Mortgage Shortfall Dispute

[scotty2021]

Hi

In 2008 my property I owed with an ex partner was repossessed, it was sold by the bank and the funds didn't fully clear the mortgage and arrears that had built up at that point. I wasn't aware of it at the time. Back then I pretty much suffered a break down and basically buried my head in the sand over a number of things.

In 2017 I received a letter (via my parents address) from a firm of solicitors acting on behalf of the bank claiming a £16k shortfall. I contacted National Debt Helpline who advised I should send a letter to the solicitors requesting some information regarding how the shortfall was made up, copy of the mortgage agreement and statements of account as I could see by my credit file the balance was reducing each month and was about £10k less than what the solicitors were claiming.

I received a partial reply with some bare minimum information which led to further questions. As not all the information was received and despite me complaining to the solicitors and the bank, I ended up taking a complaint to the ombudsman in 2020. The complaint was upheld and finally I got the statements of account from the bank. I could see from there that the account balance was in fact £7k. I could also see that from the proceeds of sales several deductions had made one for around £2.5k for service charges (leasehold property) being that the service charges at the time were around £600 per year to have amassed that amount in arrears I would have not paid anything for 4 and half years (this would not have happened as the management company was run by the owners).
On the 19 May this year I disputed the full amount the solicitors were claiming since then I have heard nothing back from them except an acknowledgement.

I had a phone call from the bank in July this year to say they were looking into this but they couldn't find the original mortgage agreement nor any record of service charges being deducted from the proceeds of sales even though it was clear on their completion statement the solicitors had sent. Since that phone call I have heard nothing.

I made a full and final settlement offer to the solicitors which was the current balance per the statements less the service charges less the interest the bank had charged (which they claim they haven't) they asked me to complete an income and expenses form which I have refused to do, reason being I want to pay it off in full but I don't want to pay for thing I don't believe I owe.

Is anyone able to advise what I should do next please? I am getting to my wits end with this. It’s been going back and forth for 4 years now.

[scotty2021]

Hi all

Is anyone able to point me in the right direction on this, even if its I need to seek professional legal help?

The solicitors dealing with this have sent another letter chasing the debt but have not resolved my dispute, I believe this goes against the FCA's handbook on dealing with disputed debts?

Any help or advice would be greatly appreciated.
Thanks

[echat11]

Hi SCOTTY2021

If the debt was from 2008, contact wasn't made until 2017, wouldn't the debt have been Statue barred?
Had National Debt advised / considered that. You could consider lodging a complaint with the FOS after following the creditor's complaint procedure, if it's been over 8 weeks, you can lodge a claim straight away. I think you've got bogged down with their solicitors, there is no traction. the longer it goes on, the more fees they can command.

Wait for more members to advise.

[des8]

If the mortgage shortfall is on capital the limitation period is 12 years, if on interest the period is 6 years.

[scotty2021]

Hi both

Thanks for the advice, the debt was being paid by my ex partner so would not be statute barred, sorry should have made this clear.

The original lender has admitted to the ombudsman that they don't have the original mortgage agreement and cannot supply a copy and they don't have any paperwork relating to the payment of the service charges they are claiming for. So should I now go back to the ombudsman and complain that the lender has not replied to my letter disputing the amount owed?

Thanks again

[echat11]

Hi both

Thanks for the advice, the debt was being paid by my ex partner so would not be statute barred, sorry should have made this clear.

The original lender has admitted to the ombudsman that they don't have the original mortgage agreement and cannot supply a copy and they don't have any paperwork relating to the payment of the service charges they are claiming for. So should I now go back to the ombudsman and complain that the lender has not replied to my letter disputing the amount owed?

Thanks again

I would, providing 8 weeks has elapsed since your complaint and there has been no response to your complaint, the FOS should look into the matter straight away. No doubt they will give the creditor an opportunity to respond. But this is the best cause of action.

[scotty2021]

Hi

Thanks for your advice so far.

Shortly after my post I was contacted by the bank to say they were looking into my complaint, so I left them to it and didn't take my complaint to the Ombudsman. Today I have had final reply from them and its states they will not look into the matter because the service charges where deducted from the proceeds of sale more than 6 years ago and "you're complaining more than three years after you realised". The second part is plainly not true, I have been disputing the debt since 2017 which is when I first found out about it.

Is it correct that I now cannot dispute the amount amount they paid to the management company in service charges and thus deducted from the proceeds of sale?

Is it worth now complaining to the ombudsman? Their website does suggest that the banks opinion is correct.

Also they haven't addressed the other elements of why I disputed the amount those being:

The amount their solicitors are claiming is owed is £10k different to that on the statements they have provided.
They have failed to produce a mortgage agreement.
Interest has been applied to the account since the repossession.

Any help would be appreciated.
Thanks

[scotty2021]

Anyone able to provide any further advice?

[echat11]

Gather all your evidence, as long as they have had the opportunity to look at all the elements of your complaint, then lodge a complaint with the FOS. On the FOS's website, they will have decided cases similar to yours, look at the reasoning behind the FOS's decision.

https://www.financial-ombudsman.org....s/case-studies

[scotty2021]

Hi all

The ombudsman has finally started looking into my complaint. They are so far saying they cannot investigate part of my complaint as its 3 years since I would have reasonably known and my complaint is outside this. They are saying that "You wouldn't have had to know all of the specific points regarding why you were unhappy but simply that something appeared to have been wrong with what you were being asked to pay a high balance - so the complaint needed at the latest to be raised by 2020." When I received the letter I asked for a breakdown of the account as I wasn't sure if what they were asking for was correct or not. How can I know if something is wrong without knowing how a balance is made up? I only found out in 2018 that service charges had been deducted from the proceeds of sale, I asked for proof of these charges and the bank was not able to provide any, even telling the ombudsman in 2020 they were not able to. I then disputed this element of the shortfall in 2021. So is the ombudsman right I have no recourse against these fees?

Any help would be much appreciated.

Thanks

[echat11]

Hi all

The ombudsman has finally started looking into my complaint. They are so far saying they cannot investigate part of my complaint as its 3 years since I would have reasonably known and my complaint is outside this. They are saying that "You wouldn't have had to know all of the specific points regarding why you were unhappy but simply that something appeared to have been wrong with what you were being asked to pay a high balance - so the complaint needed at the latest to be raised by 2020." When I received the letter I asked for a breakdown of the account as I wasn't sure if what they were asking for was correct or not. How can I know if something is wrong without knowing how a balance is made up? I only found out in 2018 that service charges had been deducted from the proceeds of sale, I asked for proof of these charges and the bank was not able to provide any, even telling the ombudsman in 2020 they were not able to. I then disputed this element of the shortfall in 2021. So is the ombudsman right I have no recourse against these fees?

Any help would be much appreciated.

Thanks

If you Google your case i.e. Mortgage Shortfall Dispute, see if there are similar decided cases by the FOS, see what periods they looked at.

EXC Can you please take a look at what the FOS are saying, does your knowledge / experience back up what they are saying.

[scotty2021]

Thanks Echat11, I'll take another look I did have a look through the ombudsman's cases before submitting mine back in early Feb but so much time has passed I can't remember what I found.

Also maybe not relevant for this but I have found out that all mortgage statements since 2008 have been sent to an address at bank.

[scotty2021]

Hi

Would anyone be able to comment on the FOS investigators response that my complaint is outside the time limit please? I will need to make a decision this week on whether I ask for the complaint to be referred to an ombudsman to look at.

Thanks

[des8]

You have nothing to lose by requesting referral to an ombudsman, so I would go ahead anyway

[echat11]

Hi

Would anyone be able to comment on the FOS investigators response that my complaint is outside the time limit please? I will need to make a decision this week on whether I ask for the complaint to be referred to an ombudsman to look at.

Thanks

You need to make clear this argument (below) to support your case, do it in writing for the attention of the Ombudsman who will be looking at your case. You can do this.

'When I received the letter I asked for a breakdown of the account as I wasn't sure if what they were asking for was correct or not. How can I know if something is wrong without knowing how a balance is made up? I only found out in 2018 that service charges had been deducted from the proceeds of sale, I asked for proof of these charges and the bank was not able to provide any, even telling the ombudsman in 2020 they were not able to. I then disputed this element of the shortfall in 2021. So is the ombudsman right I have no recourse against these fees?'

In essence the FOS Investigator is saying, that they can't investigate, because you should have lodged a complaint with them (FOS), regardless of not knowing whether you had a case or not regarding the added fees, so without facts. The FOS are saying 'Put the cart before the horse', when they should be saying 'Don't put the cart before the horse'.