Mortgage arrears charges unfair?

[Legal Beagles]

Debt advisers have criticised administration charges made when home owners fall behind with their mortgage payments.

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[Amethyst]

Re: Mortgage arrears charges unfair?

Page last updated at 12:28 GMT, Saturday, 21 February 2009
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Mortgage arrears charges unfair?


By Bob Howard
BBC Radio 4's Money Box



Maxy Mahar incurred charges when she fell behind with her payments

Debt advisers have criticised the administration charges lenders make when home owners fall behind with their mortgage payments.
Many customers are charged between £20 and £50 per month if they fall into arrears.
Lenders say charges reflect extra costs they incur and are stopped when customers agree a repayment strategy.
But critics say the charges are inflated and are pushing people closer to repossession.
Pushing towards repossession
Maxy Mahar from Sussex told BBC Radio 4's Money Box programme she was charged £30 a month in administration fees when she fell behind with her payments.
"With every £30 which gets added on, the cost becomes greater and it becomes more difficult to catch up."

The charges should be waived in the current crisis


Nick Pearson, Paymex

Most lenders include a right to levy administration charges in their terms and conditions. Nationwide charges £20 a month, Halifax and Abbey charge £35 and GMAC charges £50 a month.
Waived charges
Nick Pearson works for the debt advice firm Paymex which has been advising Maxy.
It has been able to negotiate a repayment deal which means the charges are no longer being incurred.

It's particularly unfair when people have reached an agreement with their lender


Peter Tutton, Citizens Advice

He believes some charges are unreasonable and by levying them, lenders are simply pushing more homeowners towards repossession: "We think the charges should be waived in the current crisis because they will undermine efforts to keep as many people in their homes as possible."
Most lenders say if customers contact them, a repayment schedule can be arranged and the charges are stopped.
Nevertheless Peter Tutton, a policy adviser at Citizens Advice, says he has heard of cases where the charges continue, whether agreement has been reached or not.
"We think it's very unfair that people in financial difficulty are being charged just for being in arrears.
"It's particularly unfair when people have reached an agreement with their lender."
FSA review
It is not just debt advisers who are concerned.
A senior county court judge who regularly hears repossession cases says his colleagues are aware of this issue and he has raised it with lenders' representatives.
The lenders insist they are trying to help people who are struggling to pay.
Halifax - the UK's biggest mortgage lender - says if people are in arrears it can offer a temporary suspension of mortgage payments, or a transfer over to interest only.
Halifax says it is about to change its arrears charges and Bradford and Bingley is also considering its policy.
The Financial Services Authority is reviewing all lenders arrears charges and expects to publish its findings in May.

[Amethyst]

Re: Mortgage arrears charges unfair?

The Financial Services Authority is reviewing all lenders arrears charges and expects to publish its findings in May.







Good news :~)

Fees and charges

[borgbaiter]

Re: Mortgage arrears charges unfair?

hi

following this ive been yahooing it. came up with this from the FSA

http://www.fsa.gov.uk/pubs/other/con...cts_report.pdf

its long and boring as usual. the thing they seem to keep going on about is changes to contract terms. this made me think about arrears charges as these change every year or so. such a change in itself may result in it being an unfair contract term? if so it would become unenforcable?

am i clutching at new straws or does anyone else read it that way?


Borgbaiter

[LuggerBugs]

Re: Mortgage arrears charges unfair?

Seems to me that if you are effectively tied into a contract for 25 years, then to materially change the conditions on an annual basis would seem to me to be unfair, yes.

It's not as if you can just pay a mortgage off if you don't like what's happening. Sure, you can remortgage, but it's hardly a practical proposition to do that on an annual basis likewise.

[TUTTSI]

Re: Mortgage arrears charges unfair?

We are just in the process of reclaiming mortgage charges from 4 different lenders and the first one that has responded, firstly, reduced them by half and after a our letter before action they reduced them again. Now we are thinking why are they caving in so easily - not a full refund but 75% less which is much reduced to what we had originally been charged. Had we not of complained we would still have been responsible for these humongous charges. T

his one was Melbourne Mortgages - it is a current second mortgage. Aparently these charges are non interest bearing and these charges would not be added until we redeem the mortgage.

[scoobydoo]

Re: Mortgage arrears charges unfair?

Thank goodness I now feel justified for feeling enraged about this. Especially with SP lenders who do charge whether an arrangement has been made or not. This is kicking people when they are down and the administration in the early stages does not jusify the level of charges and fact the the charges are added every month the account is in arrears.

To me the extra admin involved is part of the total business over head of running a mortgage company and untill the situation gets to the possession stage there should not be AUTOMATIC monthly arrears charges at this level and DEFINITELY not included in the arrears figures and used for court hearing purposes which is what is happening at the moment.