Kensington Charges

[woodwa5]

Long storey short I had my house repossessed by Kensington nearly three years ago. Since then I have been paying back £250 per month on a shortfall of about £28k. I still owe £28k as all I appear to have been doing is paying the interest which has made me extremely angry.

 

My issue is this. When they reposessed the house they charged me about £18k for an early remption clause, they also charged me a shed-load of charges. How can they charge me an ERC when I didn't voluntarily come out of the mortgage. My suspicions have been raised further by the fact that they took the ERC and all the various charges out of the money raised by the house sale so all that was left was capital to be paid. Is this right? Can they do this? I would appreciate somebody with experiance to look at this for me,

Kind regards,

Woodwa5

[reallymadwoman]

bump

[Markiemark1]

Sadly contractually I think they probably can. They could argue that they didn't voluntarily come out of the contract either. I would do a SAR so that you can see exactly what the position is then come back to us for more guidance.

 

RM

[sillygirl1]

Stop paying them.... their next option would be to make you bankrupt, and you can then show the Official Receiver their statement, ask for the ERC to be removed from the equation (which they apparently can do - it was done to a family member recently and lessened their debt by around £12K) and then Kensington will be the sorry ones.

 

Really you have very little obligation on a mortgage shortfall, especially as they have taken ERC, and also possibly have claimed on any insurance policy as well... this is NOT a priority debt any more and should not be treated as such.

[woodwa5]

you make some great points but i can't go bankrupt or i'll lose my job

[jansus]

I think the Subject Access Request is a good idea.

 

Would give you a chance to check the contract.

 

Then maybe check with the FOS?

[woodwa5]

I agree, I need all the information before I can even start fighting this one. Like I said it seems suspicious to me that they could take the ERC out of the money raised by the house sale so all money left over is capital. I am going to fight this all the way as it is nearly 3 years now and my shortfall has actually gone up by about £300

[supersleuth]

Hi Woodwa5

 

Re your 18K ERC. I think your instinct is correct. I don't think they can charge you an ERC when they repossessed you. The FSA have guidelines on ERC charges and 18K is excessive even if they could get away with charging an ERC.

 

Way forward: first starting point may be to check the ERC rules under the FSA. On the FSA website you will find the MCOB rules (Mortgage Conduct of Business). Check out what the rules are regarding ERCs. If, as I believe, you have been illegally overcharged an ERC, then you can claim credit on your account for the overcharged ERC and don't forget to charge them 3 years compound interest on the overcharge.

 

second is to check your actual contractual terms to establish exactly what the ERC should have been (but see also below for comment on the UCTA).

 

third is to check what the actual court order states. Exactly what monetary judgment did they get against you? e.g., Are they charging you more than the monetary judgment? Strictly speaking, you should only have to satisfy the monetary judgment. If you've paid enough to satisfy the monetary judgement then on what basis are they charging you?

 

What interest rate are they charging you etc. Is it a higher rate than they charge other borrowers. If so, that is against the FSA rules.

 

Also, contractually and legally, they can only charge you reasonable fees when they exercise their power of sale. Thus, get a copy of the statement of fees from when the property was sold and see how much and what exactly all the fees are. Perhaps you need to challenge some of the fees if they were unreasonable.

 

Also, check out some of the other threads on this site where people have recovered ERCs. That will give you an idea of how to go about claiming back your ERC overcharges (and any other overcharges that they may be dumpiing on your account).

 

Finally, consider the UCTA (Unfair Contractual Terms Acts). There are laws that state that many contractual provisions are unenforceable against consumers because they are oppressive and unfair. Such terms are legally unenforceable. Many of the mortgage contract terms fall under these laws (e.g. that's why the FSA have rules prohibiting excessive ERCs). You can find these laws on a web-site called British and Irish Legal Information Institute , also check out opsi website (office public sector information) which has access to legislation and also google the "uk statute law database" which is another source of uk legislation.

 

General advice is: find out exactly what you are legally obliged to do and do only what you are legally obliged to do and no more. My instinct is that you are being well and truly shafted - which is normal for Kensington - so arm yourself with the information first and make them justify exactly what they demand from you. That is, justify where in the contract they can charge you what they demand and justify legally why they can charge you.

 

Finally, if it turns out that you've paid enough to satisfy the monetary judgement, you could consider going to court for a declaration that the judgment is satisfied - in which case, they will have to take a hike for any further money they demand from you or, they'll have to sue for another judgment - which will be very very tough for them to get because they've already repossessed you and its unlikely that they'll be able to give a full account and justify why they're still charging.

 

Hope this gives you some pointers for where to start.

 

Good luck and remember, all the time you just pay without questioning the charges, they will continue to abuse your account.

[sillygirl1]

Are you sure you would loose your job if you are made bankrupt, the two don't necessarily go hand in hand anymore, its only if you are a lawyer or something in banking that it might be certain, for most other professions, (I understand this includes teaching - from friends experiences) you can't loose your job due to bankruptcy.

 

My job won't go if GMAC or London & Scottish decide to make me bankrupt (or anyone else) so I would quietly check on this - does it clearly state in your contract of employment that this would happen? They may not directly employ bankrupt people but if a current member of staff were to be made bankrupt the rules have changed.

[sillygirl1]

Nice post Supersleuth - I've tickled your scales.

 

I think the government may be looking into scrapping ERCs completely if a reposession order is given - would make a lot of difference to some people - and would stop the likes of Kensington going for 'easy' money.

[jansus]

I have read of several cases where the monetary judgement is not even obtained after the sale of the property and the borrower has no idea of how the charges are calculated.

[supersleuth]

Hi Janus,

 

No doubt you're right, but that's all the more reason why these lenders (in my view extortionists) should justify at law and under the contract, how they have a right to demand extreme amounts of cash off ex-borrowers. The acccount should be determined with an exact figure at the point-of-sale, such that both the borrower and lender know exactly where the account stands and the basis on which the account can be cleared.

 

Moreover, the lender has a legal obligation to account to the borrower for how they have allocated the sale proceeds. At law, (as I understand) the proceeds of sale must first go to pay down the principal amount borrowed. It seems that Woodwa5 had enough money from the proceeds to pay the principal, and the alleged 28K shortfall is probably made up of the £18K ERC plus fees and charges. Thus, if so, Woodwa5's alleged 28K is not the principal amount, but 28K's worth of charges. If that is the case, then on the basis that the ERC is not (at law) payable, then Woodwa5 is probably in the clear now. If borrowers don't establish the exact account after the sale then it leaves the account open-ended for the lender to make-it-up as they go along and open endedly keep demanding cash.

 

At the moment, Woodwa5 has ended up with Kensington saying that he/she (allegedly) owes an extra £300 more, even though he/she has paid them an additional £12K over the last 3 years. My instinct is that when Woodwa5 gets to the bottom of his/heraccount, there will have been some serious abuse with the charging and, if that is the case, then it may turn out that Kensington owe Woodwa5 money!

 

Go to it Woodwa5 don't be easy pickings for them!

Edited January 2, 2009 by supersleuth
spelling correction

[supersleuth]

Hi Sillygirl,

 

Thanks for your post. I agree that whilst any help from the government and/or the FSA or FOS is always gratefully received, I don't put that much faith in waiting for them to get their finger out and do something. Everything that they've done so far seems to me to be no more than treating a terminal patient with a band-aid. Whilst waiting for the govt/FSA/FOS, that doesn't usually help people who need help now. We've got to enforce our rights e.g. consumer protections and the rule of law, which already exist. Alot of what the lenders are getting away with is unlawful (i.e. non-contractual demands and unenforceable contractual terms), but as we don't know what the law is, we don't question enough of what is going on.

 

Thus, my strategy is to get them to state exactly which contractual obligation they are asserting and then take it from there. If the contractual obligation they are asserting gives them too much discretion (to make it up as they go along), then it is likely that the contractual provision will fall foul of the unfair contract terms. Us borrowers have got to create the case precedents and we've got to enforce our rights. Hard work, I know, but it's worth it.

[jansus]

I totally agree and IMO there should be RULES set out about how the FI should act on re-possession - not just guidlenes and these should be notified to the borrowers and signed by both parties as soon as possession hearings are commenced.

[supersleuth]

Hi Woodwa5

 

One final point: Do everything in writing - no phone calls. You need the paper trail in order to keep your position strong.

[supersleuth]

Hi Janus,

 

There are rules of law (although the borrowers are not notified of the law or the rules). The rules (which are law) can be found in the Civil Procedure Rules book (often referred to as the White Book), a copy of which can be found in the reference section of the local library, or on line at Civil Procedure Rules Homepage Also check out the corresponding Practice Directions which give commentary on, and augment, the CRP rules. The book itself (from the library) contains more detail than the web-site version plus the commentary in the book references many cases that may be useful.

 

The CPR rules that goven repossession actions is at Part 55 of the Civil Procedure Rules. It's worth a read. It details all the information that MUST be stated in the claim form. For example, see CPR 55.4.4 which states that (amongst other things), the claim form must state "details of all other payments to be made and claimed" (see CPR 55.4.4).

 

Therefore, if there's no monetary judgment, it begs the question on what basis are lenders charging people who've been repossessed and the lender has already exercised its power of sale? If there's no monetary judgment against a borrower that has been repossessed, then the lender is not charging a borrower pusuant to a court order. There must be some other legal basis on which they are demanding cash. Plus, if they have not stated in the claim form all the other payments that are to be "made and claimed", then one could argue that they have forfeited any right to make any more "claims" against the borrower.

 

This is because, under a rule called the rule in Henderrson, (which comes from a case called Henderson v Henderson which is common-law): it is a rule that essentially holds that a Claimant must bring all its claims against the party sued (in this case the borrower) so that the whole claim is dealt with at in the one action. It is deemed to be an "abuse of process" to bring repeated claims against a person on an issue that arises out of the same facts and circumstances. Consequently, where lender tries to start another action against a borrower who has already been repossessed, the borrower could argue that the second litigation is an abuse of process and accordingly, the second action could be "struck out" on that ground.

 

Just had an idea! this rule could be used in any bankruptcy proceedings that a lender might bring against a repossessed borrower and as such strictly speaking, the rule would defeat any bankruptcy proceedings that a lender might bring.

 

Got to say that I'm not a solicitor, but have done alot of reading on the law around this subject.

 

Good luck

Edited January 2, 2009 by supersleuth
typo

[jansus]

Not wanting to hijack this thread - but these are all helpful points. I was also thinking of the way the properties are sold and the conflict between getting a fair price and also not letting the debt increase too much whilst trying to obtain the "fair price" . It is very hard to prove that there was an "independant" valuation etc when so many companies are "linked" and also that all the fees are legitimate and fair.

 

 

woodwa5 hope you are finding some of these discussion points useful?

 

I would be interesting to here how you have been treated during this difficult time for you?

[woodwa5]

Wow,

 

i've only just got up (suffering from a serious bout of man-flu). Some really useful discussion points and thank you to supersleuth in particular. I was treated like crap. Three years ago is before I discovered this wonderful site so i was very niaive. They took me to court and got a judgement in my absence to cover the shortfall. I think i need to do an SAR and find out exactly what the ERC and original court orders say and take it from there. This is really useful because i am sure i am not the only one going through these problems

[Dangermouse]

Hi all, very interesting discussion.

 

SPML Capstone took me for an £18k erc two years ago, I was under a possession order (not suspended) I recall reading at the time that there was some argument whether ercs could be applied when the mortgage was in default.

 

I lost which thread it was on. Does anyone know if there proved to be mileage in those arguments?

 

Dangermouse

[jansus]

I am trying to research this on the CML site. Under the European code I found this:

 

12. Early repayment The lender should provide an indication of:

- the possibility and terms of early repayment;

- including an indication of any charges applicable.

Where it is not possible to stipulate the charge at this stage, an

indication should be provided that a sum sufficient to recoup the

lender’s costs in unwinding the transaction would be payable.

 

 

I think that would indicate it would depend on the individual T&C - unless they were an unfair term - but it should be part of the key facts given to the borrower at the time of signing?

[jansus]

I know this is OLD - found this from OFT 1999 - but interesting

 

National Westminster Home Loans

1.19 On 28 October the Office issued a News Release announcing that National Westminster Home

Loans (part of Nat West Group) had agreed to make significant reduction in variable redemption

Unfair contract terms - case report bulletin 8 Page 6 December 1999

charges on its fixed rate home, following intervention by the Office under the Regulations. Some

borrowers previously face charges that the Director General described as ‘ruinously high’. On

existing fixed-rate mortgages Nat West agreed to cap redemption charges at no more than five per

cent of the sum redeemed where the original loan was for a period of five years or less. For loans

that had had a longer fixed rate, the cap would be seven per cent.

1.20 The bank also gave a written undertaking that it would not seek an early repayment charge (ERC)

at all in the event of death or repossession. Cases of hardship would be dealt with sympathetically

and on a case by case basis. In addition, the bank agreed that maximum redemption charges on all

new loan agreements would be clearly expressed in cash terms.

1.21 Nat West had offered long-term fixed rate loans at a time when interest rates were higher than at

present. The ERC was unusual in being variable and tied to movements in market rates. It rose

directly in line with each fall in the level of interest rates. Borrowers did not appreciate that if

their circumstances changed and they wished to redeem early, they could face very substantial

charges. Complaints to the Office indicated that the formula used by Nat West to calculate charge

was incomprehensible to most borrowers, and that consumers had not realised that their exposure

to rising charges was open-ended. Nothing in the paperwork prepared them for this possibility and

many faced charges of tens of thousands of pounds, especially on longer term loans. The lack of

transparency about a term with such potential to be extremely onerous was considered to be source

of unfairness under the Regulations in its own right.

Case

[jansus]

so this has been flagged as an unfair term in cases of possession years ago!

 

Maybe when the SAR and full complaints proceedure received worth a try?

[woodwa5]

good point, i'll look into it

[jansus]

from FSA

 

Mortgage Early Repayment Charges

 

In February 2007, we completed a thematic project about mortgage early repayment charges (ERCs). We undertook the project in response to complaints we received from consumers under the Unfair Terms in Consumer Contracts Regulations 1999 ('the Regulations').

The consumers alleged that ERC terms in their mortgage contracts were unfair or not expressed in plain and intelligible language, so we looked at them under the Regulations. As we explain below, because of the findings of our work and our risk-based approach, we are not proposing to take any further regulatory action now, but will continue to deal with any complaints as usual under the Regulations.

Analysis & action

 

Our review of ERC terms

 

We assessed whether, in our view, the ERC terms were fair, whether they were drafted in plain and intelligible language, and whether we considered that there was enough actual or potential risk to consumers to justify further action.

We reviewed just over 60 mortgage contracts containing ERC terms. This involved engaging in discussions with the firms about which we had received complaints (primarily mainstream lenders and a sample of firms from the sub-prime market). We also considered the work which had already been done on ERC terms by organisations such as the Office of Fair Trading, Which? and the Council of Mortgage Lenders.

Our conclusions

 

• Ultimately whether a term is a core term is a matter for the Courts. In our view, an ERC term may be in breach of the Regulations where it requires a consumer to pay a disproportionately high sum in compensation for exiting a mortgage contract early;
  
• we also remind firms of MCOB 12.3 which contains specific provisions in relation to early repayment charges; and
  
• an ERC will be in breach of the Regulations where it is not expressed in a plain and intelligible way in the contract.
  

We obtained undertakings under the Regulations from two firms about their ERC terms.

We encourage all regulated firms to remain alert to undertakings concerning other firms, since these are of potential value in indicating our likely attitude to similar terms or terms with similar effects. The undertakings we obtained should improve the standards of fairness in other consumer contracts containing similar terms in the financial sector.

We did not find widespread unfair terms. Because of this and in light of the undertakings we have obtained for ERC terms and our risk-based approach to regulation, we do not intend to conduct any further thematic work on ERCs under the Regulations at this time. However, we will consider individual complaints about ERC terms as part of our general duty under the Regulations and follow up with firms, if appropriate.

To find out more about our work under the Regulations see the Unfair contract terms web pages.

[woodwa5]

looks like the fsa will be the place to go then