on the £205 million allocated.

The scheme allows home owners struggling to make mortgage payments to sell part or all of their home to a housing association and rent it back or enter into shared ownership agreement.

Around 180,000+ are struggling to pay their mortgages so this is just not enough.

The report accused the Communities and Local Government Department of misunderstanding what support borrowers wanted and reacting slowly when it became apparent the scheme was not providing value for money.

Related articles

• Mortgage rescue ‘missed targets’ (bbc.co.uk)
• Homeowners need helping hand if they hit hard times (mirror.co.uk)

Irresponsible mortgage lending by Deutsche Bank mortgage division

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The UK lending arm of Deutsche Bank, has been fined £840,000 and ordered to pay customers £1.5m by the Financial Services Authority for “irresponsible lending practises” in the years leading up to the financial crisis.

This is the first time the regulator has taken enforcement action against a group for irresponsible mortgage lending.

The FSA criticised the lender over:

• the sale of self-certified and interest-only mortgages
•  loans sold to people approaching retirement

It also revealed that the company had

• failed to treat customers in arrears fairly
• made unfair charges for arrears
• and failed to highlight more suitable options for customers

The bank had not given enough consideration to how customers would afford their mortgages once they had retired and had failed to look at cheaper options for self-employed individuals.

It did not ensure customers with interest-only mortgages who were dependent on the property sale to repay the loan had thought about where they would live at the end of the term.

Related articles

• Another case won from repossession (homesavingexpert.wordpress.com)

Ladies and gentlemen I give you Bridging Loans Ltd

In November 2010 the FSA fined mortgage company “Bridging Loans Ltd” £42,000 and personally fined its director Joseph Cummings £70,000 for what it termed “Serious failures related to lending practices and for failing to treat customers fairly in arrears”.
Also interesting to note that the FSA also banned three of the other company directors (all in the same family) from acting in senior positions within the financial sector. This was the first case where the FSA took action against the directors themselves – maybe if they did this more often other mortgage lenders might ensure that their companies treat their customers fairly.

Related articles

• Let’s Hear it for GMAC (homesavingexpert.wordpress.com)
• Another case won from repossession (homesavingexpert.wordpress.com)
• Banks accused of using mortgage debt leniency to flatter numbers (telegraph.co.uk)

Put your hands together for GE Money

Financial Services Authority

Fined £1.12 million for exposing their borrowers to financial loss.

Director of Enforcement for the FSA, Margaret Cole said  “The firm’s failings were serious because a large number of borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss. The firm identified the systems and control failings in 2004, but despite internal recommendations that improvements be made, no corrective action was taken for more than two years. I emphasise that we expect high standards by lenders in their administration of their mortgage book.”

Related articles

• Let’s Hear it for GMAC (homesavingexpert.wordpress.com)
• The big mortgage debate (blogs.confused.com)

Put your hands together for Redstone Mortgages

In July 2010 The Financial Services Authority fined Redstone Mortgages £630,000 for what they called “Poor treatment of some customers facing mortgage arrears”, which included:

•  Failing to treat customers fairly.
•  Focusing on reducing arrears regardless of customers personal circumstances.
•  Having written policies that promoted uneccesary legal action.
•  Sending excessive and confusing correspondence.
•  Applying unfair and excessive charges.

Related articles

• Another case won from repossession (homesavingexpert.wordpress.com)
• Interest-only mortgage customers face tight restrictions (mirror.co.uk)
• New FSA Proposals Could Help Mortgage Customers (payplan.com)

Please give a warm welcome to Kensington Mortgages

In April 2010 the FSA fined Kensington Mortgages £1.225 million and ordered them to pay a further £1.1 million to affected borrowers for:

• Trying to pressurise lenders into paying off arrears in ways that suited the lender.
• Charging fees for bounced direct debits, no matter how many times they chose to represent it to the borrower’s bank.
• Excessive fees for cancelled direct debits.