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Mortgage lump sum reduction chicken egg situation.

Last post Thu, Nov 08 2012, 11:44 PM by potatoefeet66. 4 replies.
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  •  Thu, Nov 08 2012, 11:44 PM

    Re: Mortgage lump sum reduction chicken egg situation.

    Please understand I did not come on this forum just for a moan over my existing lender refusing to allow me to reduce my mortgage.
    I fully understand and appreciate the pro advice and comments made, this is a very complex genuine problem. I was instructed by the independent assessor to raise issues back to the ombudsman and they have told me they will reply by next friday, however this is level one of a three stage process. Fos have already offered me compensation for its failure to deal with complaint and understand issue and poor service. The CAB looked at my case with FOS and acknowledged and advised I pursue FOS for damages.

    To clarify a couple of points, I've never had any thing fast tracked, the 80K you refer to was the 80k left after I had the deposit 92k on new property total of 172k deposit on a purchase of between 210 and 230K. My offer on this property of 203k was accepted which was on the market for 300K. thats the first loss, further loss has been incurred by lender breaching terms on lump sum reduction which would have reduced mortgage term by about 10 years, second loss. once the property had been referb'd the market post code average detached property value is 575K third loss, plus now over three years of almost daily writing and both to lender and FOS.

    As lender no longer wanted my business even for a substantially lower debt than currently existing,after the application was conducted credit search carried out, underwriters assessment on the 5th Feb 2009 when all card would have been on the table what ever criteria they were going to or could have used to decline application to port, why then offer any appeal to me. another breach of FSA rules.

    whether or not any one wants to believe me or not that their prerogative. this is my problem and I doubt anyone on this site / forum has the ability or authority to help other than if they choose read and reply to my posts.

    Im not ungrateful just as a professional photographer not mortgage expert trying to get as much feed back as possible. Until you see and read the documented evidence I don't think i'd believe it was true and that not all was above board.

    thank you for listening.
    • Post Points: 5
  •  Thu, Nov 08 2012, 9:22 PM

    Re: Mortgage lump sum reduction chicken egg situation.

    You did not meet their criteria for lending so they declined you. Exactly how has this caused you financial loss? I could look to place a £100 bet on a horse tomorrow at 10,000/1 but if something stopped me from placing that bet would that make the something be responsible for financial loss.....of course not.

    I would assume that you told the lenders what value you wished to drop the mortgage down to and if they still declined you then they obviously still felt that this was below your potential affordability. While i will never say that a lender is totally blameless your own information has been scant and only offered when needed. Your original post said you had been fast tracked for £80k more than you needed but you did not mention that your income was now less than the lender was aware of so of course they would not offer this figure. I can only assume that if you were offered £80k above what you needed then your income has not dropped slightly but very significantly. I would hazard a guess that you are a sole trader or director of a company that has shown either declining profits for the last few years or even zero profit or loss and that is why the lender has reduced your potential borrowing so much. You are claiming fraud from the lender but purposefully declaring a certain income to obtaina loan of a certain value when you know that your income is lower than this declared figure is also fraud.

    If certain application processes and protocols have not been followed then yes this is a matter for complaint but it will be most likely dealt with through an inhouse enquiry. It will not give you a mortgage that you still cannot afford to take on. You did not lose any money through this process, you did not stand to make any money in this process for you to lose. I still can't ubnderstand why you would be at financial loss?

    So far as complaints process. A lender has has 5 days to respond and acknowledge a complaint. They then have a further 7 weeks to send back a final response or proposed resolution to this complaint. If this final response or resolution is not forthcoming or if it is not a satisfactory resolution then you are well within your rights to then approach the ombudsman...obviously setting out and evidencing that you have followed the correct complaints procedure. From this point the ombudsman can then act in its own accord to get to the bottom of the matter. If you cannot evidence that you have followed the correct procedure for complaints then the ombudsman will submit the complaint on your behalf again and then the lender will have a further 8 weeks for resolution or final response.

    I am still not fully aware of what has happened and in what order but I do agree that the lender should be able to provide a signed disclosure for the date that you sat with the adviser and certain processes and orders need to be followed. if they were not then this is a matter for the ombudsman to follow and if neccessary then breaches reported first to the bank itself to rectify operating procedures and then onto the FSA if this is proven to be a network wide problem.....which i very much doubt it would be.

    As I said before, i doubt very much if your threats of the ICO will go any further as there has been no breach or mis-use of data. I doubt very much if the FSA will have any interest as this is an individual case and unless there are numberous other cases against the same branch then it will just be filed away until such a time as numerous cases can be complied. I think your only option is to speak to the ombudsman about this but if you have not managed to do this despite your frustrations for 3 years then i think that you must have your own concerns of how it may play out....but if you have genuinely been waiting nearly 3 years for am final response then stop waiting and contact the FOS snd get them to look at the case.

    This is not a forum for sour grapes, just for genuine problems and yours will most likely now be resolved by comtactiong the Financial Ombudsmans Service

    • Post Points: 20
  •  Thu, Nov 08 2012, 6:53 PM

    Re: Mortgage lump sum reduction chicken egg situation.

    Sour grapes yes of course, they imprisoned me and not allowed me to realise capital. I do have a mortgage with same lender, Ive had it since 1999.

    Affordability, income criteria not met for figure that they assessed not figure i was prepared to reduce lending to there is a difference.

    Failing criteria in not a green light for lender to alter regulated processes with the intent to cause financial loss, that is fraud, and that is what my lender has committed here.

    I did not intend to be embroiled in this for over three years and its still going on I'm still waiting for answers from the ombudsman and the lender is yet after three and half years still to issue its final response on the evidence of fraud to me or the Financial Ombudsman Service.
    • Post Points: 20
  •  Thu, Nov 08 2012, 6:30 PM

    Re: Mortgage lump sum reduction chicken egg situation.

    If the lenders have declined the risk based on the income that you cabn provide towards the application then this is a conformed calculation than many other lenders will use to assess an applicants affordability. it is not a method to get you to transfer onto a higher mortgagr rate because that will give you less proven affordability as the same mortgage will cost more on a higher interest rate.

    I do honestly think you are having a touch of sour grapes because a mortgage lender has declined you on the basis of the mortgage you want and you want to hit back at them.

    Moprtgage affordability is not what it was a few years ago when you could earn a tuppence and buy a country mansion. Nowadays you have to have guaranteed basic income and and proven overtime and bonuses and even then the addtional income you may earn may only count at 60% of full value. lkenders rarely use income multiples nowadays but will use an affordability ratio, income levels, debt levels and credit history to judge the affordability for each applicant. if your income has dropped since the last application the lender will see this the same as a self employed businessman who has a company showing a declining profit....not a good risk and as such your affordability may be even lower than someone with the same income level but has an increasing profit.

    The fact that you are looking to drop the loan to a lower level should be good enough to let uyou take the loan but if you are not dropping it to a level that meets theuir affordability scales then they will keep this in decline until you do reach their level. if this is below the maximum amount of equity that you can repay then the loan will remain in decline.

    I am bnot a fan of high street banks or their processes but from the scant and incomplete information you have given.....as well as the fact that the application you are describing is 3 years past I have to side with the lenders....if your affordability is below the loan that you want....the lender will decline it on the basis of risk

    • Post Points: 20
  •  Thu, Nov 08 2012, 4:54 PM

    Mortgage lump sum reduction chicken egg situation.

    A customer has an existing mortgage a life time tracker with no erc or associated tie ins. He/she has ±70pc equity in the mortgaged home.no ccj no credit issues and has perfectly run mortgage for the past 9 year or more.

    The lender confirms,...."we can confirm that your current Mortgage product may be ported to a new property up to the balance outstanding of each account and the new mortgage must be completed simultaneously or with in six months following the redemption of the existing Mortgage."

    The terms are set out that " you can keep all parts of this mortgage if you move to another property provided that you still meet our lending criteria at that time".

    However the customer does not want to keep all parts in as much he no longer wishes to have any where near as much borrowing, and want to use equity of between 60-80K to reduce the existing balance upon porting. original advance 3years earlier 150K outanding balance 138K lump sum repayment upon simultaneous porting 60-80K. product rate to port 0.84pc.

    Even though he/she is putting down min 40pc deposit of 92K but has at disposal a further 60-80K to use making up a deposit of over 80pc.

    The lender declines application as income of customer is not the same as when the original advance of 150k was made.

    They then also refuse to allow customer to even offer use of all equity reducing balance. options given by lender stay put or go elsewhere for mortgage.

    who is at fault the customer for not foreseeing ten years later his income temporarily would not be same for that year as it was three years earlier, customer fault for not forecasting a recession, or the lender for having ambiguous terms about lump sum payments and not explained clearly enough that simultaneous lump sum repayments while porting a reducing balance are actually not allowed.
    which is irresponsibly enforced as product held by customer is clearly no longer financially viable to lender. Is lender in breach of contract by blocking the realisation of capital preventing a contractually agreed process due to income no longer supporting outstanding balance and refusing to consider any use of capital equity.

    Has the customers current security all of a sudden become valueless and is property to which balance would be ported also not good enough as security for a ltv less than 15pc.
    • Post Points: 20