CCA 1974 Loan amount in excess of the £25k threshold

[theturningworm]

Hello gang, I hope you can help

I took out a mortgage in 2002. It was part standard residential mortgage for £95k (which does not concern me just yet) and part CCA 1974 regulated "flexible options" running account agreement for £35k

Two further advances were later made against the CCA agreement, one for £22k in 2003 and another for £18k in 2004. Both of these additional loans were described as an "increased Credit Limit on your flexible options agreement"

So, given that the threshold for CCA 1974 running account agreements at all relevant times was £25k, it seems to me that the the original loan is CCA non compliant as it breached the credit threshold. Things is, how does that affect the two later loans that were given on "existing terms and conditions"? I've also read elsewhere that Mort Cos can say that because of the amount, the agreement is simply not regulated . Can they say that? Is that not against the rules somewhere? So really my questions are;

1. Is the original loan CCA regulated and if so is it improperly executed?
2. Can the mort co just say now that it isn't (and never was) regulated because of the amount - so tough!
3. If they do say it isn't regulated, what recourse would I have for their possible misrepresentation of the agreement?
4. How does that affect the two later loans, both of which were under the threshold and were on "the same terms"? Are they regulated because of the amounts and if so, on what terms or could the mort co claim they were non regulated because they were an addition to the original loan?
5. In any event, should new agreements have been drawn up for each of the two further advances?

I'd appreciate any help with so I at least know where I stand when they come knocking

Thanks in advance

[ncf355]

Re: CCA 1974 Loan amount in excess of the £25k threshold

1. I'm of the impression that they cannot claim an agreement is CCA 74' regulated and then not - it is in their power to state that an agreement over 25k of this age is CCA regulated, but once they have taken this option, they cannot retract it (as I said, my belief - cant seem to find a quote to back that up - others may be able to)

2. See above

3. If it was regulated originally (e.g actually states this in the agreement) nmothing has changed

4. Do you have paperwork for the later loans? do they actually state "same terms" in this? if so, they would also be regulated and to my mind would actually be seperate agreements, though again happy to be proven wrong on this comment

5. See above - I would imagine you should have new agreements for each extra loan? - if not, how would they seek to enforce these at court?

[ncf355]

Re: CCA 1974 Loan amount in excess of the £25k threshold

Actually,

THIS may be of some interest

[Guest]

Re: CCA 1974 Loan amount in excess of the £25k threshold

If the agreement was executed before April 2008 and the total amount of credit was over £25k it will not be regulated under the CCA, this is irrespective of what the creditor has put on the agreement, the creditor has no control over the legislative requirements.

If at any time the exempt agreement was modified and the resultant agreement was under the threshold, the act says that the modified agreement should then be a regulated agreement.

This would mean that in each case a properly executed agreement would have to be made.

[ncf355]

Re: CCA 1974 Loan amount in excess of the £25k threshold

Hi,

was this a NRAM "Together" loan?

There seems to be an awful lot of grief going on around this kind of thing - "over the road" has a large thread on this

It appears NRAM are attempting to take court action via the CCA where they have created agreements over 25k that show "regulated by the CCA 74" but when the shoe is on the other foot and their customers claim the protection of the CCA 74' they state it's a mistake and the agreement isnt regulated

Quite a mess

[Guest]

Re: CCA 1974 Loan amount in excess of the £25k threshold

It depends on what the OP's compliant is, even if it is not regulated there is still a contractual relationship, the creditor can still enforce the contract of course.

It is possible to say that some or all of the protection available under the act were implied in the contract, even though it is not regulated. I believe that some are taking action for breach of the 2006 regulations on statements for instance, and seeking refunds of interest charged.

[Angry Cat]

Re: CCA 1974 Loan amount in excess of the £25k threshold

subbing...!

[theturningworm]

Re: CCA 1974 Loan amount in excess of the £25k threshold

Thanks for the quick replies, especially the NRAM story. Mine isn't actually with NRAM, but it's still very messy and uncertain

I reckon that if they can simply say its not regulated then they will, that looks the easiest option for them (if it is an option and not a requirement?) Either way, I agree that any loan after the first, whether they say regulated or not, MUST be regulated as its under the threshold. My understanding is that ANY loan under the threshold (not for land) is (should be) regulated.

It would be nice to find a precedent or something more definite to rely on. As we can see in the story above , the lenders will argue black is white that they've done nothing wrong

[theturningworm]

Re: CCA 1974 Loan amount in excess of the £25k threshold

Andy58,

You said "If at any time the exempt agreement was modified and the resultant agreement was under the threshold, the act says that the modified agreement should then be a regulated agreement."

Do you think a further advance where they state "we have increased the credit limit on your agreement..." constitutes a modification and so requires new paperwork? Not forgetting as well that the further advance takes the amount of the loan even further over the threshold?

I'd like to believe that as the original loan exceeded £25k, then that particular agreement was incapable of being increased further under CCA and so a new agreement must've been be necessary..?

[Angry Cat]

Re: CCA 1974 Loan amount in excess of the £25k threshold

Irresponsible Lending comes to mind...
Lloyds, RBS and NR etc, they thought the streets of London were paved with Gold; over the pond, also!

http://www.telegraph.co.uk/finance/p...e-lending.html

Interesting article, one of many

[Guest]

Re: CCA 1974 Loan amount in excess of the £25k threshold

HI
This is not an arrangement I am familiar with, when you say that the associated agreement was running credit, do you mean that there was £35k unrestricted use cash available after the main sum was paid for the property, or do you mean that a running credit account was set up with a limit of £35K. ?

[theturningworm]

Re: CCA 1974 Loan amount in excess of the £25k threshold

It was an unrestricted use, drawdown facility (by way of a chq book) with a credit limit of £35k taken out the same time I took out a regular mortgage.
The original running account agreement stated that the credit limit was £35k and would be increased by 5% of the property valuation after 3 months. So the credit limit increased to £42k after 3 months.
About 12 months later, I applied for a further advance and the credit limit was increased by £22k "...on the existing terms and conditions related to your mortgage..."
Same thing happened 12 months later and the credit limit was increased by another £18k "...on the existing terms and conditions related to your mortgage..."

It simply meant that instead of using a credit card, I wrote cheques instead

Does this make sense?

[Guest]

Re: CCA 1974 Loan amount in excess of the £25k threshold

It was an unrestricted use, drawdown facility (by way of a chq book) with a credit limit of £35k taken out the same time I took out a regular mortgage.
The original running account agreement stated that the credit limit was £35k and would be increased by 5% of the property valuation after 3 months. So the credit limit increased to £42k after 3 months.
About 12 months later, I applied for a further advance and the credit limit was increased by £22k "...on the existing terms and conditions related to your mortgage..."
Same thing happened 12 months later and the credit limit was increased by another £18k "...on the existing terms and conditions related to your mortgage..."

It simply meant that instead of using a credit card, I wrote cheques instead

Does this make sense?

Not something I have come across, certainly a multiple agreement, whether parts of it should be regulated under the act I am not really sure.
If there was a draw down facility of £35k and only £25k was used, would this then be regulated ? Or was the extra £35 just sat in a separate loan account waiting to be drawn, in other words where you paying interest on it even though you wasn't using it, in which case it would certainly be unregulated, is it possible to see the agreement >

[theturningworm]

Re: CCA 1974 Loan amount in excess of the £25k threshold

andy, I don't want to seem rude, I really appreciate your input, but I hope you can understand why I would rather not post up the agreement at the moment. I'll see if I can butcher it a bit and make it look Greek or something

The simple answer to your question though is that the £35k facility was there from day one, but I only paid interest on the amount(s) I actually drew down with the cheque book.

I only made out cheques as and when I needed the funds but I could have written a cheque for £35k on day one if I wanted to. Its like having a credit card which, I eventually maxed out, at which point I asked for a higher limit and they were happy to oblige but there was nothing to stop me using it to buy a £35k toy in one hit

[Guest]

Re: CCA 1974 Loan amount in excess of the £25k threshold

No I quite understand, it is just that I am not familiar with this kind of arrangement. I take it the total sum was a fixed term and secured on the house, so the payments would alter as you drew down more of the unrestricted borrowing ?