"Early Payments" leading to a default?

[Matt63]

Has anyone any experience of payments being paid early thus leading to a default?

 

My friend is facing repossession proceedings because RBS say she has not stuck to her arrangement. They are saying that she missed payments in June and September.

 

However from the statement it is clear that she did not, she just paid them early and the statement clearly shows payments made on 30th May and 30th August, and thus shows two payments in both May and August, but no payments in June and September.

 

But the arrears are where they are meant to be (in fact she is a little inside as she has genuinely made a few small overpayments from time to time)

 

The mortgage has 13 years to run and the arrears are exactly £2,400, and the agreed payments are the regular payments plus £100 per month, so it should be cleared in two years.

 

Is there any case law in relation to this?

 

Thanks in advance

[ukaviator]

Your friend should fill in an income and expenditure form and make an offer of regular payments to the mortgage with a realistic offer every month towards the arrears. The arrears are small compared to others we have seen and should clear quite quickly if a realistic offer is made.

 

Also get your friend to reclaim the arrears charges added to the account every month, there could be a good few hundred pounds there added to the account. To claim back the charges write to the lender using the letter here:

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?390026-Mortgages-Reclaiming-Charges

 

Income and expenditure form is here:

 

http://www.consumeractiongroup.co.uk/forum/attachment.php?attachmentid=31141&d=1320168516

 

The case law your friend could refer to is Cheltenham & Gloucester v Norgan which states that a reasonable period of time to clear the arrears could be as long as the rest of the mortgage term itself , although if you are able to clear the arrears over a shorter duration this is encouraged.

[Ell-enn]

As you have obviously already made an arrangement to pay £100 on top of the normal monthly payment, you now need to write to them (by recorded delivery), pointing out that it is their accounting error not your missed payments. If they have sent you a statement affix a copy of it with the payments highlighted. Work out how much should have been paid since the arrangement started and then give the dates payments were made - this should make them understand that there is no default on the arrangement. If you need help with a letter please let me know and I'll draft one.

[ukaviator]

Paying early Matt63 can be seen on the system as 2 payments made in one month, you need to check the payment date for the mortgage. If the mortgage is paid on say the 30th August then another payment is made that same month before the next one is due, it will be added to the August payment as an over payment. The mortgage company should be able to manually adjust the figures when payments were made to cover those months. As Ell-enn writes it is an accounting error and could easily be resolved. In the letter ask for the default sums and arrears charges back also.

[Matt63]

Hello everyone, yes my friend has discovered that payments are due on the first day of the month but must be received by the last day of the month otherwise a default is recorded.

 

What my friend has been doing is as follows: as soon as her salary is received from her employer, she sends the agreed amount by cheque in the post to the mortgage company but as to when it arrives depends on the post service, weekends, bank holidays etc. From the statement it clearly shows payments made 4/1, 1/2, 4/3, 3/4, 1/5, 30/5, 1/7, 2/8, 30/8, 1/10, 29/10. So as you can see it is a good regular pattern of payment.

 

She had pointed out that the payments dated 30/5 and 30/8 were "early" payments but what they are saying is that overpayments are gratefully accepted but as she missed the agreed payments in June and September so they are entitled to go for a possession hearing which has been set for 12th December.

 

It all sounds daft to me! Any ideas?

[Ell-enn]

I can't see a judge being too pleased with them wasting court time when your friend has been making regular payments. She should write to them as suggested in an earlier post and add that she intends to defend the possession claim which will include reporting to the court that they have brought the claim unnecessarily and are wasting court time.

 

Has your friend actually received the claim for possession from the court? we can help write a defence statement if you wish ?

[Matt63]

Yes the court papers have been received albeit several weeks late as they had been delivered to a neighbour. It appears there is a discrepancy between the land registry address and the postal address. Apparently a letter had been sent in July to the land registry address which had not been received. The solicitors are offering a 'suspended possession order' but my friend is minded to argue the case because she feels she has kept to the arrangement. The downside is that if she loses they might get the full possession order to vacate within 28 days. The other issue is that the date and time of the hearing is very inconvenient for her, requiring an overnight stay in a hotel to be certain of getting there for the 10am start. Is there a document somewhere as to what to expect in court?

[Ell-enn]

Hi, there is absolutely no way she will lose - once the judge sees the payment record he will be none too pleased with the lender. Has your friend completed the N11M defence papers? I can help with a statement for court - just let me know. One the defence is lodged at court they will send a copy to the lender and I wouldn't be surprised if they withdrew the claim once they see your statement. They are being complete idiots - The Civil Justice Council Mortgage Protocols state that a claim for possession should be a last resort and when all negotiation has failed - this is not the case here.

 

Your friend should write to them as suggested in a previous post and add that should the case be heard and you will ask for your costs as the claim has been brought unnecessarily - would you like me to draft a letter?

[Matt63]

Sorry I seem to have missed your reply from earlier in the week. These protocols seem just what my friend was looking for. Am I right in thinking that the mortgage lender has to demonstrate that they have followed the pre-action protocols? Do you have any anecdotal stories about judges get annoyed with lenders that do not comply with the protocols? One of the issues in this case is that a couple of key letters were never received and therefore a dialogue did not start until after the issue of court papers. Thanks again.