Thread: Guidance Notes (incomplete)

Early draft of some notes to help people claim back unlawful penalty charges on their mortgages. These are incomplete- in particular we need to prepare something on redemption penalties but the notes will set the scene. Please feel free to suggest changes.

Can I claim back charges from my mortgage account?

There are two types of mortgage charge:

• Penalties for missing a payment, being in arrears, the use of debt counsellors, deeds release fees etc.
• Penalties for redeeming a mortgage early. AT THIS POINT IN TIME WE DO NOT RECOMMEND THAT YOU PURSUE SUCH CLAIMS TO COURT.
  

The two types of charge have to be looked at separately.

First, however, a word of warning: If you decide to try to recover unlawful mortgage charges you must remember that you are dealing with issues affecting your home. We do not recommend that you pursue court proceedings against your CURRENT lender. Whilst the lender can’t call in the mortgage because you are seeking recovery of unlawful charges, they could cause you considerable problems if you ever fall into arrears. The only exception to this is if they are in the middle of taking possession proceedings against you and the total of the charges is greater than the arrears. Even then, you run the risk of them taking revenge in the future if you end up in arrears again.

As for previous lender, feel free to issue proceedings if you feel you have a case.

Before taking any action, it is important that you obtain a full Subject access request disclosure under the Data Protection Act. You must obtain a full statement of account setting out all transactions since the start of the mortgage plus a schedule listing manual interventions in the account.

The statement will enable you to work out what has been charged and when it was charged. Remember that with a mortgage (not to be confused with a simple secured loan) you can recover up to 12 years of charges although you may have difficulty in obtaining 12 years of records for an old mortgage.

For each type of charge you need to think about whether it is a penalty. Some things are likely to be unlawful penalty charges like monthly arrears charges where there is little evidence from the list of manual interventions that the mortgage company did much in that month. Similarly charges for bounced transactions may be unlawful although do remember that the mortgage company is not like a bank- it is the receiver of funds and will have to do more work than a bank which simply refuses to make a payment,

Other charges are irrecoverable where they could be held to represent some sort of service or relate to the cost of legal proceedings. For example, legal costs in possession proceedings will be irrecoverable in almost all circumstances but you should still ask for certified proof that these charges relate to the direct reasonable costs incurred due to your breach of the mortgage contract. Similarly charges for releasing deeds and dealing with the administration of paying off the mortgage are likely to be regarded as services although there is some concern about the way these charges have increased over the past few years.

There are some charges that fall into a grey area. A mortgage/ debt counsellor’s fee could be regarded as either a service or a penalty. The mortgage counsellor is unlikely to provide better advice than someone from the CAB. The mortgage counsellor is also acting as an agent of the mortgage company and therefore does not have a duty of care to the customer. Nevertheless, it is at least debatable that this is a service.

Similarly, penalty interest is highly debatable. This is where the mortgage company charges you interest on any arrears. This may be recoverable but we recommend that you leave it out of any claim to allow you to argue that this represents fair compensation to the bank for your breach of the agreement rather than the fixed monthly charges that they have applied.

To be continued

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Great info.............dont apply to me personally but I know will apply to quite a few.

my understanding of the notes is that if you should get into any difficulty with them at a later date, having approached them for unfair charges, they may not be cooperative and take the first opportunity to 'get rid'

I dont know if this has happened to anyone but I know my lender has already shown itself to be extremely unsympathetic to date, as soon as I can change I will and then I will make my decision.

Hi there everyone

We are trying to get ERC back from GMAC and Kensington (I am still awaiting statements from both as I know because of our circumstances there will be plenty of charges added) I would assume that we claim separately for ERC and charges. However, I have had a letter today from GMAC as a final reply to my complaint in August saying that we should write to their legal department in future but they are not treating the matter as a formal complaint!!! what are they on. They refer to their mortgage Conditions a copy of which they sent me and can you believe it they only put a 1st class stamp on it and there was £1.23 postage to pay!!!! I have kept the envelope! The conditions state:-

"The company's right to recover its costs and expenses entitles it:

(a) to recover the costs and expenses which it has to pay to third parties, and

(b) to recover its internal costs by charging administration fees in accordance with its published tariff.

Any help on what you suggest we do as our next move write to the Legal Department asking for our money back or pursue through county court?

Any comments would be welcome.
Many thanks
Catherine and Dave

Costs are discretionary anyway as far as you being asked to pay them.
The judge is not automatically sure to make you pay 750.00 if they win

The small claims too although restricted to 5k has leverage in that.
However at this stage the prospects of you losing are not high stakes since it has yet to happen.
The important thing with a claim this size on an n1 is to prepare well and leave nothing to chance.If you put the case over having regard to the experiences of cases to date then you should have nothing to fear.......least of all paying their costs.

reading this thread with interest as Iam about to pay off my mortgage , Nationwide want to charge me £1500 for this. Iam wondering if it is worth putting aletter together to ask them to drop the charge and state the relevant law cases in the letter telling them it is a penalty yada yada yada!!!. Also whwen I took ut the mortgage they charged me an LTV (loan to value ) fee of £40 a month. Do you think that this is recoverable or was that aservice rather than a penalty. Thanks in advance..

hello, I received copy statements from Halifax back to 1994. I sent in my SAR and a lady rang to say she would send six years, I told her that I wanted all of them back to the start of the account for my own information. I received them all, but it did take a couple of reminders.

I was debited £5.