Mortgage Company on interest only mortgage have allowed high arrears to accumulate

[redrose281]

Hi, I am posting on behalf of a dear friend of mine who recently confided in me about her mortgage. Basically, she bought her property with her Partner, with him being the main wage earner. He left her some years ago, since then my friend struggled to make mortgage payments and then became seriously ill. Since then she has been unable to make mortgage payments and the interest has gone up and up til her mortgage which was originally £295,000, is now £476,000! Her Ex hasn't paid a penny towards the property since he left her, and the Mortgage Company have done nothing to try and find him . The Mortgage Company have offered her no help or advice. Surely it cannot be right that the mortgage Company have allowed the arrears to rise to such an extortionate amount? I have said I will try and sort out this matter as she just isn't well enough either mentally or physically, but am not sure where to start at the moment. Any help or advice would be very welcome.

[atticus]

Is there any equity in this property?

[redrose281]

Hi atticus
No, there isn't any equity in the property.

[atticus]

In which case selling will not yield any money for your friend. It is tempting to suggest that she stays put until the lender takes action to obtain possession of the property. But my firm advice is to consult a specialist debt advice charity such as StepChange.

[Frank1]

Financial companies such as registered lenders must follow general rules known as "Consumer Duty" laid down by the FCA.
Two of these rules are that the company should contact the customer in a way that is acceptable to the customer (phone, email, letter for example) and ensure the customer can afford to make the repayments.
When your friend failed to make a monthly repayment the lender should have contacted her to discover why a payment had been missed. If the company didn't do this she has a right to make an official complaint.
It seems difficult to believe that the lender has let monthly repayments to be missed for years allowing the amount outstanding to increase by £180k

[redrose281]

In which case selling will not yield any money for your friend. It is tempting to suggest that she stays put until the lender takes action to obtain possession of the property. But my firm advice is to consult a specialist debt advice charity such as StepChange.

Hi atticus

Thank you for your reply.

My thoughts were to tell my friend to wait until the Mortgage Company takes action to obtain possession too, but I am also contacting STEPS for their advice.

[redrose281]

Financial companies such as registered lenders must follow general rules known as "Consumer Duty" laid down by the FCA.
Two of these rules are that the company should contact the customer in a way that is acceptable to the customer (phone, email, letter for example) and ensure the customer can afford to make the repayments.
When your friend failed to make a monthly repayment the lender should have contacted her to discover why a payment had been missed. If the company didn't do this she has a right to make an official complaint.
It seems difficult to believe that the lender has let monthly repayments to be missed for years allowing the amount outstanding to increase by £180k

Hi Frank1

Thank you for your reply.

The Lender has been aware for some time that my friend is unable to afford the repayments, she informed them as soon as her Partner left her, both verbally on the phone, and also in writing. It is my belief that the Mortgage was mis-sold to my friend and her Partner in the first place, but when she complained to the FOS, they refused to look at her complaint as it was out of the allowed time limit. She had received a letter from the Lender which she hadn't realised was their final response and she replied to it and was waiting for their reply , in the event, the Lender denied having received my friends letter, and despite the fact that my friend could prove the letter had been sent to the Lender and was received by them, (she'd sent it first class Signed For and had a copy of the signature to prove receipt), the FOS refused to consider her complaint of mis-selling of the Mortgage. My friend has been struggling with her health for years, as she has cancer, the Lender is aware of this and I think that may be why they haven't taken it any further re her huge arrears. I understand what you are saying in that it seems difficult to believe the lender has let monthly payments be missed for years allowing the amount outstanding to increase by £180k, but that is exactly what has happened, I know this as I have seen all of the paperwork and she hasn't actually made a payment since 2020! Although my friend is responsible for the payments not having been made, I also feel the Mortgage Company have let her down massively to allow the arrears to build to such a high amount without taking action of some sort, either to help her, or to do whatever they needed to do to keep the arrears down.

[Frank1]

Did the lender's final response threaten eviction and how long ago did your friend receive it?

You stated that your friend's partner was the main contributor to the mortgage payments until he left I'm not convinced a defence that the mortgage was mis-sold would stand up in court. Mortgages should consider life insurance, ill health insurance in addition to buildings insurance.