GE Money from 2004

[Mephistopheles]

I hardly think the majority of people on the forum can be described as naive, most of us are only too aware of what the law does and does not allow and thanks to this forum, we are all learning increasingly what our rights actually are, much to the detriment of the DCA's.

 

If you are posting in order to provide constructive help in dealing with the appalling actions carried out by many of the DCA's, then all good and well, but if not, I really do not see what benefit it will have to anyone posting here.

 

We all have our ongoing battles with DCA's - I have an account which on reflection, I actually did not owe any money on at all, the balance was made up of unlawful charges and interest applied on top, and the DCA actually owed me money!! In actual fact, despite comments to the contrary, there can be no justification for the high level of charges applied to these accounts and we as consumers are now starting to fight back.

 

Magda

 

 

I wasn't suggesting everyone was Magda and I am here to help if people want it, however posts suggesting charges are 'morally wrong' or your own post about 'there is no justification' won't actually help anyone, it just inflames the argument.

Decisions as to whether that is the case will be taken by politicians and legislators and enforced by the relevant ombudsman, If somebody wants help, I will try to help, tell me the scenario and I will try to work it through, you mention about charges, what is the scenario please?

 

Meph

[Suetonius]

Would you all like the opinion of an ex-GE employee who actually worked in the litigation department and can actually tell you why things happen and what the responses are, reading this thread, some of you are incredibly naiive with regards to how and what the law allows and what yours and the lenders rights are, I can even explain the repo situation and why charges are applied.

'the other side' regardless of who he works for has given some very good answers on here, I know its difficult to take the heat out of these arguments, if you can step back for 1 minute then you may be surprised at what help can be offered.

 

Meph

 

Could you please:

 

 

• Provide a breakdown of the monthly arrears fee
  
• Explain how it can be deemed fair and reasonable, or positve and sympathetic to borrowers that are already in arrears (as per lender obligations)
  

[diamondgirl]

I hardly think the majority of people on the forum can be described as naive, most of us are only too aware of what the law does and does not allow and thanks to this forum, we are all learning increasingly what our rights actually are, much to the detriment of the DCA's.

 

If you are posting in order to provide constructive help in dealing with the appalling actions carried out by many of the DCA's, then all good and well, but if not, I really do not see what benefit it will have to anyone posting here.

 

We all have our ongoing battles with DCA's - I have an account which on reflection, I actually did not owe any money on at all, the balance was made up of unlawful charges and interest applied on top, and the DCA actually owed me money!! In actual fact, despite comments to the contrary, there can be no justification for the high level of charges applied to these accounts and we as consumers are now starting to fight back.

 

Magda

 

I'm sure everyone will agree Magda, very well said.

DG

[MAGDA]

I wasn't suggesting everyone was Magda and I am here to help if people want it, however posts suggesting charges are 'morally wrong' or your own post about 'there is no justification' won't actually help anyone, it just inflames the argument.

Decisions as to whether that is the case will be taken by politicians and legislators and enforced by the relevant ombudsman, If somebody wants help, I will try to help, tell me the scenario and I will try to work it through, you mention about charges, what is the scenario please?

 

Meph

 

Could you please:

 

 

• Provide a breakdown of the monthly arrears fee
  
• Explain how it can be deemed fair and reasonable, or positve and sympathetic to borrowers that are already in arrears (as per lender obligations)
  

 

I would say you can help by providing a detailed response to the above post.

 

Magda

[Mephistopheles]

Could you please:

 

 

• Provide a breakdown of the monthly arrears fee
  
• Explain how it can be deemed fair and reasonable, or positve and sympathetic to borrowers that are already in arrears (as per lender obligations)
  

 

Thanks, lets look at 2 things.

 

1. a breakdown of the fee. The other side covered off most of the points but here's the killer, it doesn't break down, its not even costed on that basis. The premise behind the fee is exactly what is in the letter, accounts that are in arrears cost the company, who ever the company is more money to administer, that's monthly statements, reminders, the staff to man the telephone lines and all the associated costs.

The whole point is an account not in arrears requires nothing more than a yearly statement, accounts that are in arrears requires more. Fair or not, that's the reality.

 

2. Right lets look at those statements, fair and reasonable, ok see above for why , you might not agree, in fact I'm sure there will be a lot of people outraged by the answer, but fair and reasonable is a two way argument.

Person A has fallen into arrears, it doesn't matter how, its happens, the company spends more money to collect the monies due under the contract and therefore is entitled to charge the customer for those expenses (read your mortgage T&C's re costs).

They have to notify you, you should get a monthly arrears statment and a leaflet telling you the costs. As to fair, thats where it gets interesting, if you fall into arrears and agree a payment schedule and pay those off by DDM each month, then you may have an argument that charging the fee month on month is unfair and the company may listen depending on timescale and regular payts. If you didn't pay like that and were irregular, broke arrangements and required contact from the company, they will argue the cost was justified, if you want to take it further that's where the ombudsman comes in, but his job isnt to determine what was morally right or wrong, just whether you were treated fairly, so it again depends on the circumstances of each case.

As to the positive and sympathetic, right lets get something set as a ground rule, surprisingly enough companies don't want to repo you, why because its a hassle, it costs them money and more often than not they will lose money, however, they also want you to pay. why, because bad debt (arrears) means they have to provide more capital (money) in reserves (bank account) to cover potential losses (you been repo'd). That's money they could spend elsewhere and why we have a credit crunch in the first place.

 

As to sympathetic, yes they will be, and they will agree payment schedules for the arrears and try to work with you to resolve, what they won't do is the following, agree payment holidays, this doesn't stop the payments, it just means the balance of your account will actually rise in the short term as you are not paying it, the only obligation a lender is under is to try to be fair to you to make sure you don't end up paying the debt back for years and years even if they reposess the property.

 

Positivity is again a two way argument, legally if you break you mortgage contract, you are in breach and therefore the lender can reposess, even at 1 month, practically it doesn't happen as the government gives guidelines to the courts that they don't want loads of people evicted as there is no social housing, so the norm is 3 payts, though this can be 2 if you have a high enough payt each month and are fast tracked through the process to mitigate the loss.

As to sympathetic, what does this mean? The company should let you off the payts? for how long? till you find a job (assuming redundancy?) never?

 

They normally won't take action for 3 months, letters etc but no actual legal action. So, thats 3 months to try to sort things, ok some of you will argue you can't find a job etc, fine, so look at the facts, if its going to take more time, you can petition the court for time, but you will require concrete proposals, the court won't listen to vague promises, it needs to see you are acting, which may mean you have to sell your house, is that harsh? Maybe, remember that phrase your house is at risk if you don't keep up repayments, thats what it means.

In fact selling the house instead of fighting the repo will actually gain you a more sympatehtic approach from the lender plus less costs, they make actually give you more time if there is a reasonable chance of sorting out the account.

 

 

So this is a long reply and I'm sure there will be lots of comments, I'll try to help with each scenario, but you need to be realistic, if you can't pay the mortgage, until you can action will happen. As to what you are charged and when and whether it was fair, I'll try to give a view as to whether I think you might get somewhere with your arguments, I hope you will listen though you might not like what I have to say all the time.

 

Meph

[Suetonius]

Thanks, lets look at 2 things.

 

1. a breakdown of the fee. The other side covered off most of the points but here's the killer, it doesn't break down, its not even costed on that basis. The premise behind the fee is exactly what is in the letter, accounts that are in arrears cost the company, who ever the company is more money to administer, that's monthly statements, reminders, the staff to man the telephone lines and all the associated costs.

The whole point is an account not in arrears requires nothing more than a yearly statement, accounts that are in arrears requires more. Fair or not, that's the reality.

Please excuse me, I think I am being naive

 

You say:

"here's the killer, it doesn't breakdown, its not even costed"

 

You would appear to confirm that this charge is in breach of MCOB 12.4.1 which states:

 

MCOB 12.4.1 (1) A firm must ensure that any regulated mortgage contract that it enters into does not impose, and cannot be used to impose, a charge for arrears except where that charge is a reasonable estimate of the cost of the additional administration required as a result of the customer being in arrears.

 

 

2. Right lets look at those statements, fair and reasonable, ok see above for why , you might not agree, in fact I'm sure there will be a lot of people outraged by the answer, but fair and reasonable is a two way argument.

Person A has fallen into arrears, it doesn't matter how, its happens, the company spends more money to collect the monies due under the contract and therefore is entitled to charge the customer for those expenses (read your mortgage T&C's re costs).

They have to notify you, you should get a monthly arrears statment and a leaflet telling you the costs. As to fair, thats where it gets interesting, if you fall into arrears and agree a payment schedule and pay those off by DDM each month, then you may have an argument that charging the fee month on month is unfair and the company may listen depending on timescale and regular payts. If you didn't pay like that and were irregular, broke arrangements and required contact from the company, they will argue the cost was justified, if you want to take it further that's where the ombudsman comes in, but his job isnt to determine what was morally right or wrong, just whether you were treated fairly, so it again depends on the circumstances of each case.

As to the positive and sympathetic, right lets get something set as a ground rule, surprisingly enough companies don't want to repo you, why because its a hassle, it costs them money and more often than not they will lose money, however, they also want you to pay. why, because bad debt (arrears) means they have to provide more capital (money) in reserves (bank account) to cover potential losses (you been repo'd). That's money they could spend elsewhere and why we have a credit crunch in the first place.

 

As to sympathetic, yes they will be, and they will agree payment schedules for the arrears and try to work with you to resolve, what they won't do is the following, agree payment holidays, this doesn't stop the payments, it just means the balance of your account will actually rise in the short term as you are not paying it, the only obligation a lender is under is to try to be fair to you to make sure you don't end up paying the debt back for years and years even if they reposess the property.

 

Positivity is again a two way argument, legally if you break you mortgage contract, you are in breach and therefore the lender can reposess, even at 1 month, practically it doesn't happen as the government gives guidelines to the courts that they don't want loads of people evicted as there is no social housing, so the norm is 3 payts, though this can be 2 if you have a high enough payt each month and are fast tracked through the process to mitigate the loss.

As to sympathetic, what does this mean? The company should let you off the payts? for how long? till you find a job (assuming redundancy?) never?

 

They normally won't take action for 3 months, letters etc but no actual legal action. So, thats 3 months to try to sort things, ok some of you will argue you can't find a job etc, fine, so look at the facts, if its going to take more time, you can petition the court for time, but you will require concrete proposals, the court won't listen to vague promises, it needs to see you are acting, which may mean you have to sell your house, is that harsh? Maybe, remember that phrase your house is at risk if you don't keep up repayments, thats what it means.

In fact selling the house instead of fighting the repo will actually gain you a more sympatehtic approach from the lender plus less costs, they make actually give you more time if there is a reasonable chance of sorting out the account.

 

 

So this is a long reply and I'm sure there will be lots of comments, I'll try to help with each scenario, but you need to be realistic, if you can't pay the mortgage, until you can action will happen. As to what you are charged and when and whether it was fair, I'll try to give a view as to whether I think you might get somewhere with your arguments, I hope you will listen though you might not like what I have to say all the time.

 

Meph

 

It still begs the question of how applying a monthly charge and increasing the amount of a debt of a consumer who it is evident may not be able to afford the existing debt can be deemed fair or reasonable (as per the FOS jurisdiction as defined by the FSMA 2000).

 

 

Mr Tony Boorman, Decisions Director and Principle Ombudsman, of the Financial Ombudsman Service said:

"More generally, as my earlier brief example of the mortgage arrears fee shows, the application of extensive fees for customers already experiencing debt problems may not be fair treatment. Certainly it does not always sit well with the sympathetic and positive treatment of those in hardship."

[Suetonius]

There is also:

 

MCOB 12.2.1 (1) Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly.1 A firm is also under an obligation, as a consequence of this sourcebook's disclosure requirements,1 to make charges transparent to customers. This chapter reinforces these requirements by preventing a firm from imposing unfair and excessive charges.

 

If the charge is as you say not costed, how can it be deemed to be transparent to customers ?

[enoughisenough]

Person A has fallen into arrears, it doesn't matter how,

 

I beg to differ, I think it matters a great deal if any practice by the lender no matter how remotely induces the arrears.

 

1. We could start with breaches of distance selling regulations (including irresponsible lending practices)

 

2. contracts not written in plain intelligible language, as they must if they are to be enforceable

 

3. family difficulties such as illness, divorce, bereavement, child, spousal or parental disability, reduced working hours etc - circumstances to which borrowers are supposed to act sympathetically and positively but never do,

 

4. extortionate arrangement fees, usually tied to the back of the mortgage with interest over the term

 

5. interest rates at a significantly higher level as consequence of a poorer credit rating for a whole host of legitimate or illegitimate reasons (no quibble with the former, not much anyway).

 

I could go on. The real truth is that the lenders are not in the business of fairness, they are in the business of extracting as much profit as possible - lawfully or unlawfully it does not matter. A clear case of market failure for which we will all pay very dearly in massive public spending cuts and increased taxation for a very long time to come.

 

I wonder in your current helpful state what you thought of the following.

 

 

The Regulations provide that: (a) a consumer may challenge a standard term in an agreement on the basis that itis “unfair” within the Regulations and therefore not binding on the consumer; and (b) the OFT, the FSA andany other “qualifying body” (as defined in the 1999 Regulations) may seek to enjoin (or, in Scotland, interdict) a business against relying on unfair terms, although the rest of the agreement will remain enforceable if it is capable of continuing in existence without the unfair term. This will not generally affect core terms, which set out the main subject matter of the contract (for example, the borrower’s obligation to repay the principal), provided that these terms are written in plain and intelligible language and given sufficient prominence, but may affect terms deemed to be ancillary terms, which may application of which are in the lender’s discretion.

 

Thanks EiE.

[Mephistopheles]

Suetonius, look at your own response.

 

'reasonable estimate of the cost' as defined by MCOB, that does not mean costed to the penny, it means as I said a higher level approach, 'x' members of staff 'x' levels of phones calls divided by cost to give monthly fee. It is in line with other lenders, even high street lenders. It means estimated

 

Tony Boorman- MAY not be fair treatment,

 

it does not ALWAYS sit well.

 

I'm not arguing about right or wrong here, there will be some instances as Mr Boorman has said where the charge may have been unfair, I sure he will also say there are instances where it has been fairly applied.

 

I'm not here to debate the moral right and wrong of it as I said earlier, but your assumption from what I can see is that if a customer falls into arrears, they should not be charged arrears fees as it is per se unfair while the customer is in arrears

 

Ok lets look at that, and the implications.

 

1. Most customers pay their mortgages

2. Mortgages are priced on the cost of money it took to borrow the money in the first place against the risk of the person defaulting and the margin to ensure you get some profit and some volume of business through the door.

3. If your costs go up (no arrears charges) to cover your costs you have to cover it from elsewhere, so the cost of your mortgages would go up.

4. Apply that across the board, all mortgage costs would go up for all customers because of a few customers who get into arrears, is that fair and reasonable??

5. Most mortgage customers do not get into serious arrears, yes it may look inequitable that when you are in arrears you are charged more money for it, that's because you cost more

 

 

So take that another step forward, scrap arrears costs, raise mortgage borrowing costs, less margin to make a profit, less profit, less companies willing to enter the market, less companies, less competition, less competition higher prices.

 

Things don't operate in a vacuum, there are always implications as to why things are done.

An argument for the fairness of arrears charges will be both ways, look at the argument over bank o/d charges, never has the watchdog said scrap them, just where they reflective of the cost involved, hence my point earlier about are they reflective.

 

Lets say a customer falls into arrears for 6 months, goes to court, get a suspended order and clears the arrears in the following 6 months by DDM, for the first few months the customer cant pay, costs more because of contact and admin work etc and will get charged, in my opinion fairly, After the order when they have agreed the payment and then pay by DDM and clear them, perhaps there is an argument that they have caused no further cost in admin etc and that actually the fees could be reduced/waived, not everything would be waived but the total amount reduced

 

You thoughts?

[Mephistopheles]

There is also:

 

MCOB 12.2.1 (1) Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly.1 A firm is also under an obligation, as a consequence of this sourcebook's disclosure requirements,1 to make charges transparent to customers. This chapter reinforces these requirements by preventing a firm from imposing unfair and excessive charges.

 

If the charge is as you say not costed, how can it be deemed to be transparent to customers ?

 

 

 

Different argument, fair does not mean the customer is always right, TCF regulation is that you have treated the customer with the appropriate response and taken into account their circumstances, it does not say 'the customer is right'.

Edited June 27, 2009 by Mephistopheles

[Mephistopheles]

I beg to differ, I think it matters a great deal if any practice by the lender no matter how remotely induces the arrears.

 

1. We could start with breaches of distance selling regulations (including irresponsible lending practices)

 

2. contracts not written in plain intelligible language, as they must if they are to be enforceable

 

3. family difficulties such as illness, divorce, bereavement, child, spousal or parental disability, reduced working hours etc - circumstances to which borrowers are supposed to act sympathetically and positively but never do,

 

4. extortionate arrangement fees, usually tied to the back of the mortgage with interest over the term

 

5. interest rates at a significantly higher level as consequence of a poorer credit rating for a whole host of legitimate or illegitimate reasons (no quibble with the former, not much anyway).

 

I could go on. The real truth is that the lenders are not in the business of fairness, they are in the business of extracting as much profit as possible - lawfully or unlawfully it does not matter. A clear case of market failure for which we will all pay very dearly in massive public spending cuts and increased taxation for a very long time to come.

 

I wonder in your current helpful state what you thought of the following.

 

 

 

 

Thanks EiE.

 

Again, you are not looking at the picture,

 

Businesses are business to make profit? surprisingly enough yes they are, as to extracting profit, yes of course they are, that's what they are in business about.

 

To suggest though that they deliberately do it, is not correct, yes there are examples, ENron etc

 

And there are examples pre regulation, in fact pre regulation it was more common.

 

Post regulation, sorry, most if not all companies will have a compliance department to ensure they comply with the regulations, fines have a massive impact on profitability and docs etc will be written to try to ensure they don't breach regulations as you have quoted.

 

There will always be examples of where its happened, remember the people who work in mortgage businesses are not the 'fat cats' you seem to be implying, most of them are just normal working people doing a job, plus theres also a whistleblower scheme for the FSA. Firms just don't look to deliberately do this, its too risky.

 

Do you want me to respond on each point?

[Suetonius]

You thoughts?

 

Since you have asked so nicely

 

As you say the watchdog has said that the charge must be reflective of the costs involved.

 

However, if as you say there has not been a breakdown of the costs involved, how can you be sure that they are a reasonable estimation of the costs involved.

 

With regard to this specific thread it is said that GE charge £40.00. Has this figure been plucked out of the air or is it a reasonable estimation of the costs involved.

 

On what information has the reasonable estimation been calculated on.

[Mephistopheles]

Since you have asked so nicely

 

As you say the watchdog has said that the charge must be reflective of the costs involved.

 

However, if as you say there has not been a breakdown of the costs involved, how can you be sure that they are a reasonable estimation of the costs involved.

 

With regard to this specific thread it is said that GE charge £40.00. Has this figure been plucked out of the air or is it a reasonable estimation of the costs involved.

 

On what information has the reasonable estimation been calculated on.

 

 

Fair enough, when you are looking at a reasonable estimation, then the first thing that will happen will be competitor benchmarking. Rightly or wrongly GE will look at where it sits in relation to its rivals.

 

 

Then you will go on to look at the costing implications, how much does my collection/litigation/repossessions organisation cost me in relation to the money I lose from not earning on delinquent mortgages, this will be a large figure and this is about as transparent as you are going to get, because each industry member will have different costings and different overheads.

 

So what does that mean? it means the number of delinquent customers has an impact on the revenue stream for not been delinquent and actually the more that are delinquent the more you will need to look to bring in revenue from them as your revenue drops from customers who are not in arrears.

 

As to whether its reasonable, that's for the regulator to determine if he thinks you are been unfair, if you are charging similar prices to everybody else, why would you be unfair? He's only interested in the bigger pictures, not individual customers, whats charged to individuals is set by the companies depending on market circumstances.

 

Again look at the bank o/d charges, the reason for the unfairness was not the stories of customers been charged, but how often they where charged and for small amounts and then how those charges caused other charges to be applied.

 

This is a different scenario, £40 a month is small in relation to the average monthly payt. Personally , if you are in arrears for a year and therefore the payt would be £480 for the year, on an average mortgage payment of £4-600 per month, means the arrears charge would be between 6 and 10% of the total debt o/s smaller if the payt is higher.

 

So what does that mean?

 

well short term scenarios are probably relatively fair when you look at the percentage, it becomes significantly different when you consider the longer term implications.

 

A customer in arrears for a long time period, 3 yrs+ will get into thousands of pounds of costs and accrue interest on top of that, now that is where you are likely to be successful as the argument becomes, I have accrued arrears of 'x' but the costing and interest of those arrears can then be almost as much as the arrears in the long term.

 

Now before you think companies are nasty about this, why do you think they want you to clear the arrears as quickly as possible? 2 reasons.

 

1. It means they get the account back performing,

2. You don't accrue massive cost and interest burdens which will be charged in accordance with your T&C's but they recognise you won't like the charges or the interest, so they'd rather you weren't charged them in the first place.

 

So this means judges who agree payments such as Monthly instalment plus £10 on a £300 payt actually think they are helping the customer when actually it can be the other way.

 

Costs are generably reasonable in my humble opinion, but its the timescale and the interest charged that makes them unreasonable, that's where the challenge is I believe, ask for justification as to why if you had arrears of £1k does the company think that arrears charges of £x is fair in relation to the debt that was accrued and theres your basis of argument to the ombudsman.

[enoughisenough]

Hi meph I'm on mobile email at the mo and it's a pain. Will respond later but I'm very interested in your points and willtry to give the consumer perspective later.

 

Eie

 

thanks for your input. I'm certainly

no enemy of debate.

[maybelline]

3 months LOL! not in most!

[Suetonius]

As to whether its reasonable, that's for the regulator to determine if he thinks you are been unfair, if you are charging similar prices to everybody else, why would you be unfair? He's only interested in the bigger pictures, not individual customers, whats charged to individuals is set by the companies depending on market circumstances.

 

Just because all companies charge similar amounts, does not make it fair.

 

What if they all charged £100 or even £1,000 ?

[Mephistopheles]

Just because all companies charge similar amounts, does not make it fair.

 

What if they all charged £100 or even £1,000 ?

 

 

Depends on the market doesn't it, I'm not arguing its fair, I'm giving the reasons for the charges, its for the ombudsman to determine fair.

 

 

As to £100, well in a few years with inflation it will be, as to £1000, a few more years on that.

 

At present nobody is going to charge those figures as that would be like sticking your head over the parapet and saying shoot me.

 

If your competitors are charging £40 how can you say £100 is fair?

 

Taking your wider point Suetonius, what is fair? And I ask that as a genuine question, cos if anybody answers £0 they need to read my thread in full about costs.

 

Meph

[Suetonius]

Taking your wider point Suetonius, what is fair? And I ask that as a genuine question, cos if anybody answers £0 they need to read my thread in full about costs.

 

Meph

 

On this basis, if one lender increased its charge from say £35.00 to £60.00 for no other reason than to increase it's profits. This increase could be justified by every other company increasing it's charges.

 

Doesn't really sound much like treating consumers fairly

 

It would be fair for a lender to give more consideration to the situation of individual borrowers. A one charge fits all approach cannot be possibily be deemed fair.

 

If someone is in debt, how can the application of further charges which increase that debt be deemed positive or sympathetic / fair and reasonable.

 

Would it not be more beneficial for the lender to work with the individual borrower at an earlier stage to agree a way forward that would not result in the debt being increased.

 

The lender could work with the borrower to establish if the reason that arrears have accumilated is a short term or a long term problem.

 

When payments are made by Direct Debit, Mortgage Lenders take two slices of the charges pie. One charge for the payment being returned unpaid and another charge for the account being in arrears. Thus if the charge is £35.00 for the direct debit and £50.00 for the arrears, the debt can be increased by £85.00 per month (£1,020 + interest per year). Dependant upon the size of the mortgage, this could be a considerable sum.

 

Common sense, would suggest that the principles applied to Credit Card charges and Bank Account charges (including mothly excess overdraft fess), must also apply to mortgages. After all the charges are incurred for exactly the same reasons.

Edited July 10, 2009 by Suetonius
Added a little more

[Mephistopheles]

On this basis, if one lender increased its charge from say £35.00 to £60.00 for no other reason than to increase it's profits. This increase could be justified by every other company increasing it's charges.

 

Doesn't really sound much like treating consumers fairly

 

It would be fair for a lender to give more consideration to the situation of individual borrowers. A one charge fits all approach cannot be possibily be deemed fair.

 

If someone is in debt, how can the application of further charges which increase that debt be deemed positive or sympathetic / fair and reasonable.

 

Would it not be more beneficial for the lender to work with the individual borrower at an earlier stage to agree a way forward that would not result in the debt being increased.

 

The lender could work with the borrower to establish if the reason that arrears have accumilated is a short term or a long term problem.

 

When payments are made by Direct Debit, Mortgage Lenders take two slices of the charges pie. One charge for the payment being returned unpaid and another charge for the account being in arrears. Thus if the charge is £35.00 for the direct debit and £50.00 for the arrears, the debt can be increased by £85.00 per month (£1,020 + interest per year). Dependant upon the size of the mortgage, this could be a considerable sum.

 

Common sense, would suggest that the principles applied to Credit Card charges and Bank Account charges (including mothly excess overdraft fess), must also apply to mortgages. After all the charges are incurred for exactly the same reasons.

 

 

Actually I agree with most of those points, the problem I see it is twofold, lenders applying a one brush fits all scenario which they then protect as fair, but also borrowers not accepting the position they are in and doing whatever they can to change it. Most people in a long term debt problem are not realistic about solving it and believe their lender should let them sort it in their own time.

 

With regards to short term, my actual belief is the cost should be broken down to exactly what it takes and know more.

 

Meph hears various peoples chins hit the floor lol.

 

Meph

[Suetonius]

Actually I agree with most of those points, the problem I see it is twofold, lenders applying a one brush fits all scenario which they then protect as fair, but also borrowers not accepting the position they are in and doing whatever they can to change it. Most people in a long term debt problem are not realistic about solving it and believe their lender should let them sort it in their own time.

 

With regards to short term, my actual belief is the cost should be broken down to exactly what it takes and know more.

 

Meph hears various peoples chins hit the floor lol.

 

Meph

 

I do understand where you are coming from. If you look for perfection in an inperfect world, all you will find is disappointment.

 

In each argument/debate there are always at least two sides. Each side is usually right about somethings and wrong about others.

 

I feel it is only through debate answers can be found.

[maybelline]

this is an interesting debate:) and I havent read the whole thread but my gut tells me that a bank charging £39 for a returned DD is not fair and a monthly charge of £40 is also not fair. I dont have a fancy argument, it is based on the bigger picture, price of a piece of paper and a stamp, automated process, how these charges have been increasing steadily, the guy on the radio and tv saying real cost is apparently £1.50 for a returned DD oh, and the fact that all my £40 charges have been repaid to me.

[Mephistopheles]

this is an interesting debate:) and I havent read the whole thread but my gut tells me that a bank charging £39 for a returned DD is not fair and a monthly charge of £40 is also not fair. I dont have a fancy argument, it is based on the bigger picture, price of a piece of paper and a stamp, automated process, how these charges have been increasing steadily, the guy on the radio and tv saying real cost is apparently £1.50 for a returned DD oh, and the fact that all my £40 charges have been repaid to me.

 

I take your point Maybelline, it isn't just the cost of a stamp and a piece of paper though, what about the money to pay the people to do it, labour costs are businesses biggest cost, or the building for them to work in and the running costs of that.

Who was the guy on the radio? a so called expert?

 

As to the charges been repaid, I know that GE despite what a lot of people think is there to try to help people, in fact I know a lot of the people in the company personally. I also know that it is a company trying to stay afloat with a lot of people not paying their mortgages which causes it to lose money.

 

Some of its policies may sound harsh or unfair but I know they will listen if there is something they can do. They regularly speak to the CAB to see if their policies etc cause extra hardship and they will listen even if the response you get isn't always what you would have wanted to hear.

[maybelline]

point taken:)

[masmit]

I take your point Maybelline, it isn't just the cost of a stamp and a piece of paper though, what about the money to pay the people to do it, labour costs are businesses biggest cost, or the building for them to work in and the running costs of that.

Who was the guy on the radio? a so called expert?

 

As to the charges been repaid, I know that GE despite what a lot of people think is there to try to help people, in fact I know a lot of the people in the company personally. I also know that it is a company trying to stay afloat with a lot of people not paying their mortgages which causes it to lose money.

 

Some of its policies may sound harsh or unfair but I know they will listen if there is something they can do. They regularly speak to the CAB to see if their policies etc cause extra hardship and they will listen even if the response you get isn't always what you would have wanted to hear.

Ok have i got this wrong somewhere,

if you agree a payment term for arrears say over 12 months & you keep to the arrangement you still get the £40 arrears charge, so where's the justification of the charge then, obviously no letters are being sent.

also if your mortgage is say £500 a month & you are £1500 in arrears & all you can afford is £50 extra a month on top of the original payment, are the lenders not profiteering from hardship by keeping consumer in debt.

Also if repossession proceedings are started why are all charges added & not listed seperately, making the arrears figure look bigger.

This sound like the lenders are being fair doesn't it.

[enoughisenough]

As tough as it is on the lenders they have already been told in no uncertain terms by the OFT and the FSA that their general running costs are "too remote" from any individual breach to recover such costs from individual consumers. Whether the lender likes it or not that is the established position.