Missold Life Insurance UCB / Standard Life / IFA

[Amethyst]

Posted on behalf of new user



My problem concerns life insurance that I believe was mis sold to me when taking out a mortgage with a UCB Home Loans. I was contacted by an independent financial adviser [now struck off and owing money to the FSA] and told that if I didn't take life insurance out with the mortgage then I had no chance whatsoever of getting any mortgage at all.

I took this up with the Financial Ombudsman, who referred me to the FSA. They advised me to write to my mortgagors, UCB who in turn told me that my gripe was with Standard Life. Standard Life denied cullpability blaming it on the independant financial consultant. The FSA is supposed to help people who have been wrongly advised and in fact misled by independant financial consultants, especially one who had been found by their own organisation to be fraudulent and was stuck off by them.

So I've gone round in circles, and Standard Life owe me over £8,000 in unnecessarily paid Life Insurance which nobody wants to admit liability for. On their own mortgage application, UCB does not state that it is intrinsic to getting the mortgage that I take out life insurance. In fact, the relevant page says "life insurance details [if applicable]."

Please can you help me in this? It makes me so angry that my hard-earned money went out each money for no good reason. It was an interest-only policy, and the property that was mortgaged was always worth far more than the amount borrowed from UCB.

[des8]

Re: Missold Life Insurance UCB / Standard Life / IFA

I think you will have difficulty proving mis selling of a life policy, which I am assuming was an endowment policy designed to produce a lump sum at the end of the mortgage term. Presumably the mortgage was to purchase your own home and not a business venture.

When taking out an interest only mortgage the lenders will almost always want to know how you intend repaying the capital sum at the end of the mortgage term.
This can be done in a variety of ways,stocks and shares, ISA,investment bonds, unit trusts etc but the most common is by means of an endowment assurance.
The endowment assurance will contain an element of life assurance, so in the event of your early untimely demise the mortgage will be paid off (good for your heirs!)

The broker was probably correct in saying (in the absence of any other plans for repaying the mortgage at term) that you would need an endowment policy.
UCB aren't liable for his advice, and the insurance company will argue that you have had the advantage of life cover. If necessary they would have paid out if you had popped your (Clever) clogs, and your savings are building up to pay off the mortgage at term.

If it wasn't an endowment policy, how did you propose paying of the mortgage?
If you had a different scheme to repay the mortgage (other than selling the property which would probably not be a plan acceptable to UCB) the purchase of a life policy could well be viewed as a prudent course of action.

[di30]

Re: Missold Life Insurance UCB / Standard Life / IFA

Not sure if this will be of any help, but been checking out roles of underwriters/via mortgage etc......
http://homeguides.sfgate.com/role-un...gage-2051.html

What Is the Role of an Underwriter in a Mortgage?
Without an underwriter's approval, loans do not get funded and closed.
The most important person in the mortgage approval process is the person you will never see or meet. That person is the underwriter. No lender funds or closes on a loan without the approval of an underwriter. Sometimes her job is to simply check over the figures, make sure all paperwork is in order and give her approval. Other times, she must look over all of the paperwork and make a sound decision based on her experience and good judgment.






Loan Approval Requirements

Mortgage loan approval rests on several things: income, credit history, debt ratios and savings. A buyer must be able to prove the income needed to afford the payments within a verifiable and stable job history. He must have a credit history that shows a record of repaying obligations and fiscal responsibility. His additional monthly debt must fall within acceptable limits as determined by the loan program guidelines. Lastly, he must be able to show that the money used for his downpayment is his and not borrowed, as well as the fact that he has a few months of mortgage payments stashed away in case of emergency.

Underwriter's Function

It is the job of underwriters to make sure all of these factors meet particular loan guidelines. They make sure that all of the tax, title, insurance and closing documentation is in place. Underwriters also review the appraisal to make sure it is accurate and thorough, so that the home is truly worth at least the purchase price. The underwriter has final approval and final responsibility for the loan. Oftentimes an underwriter's denial can be appealed to the head underwriter or other superior, but the facts must be in place to support any overturn of an underwriter's decision.

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Automated Underwriting

There are automated underwriting systems in place that take data fed into a computer program, assess the risks based on formula and give an approval or denial. These programs require strict adherence to guidelines and will not entertain any deviations or gray areas. An approval on these files calls for an underwriter to look over all verifications and documents, along with the appraisal, to make sure that all the data matches the information inputted into the automated system that generated the approval. If the information does not match, the underwriter sends the file back to the processor with conditions that must be fulfilled prior to final approval. This usually involves getting additional information or verifications.

Manual Underwriting

Many times a loan file requires manual underwriting because it falls into a gray area that the automated system cannot address. Manually underwritten FHA (Federal Housing Administration) files are quite common, since FHA loan guidelines allow for no credit history and troubled credit buyers, along with more flexible debt rules. The loan officer and loan processor carefully compile manual files to read almost like a story, with lots of supporting detail. They provide not only the basic information on employment, income and savings along with a credit report, but they also may include a created credit history for no-credit borrowers, additional information about credit blips in a buyer's past or explanations for discrepancies in income or job history information. This documentation gives the underwriter the "whys" that allow her to make a more informed decision about the buyer's situation in order to truly determine how solid a risk the buyer is.

Underwriter's Significance

An underwriter who is conducting an underwrite, especially a manual underwrite, has to take a calculated risk and do his best to determine if a file adheres to not just the letter but the intent of the loan program guidelines. If he is wrong and the loan defaults, it can result in a hefty cost to the lender. If he works for a mortgage broker, too many defaults could cost his company its relationship with the lenders who fund their loans.