Part 1: Mortgage Difficulties ask yourself a difficult question

Many things can happen in our lives through no fault of their own…. e.g. redundancy, illness, divorce, even death of a loved one which can result in us experiencing financial difficulties. You may need a short amount of time to sort out your situation and need some support to enable you to manage your finances and get your life back on track.

An estimated 40,000 home owners will have their properties repossessed in 2011 but this is not the true picture of the number of people who are finding it difficult to pay their mortgage. In the last 3 months alone the figure stood at 166,000.

Before you decide on what choices you have with regards to your home I think you need to ask yourself some questions first?

• Is my situation short term or have I been having difficulties for a long time now and I can’t see an end to them?
• Do I want to carry on struggling or do I want a fresh start?
• Do I want to keep my home at all costs and am prepared to fight for it?

If you are not sure if you are in long term difficulties then answer these following questions:-

1. Have you taken further loans to pay off your debts?
2. Do you find yourself paying late fees and bank charges?
3. Are you scared of opening letters in case they are bills and more demands?
4. Do you get final demands for your utility bills?
5. Have you maxed out on your credit cards?
6. Do you borrow money from family and friends?
7. Are you being hassled by creditors?
8. Do you have sleepless nights or find yourself drinking to forget your worries?
9. Are you constantly thinking about money and how you are going to pay your next bill?
10. Do you borrow from Peter to pay Paul?

If you answered YES to more than 5 of the above questions you maybe experiencing long term debt problems.

Yes you do have choices but if your situation is not going to change you have to think about the impact any decision you make will have on the long term outcome. As I am sure you know being in difficulties can be stressful and cause many different types of reactions from sleepless nights, drinking more alcohol, taking medication, being depression to even having a nervous breakdown.

By taking a short term decision on your payments are you just putting these feelings on hold?

Any choice you take that reduces your monthly payments will have long term effects in that you will need to pay the money back at some stage. This is a great decision if you know your situation is more than likely going to be short term and you will be able to increase your payments some time in the next year or so. We will look at the different options you have in part two.

Related articles

• Top 10 Reasons People Lose Their Homes to Foreclosure (doorfly.com)

Dawn’s tale

Dawn is happy for me to give her name. She wants the world to know about her lender.

Dawn is a single woman, doing fine until she gets made redundant. Arrears grow to £6,000+ and being only eligible for Job Seekers Allowance at £65 a week she cant cope. She keeps going for interviews though while matters go forward. The bank get possession of her home because she has nothing she can offer them.

They go back to court and get a warrant of evcition, which means lock change time folks.

One week before the lock change she gets a job, full time and permanent. Her income will rocket to £1,500 so she can afford to pay the mortgage again plus a decent sum off of the arrears. The usual procedure is to make an offer to the bank to call off all action.

I make the call and the solicitor for the bank refuses, saying they are going to change the locks anyway. He says they have apolicy whereby they can only back off if she clears the arrears.

I tell him that this is a ridiculous stance and that we will take the case back into court and he knows, under the court rules that the judge will overturn the bank’s decision.

He again says they cannot agree to halt proceedings but adds, “If she were to make an offer”………I said “Just now you said you have a policy which says you wont back off without the arrears being cleared”. He says this is true, they do have a strict policy but again says “But if she were to make an offer”.

I said “What is the point of making an offer if they have a policy that they wont back down from?”

He sighs as if he is talking to an child and says with a heavily laden tone of sarcasm “No. You’re not listening to me are you?”. I cut across him and said “No I’m listening to you very closely but there is one thing I dont understand”, He asks me what it is and I reply “Have you got mental health problems or are you just taking the piss?”

Absolute silence on the other end of the phone. I tell him we will see him in court and ask for his name. “Jeremy” he replies like a hurt toddler.

Dawn and I launch a claim in court to suspend the warrant and astonishingly they still send a solicitor to defend their claim and ensure that they get Dawn’s home off of her.

The judge accepts the offer without a second thought and refuses the bank’s claim.

Dawn keeps her home.

Moral of the tale for all those in mortgage arrears? Never ever give in and never ever presume that your lender is on your side.

Related articles

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

Another case won from repossession

Home saved from repossession

I had a case in court yesterday of a woman with a severely autistic son whose hubby had left them in the shit with mortgage arrears. We maximised her income so she could afford to pay the mortgage plus the necessary figure off her arrears.

The lenders barrister thought it was fine and phoned the bank while we were in court. the bank said they wanted total Possession unless she could clear the arrears within 6 months. Even before 1996 you only had to show you could clear the arrears in 2 years.

He looked really embarrassed telling me this nonsense.

We went before the judge who accepted the offer and he wasn’t best pleased with the bank’s stance.

Why do banks take these positions when it is against the MCOB rules?

Related articles

• UK Data: Mortgage Repossessions Rise In Q1 – CML (forexlive.com)
• Number of repossessions rise amid cutbacks (telegraph.co.uk)

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

Image via Wikipedia

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.