Adding Arrears Fees to Arrears Balance

[ieg4]

Hi,
Does anyone know of any legislation or guidelines regarding adding arrears charges onto the arrears balance? We are struggling each month paying an arranged amount of our arrears but 3/4 of the arrears are from charges applied, so it feels like 1 step forward, 2 steps back all the time.
I have written to the mortgage company (SPML/Acenden) twice asking for an accurate arrears figure, based on the difference between payments due and payments made but they just keep sending me arrears statement (including charges) with no other communication.
Any help much appreciated

[labman]

Re: Adding Arrears Fees to Arrears Balance

Have you considered approaching a professional debt adviser to get a CFS or CASHflow statement completed. If you send one of these to your mortgage company they should stop charges being applied to your account and possibly suspend interest for a while.

Do you have other debts? If so, how many and how much? Are priority debts (mortgage excepted) up to date?

[ieg4]

Re: Adding Arrears Fees to Arrears Balance

Hi,
Thanks for responding.
We don't have any other debts.
SPML are extremely unreasonable so it is unlikely that a cash-flow statement would stop them imposing the charges, nothing else has!
While we argue it out with them over whether the charges are legitimate I just wanted some legal back-up for not adding the charges onto the arrears balance.

[labman]

Re: Adding Arrears Fees to Arrears Balance

If you are genuinely struggling each month to pay these charges, I stand by what I said that it would be worth your while getting a CFS done. This is a pretty powerful document and has a lot of legal backing. You might be surprised and it would cost you nothing.

[Gorang]

Re: Adding Arrears Fees to Arrears Balance

Labman, a quick question regarding doing this

If you are genuinely struggling each month to pay these charges, I stand by what I said that it would be worth your while getting a CFS done. This is a pretty powerful document and has a lot of legal backing. You might be surprised and it would cost you nothing.

if you get a CFS done, does it show on your CRA history at all that you are in a CFS?
If it does then what does it normally say on your history?

[labman]

Re: Adding Arrears Fees to Arrears Balance

No, a CFS is simply an Income, Expenditure and Assets from issued by the Money Advice Trust. People have to be trained and licensed to complete one on behalf of a debtor, the adviser will suggest options and the debtor chooses a route to take. Obviously if that route is a DMP then it would most likely show on the CRF, but any sensible debt adviser would ask for the account to be defaulted most of the time rather than an AP marker, the reason being the default falls off after 6 years, whereas the AP falls off 6 years after the final payment.

Often it is best to let the account be passed to a DCA first as it defaults, and DCA's are easier to negotiate F&F's with.

The CFS in itself carries a lot of punch though because -eg- the BBA and most other institutions have signed up to agree with it.

The 'new' CASHflow is designed for people who want a self managed DMP. They fill in a particular IE sheet and it is signed off by a licensed adviser. It should in theory then carry the same weight as a CFS. Neither in themselves are reported to anyone. Indeed IF they are used, only a summary goes to the creditor.

Incoming pm

[Judge mental]

Re: Adding Arrears Fees to Arrears Balance

Hi ieg4

They should not be adding arrears fees whilst an active repayment plan is in place.

Further, fees should reflect their additional administration costs incurred in dealing with the default.

Both these are within the Mortgage Code of Business, regulatory provisions issued by the FSA (MCOB 12.4.1 and 12.4.1A)

Your mortgage provider should have in place written proceedures for dealing with customers in arrears which has to be approved by the FSA to ensure compliance with their 'treating customers fairly' requirements. Whilst they are not obliged to provide a copy, there is nothing preventing them if requested.

It may be worth sending your lender a letter stating you are aware of the provisions MCOB 12.4.1 and request they provide you with a copy of their approved written policy for dealing with customers in arrears.

Also, adding arrears charges to the arrears balance is a big no-no as far as the FSA (mortgage market review), Ombudsman, and the CML is concerned, it is also probably a breech of contract as most mortgage contract state arrears fees will be added to the mortgage balance, it may be worth checking out the terms of your mortgage.

I believe lenders may prefer to add them to the arrears balance as it manipulates the figures they can show in a court, but also adding them to the mortgage balance is effectively capitalising the arrears, which is one of the options a lender has instead of possession proceedings as set in the Pre-Action Protocol, I suggest you point this out to them as well.

Regards

Stuart

[Gorang]

Re: Adding Arrears Fees to Arrears Balance

Thanks Labman

Much appreciated

[Sappho54]

Re: Adding Arrears Fees to Arrears Balance

Be prepared for a long drawn out war of attrition as this is Acenden you are dealing with, SPML is long gone, they sold your loan long ago. Talking about the Mortgage Code will cut little ice with these guys, and the Office of Fair Trading Guidelines on Unfair Practice will be similarly ignored. I am due in court tomorrow for repossession. I have missed no payments and the only arrears are their charges, most of which have been incurred during the 40 day period to consider a complaint that I made about their unfair charges and which include £1400 for taking me to court. Taking legal action for repossession whilst in the middle of a dispute about charges is contrary to OFT guidelines as I have told them on numerous occasions. All I can advise you is complain in writing, get the case off to the FSO as soon as the time period expires and keep up the pressure. Take your case to your MP. I sorry to seem so negative, but trust me, these guys are the absolute worst.

[amelia33]

Re: Adding Arrears Fees to Arrears Balance

Be prepared for a long drawn out war of attrition as this is Acenden you are dealing with, SPML is long gone, they sold your loan long ago. Talking about the Mortgage Code will cut little ice with these guys, and the Office of Fair Trading Guidelines on Unfair Practice will be similarly ignored. I am due in court tomorrow for repossession. I have missed no payments and the only arrears are their charges, most of which have been incurred during the 40 day period to consider a complaint that I made about their unfair charges and which include £1400 for taking me to court. Taking legal action for repossession whilst in the middle of a dispute about charges is contrary to OFT guidelines as I have told them on numerous occasions. All I can advise you is complain in writing, get the case off to the FSO as soon as the time period expires and keep up the pressure. Take your case to your MP. I sorry to seem so negative, but trust me, these guys are the absolute worst.

I am sorry to add to this but I agree, I Group also behave in this way, even having done ALL THE ABOVE. Additional Interest and the way funds are placed on the account are their way of making sure you will always be sunk by them They ignore MCOB beccause they can - simple as that and place their legal fees on the account so you get to pay interest on those too! as for MP - dont make me laugh, the reply mine got was the same as it was to me, you signed it and its in our t&c's so there! unfortunately misrepresentation, hardsell tactics, are basically laughed at by the lenders and the barristers they send to sink you. The financial institutions in the UK have had it their own way for a very long time now and I see nothing that has changed or is about to change.

However, that does not mean I wont fight if I can

good luck, if you get a good barrister who will give you an honest appraisal of the merits of your case that will help.