Mis-Sold A Mortgage

[storm]

When receiving our data from our mortgage company with a view to re-claiming charges, we were sent everything the company had on us, and are now reeling in astonishment.

 

My wife and I went to the company for a mortgage in 1999, both of us had our own mortgages at the time, mine with a clean 4 year history and my wife with one payment seven days late in about 3 years worth of payments.

 

I was amazed to hear from the mortgage company,that we had to be put on a high risk, high interest type mortgage due to several missed payments on my last mortgage.

 

To cut (a very) long story short this turned up to be a fault of my previous mortgage company (old Leeds mortgage) who informed this mortgage company it was an error.

 

Unfortunately by this time the seller was on the verge of pulling out, and we needed to get the kids in a new school quickly, so despite an argument with the company, on the grounds that the Leeds/Halifax had cleared me of any wrongdoing we had to take the high offer or face losing the house.

 

The companies excuse was that my wife's payment a week late on her previous mortgage was enough to justify it anyway.

 

Anyway all this re-surfaced when I got all this data through, I have now seen the letter from the Leeds/Halifax to the company saying the missed payment on my record was an error and in no way should I be penalised

 

The company never informed me of this letter, I have a copy of an internal memo at the company saying

 

'Mr Storm has telephoned asking about the letter from the Halifax that arrived Wednesday, I have told him we haven't received it'

 

So they had admitted to a blatant lie there then, and obviously had no intention of informing me

 

Then when I finally spoke to them I have seen another internal memo regarding the conversation

 

'Mr Storm was angry that he still had to pay the high risk mortgage rate, but I managed in the end to convince him it was still necessary because his wife had been a week late with one of her mortgage payments. He was ok with this, just, phew'

 

What can I read in to that memo I wonder?

 

Reading all this has made by blood boil as we have paid a £750 fee for having this 'special mortgage for high risk payers' plus extra interest each month.

 

We have got a few friends and family to apply for a mortgage via this lot, saying they have one missed payment on their mortgage history and surprise, surprise they have been told it is not a problem

 

I feel they have literally conned, frauded whatever terms you want to use and whilst with the written evidence I have I will undoubtedly be claiming the £750 fee and the extra interest, I wonder if it worth taking any further action, are they fit to hold a licence? etc

 

Haven't named the company as yet obviously (being careful) but seems an outrage and they have clearly taken advantage of our desperation to move

[storm]

Zoot

 

Thanks for your message regarding this

 

Due to my technical incompetence I only picked it up today, was not ignoring you

 

I suppose the question is where to go from here, obviously going to claim back the additional interest and set up fee, but should I go further?

 

I have most of this in writing thanks to the company kindly sending me every bit of data they have on me

[zootscoot]

Hi Storm,

 

The actions here amount to a misrepresentation which will give you the right to rescind the contract and claim damages.

 

To amount to a misrepresentation there must be a false statement of fact as oppose to opinion Bisset v Wilkinson [1927] AC 177. The statement here would be that you were not eligible for a conventional mortgage and had to take a higher interest mortgage. This statement was based on the facts of your previous credit history (mistaken) and therefore not based on an opinion. Also they were in possession of the facts and therefore can not rely it merely being an opinon Smith v Land & House Property Corp. (1884) 28 Ch D 7. Even though they believed the statement to be true at the time it was made they became aware of the change of circumstances makng the statment false by the time it was acted upon. In such change of circumstances there is a duty to disclose the truth With v O'Flanagan [1936] Ch 575.

 

The misrep must have induced the contract ie the innocent party must have known of the representation and relied upon it Horsfall v Thomas [1862] 1 H&C 90. This should be quite easy to establish as you claearly were aware of the representation that you could not have a mortgage at high street rates and its very unlikely that you would have agreed to enter a mortgage at higher lending rates unless you believed that this was the only mortgage type available to you.

 

There is no obligation on you to check out the validity of their representation Redgrave v Hurd (1881) 20 Ch D 1 indeed if you had investigated the matter yourself and acted on your own judgment rather than relying on their representation you would not have a claim Attwood v Small (1838) 6 CI & F 232. Although the fact that you were also induced to enter the contract by the sale of the house will not prevent a finding of reliance Edgington v Fitzmaurice (1885) 29 Ch D 459.

 

The remedy for misrep depends upon the type of misrep. There are three types of misrep:

1. Innocent - remedy = rescission or damages in lieu of rescission (not both)

2.Negligent - remedy = rescission and damages in the tort of deceit

3. Fraudulent - remedy =rescission and damages in the tort of deceit

 

Rescission means putting the parties back in to their pre contractual position. ie they would have to repay all monies you have paid under the contract and discharge the mortgage from your house and you would have to repay the loan advance.

 

The damages in the tort of deceit relate to any losses you have occured as a direct result of entering the contract there is no test of remoteness of damage as applicable to most contractual damages. This may cover such things as any set up fees, arrangement fees and may be survey fees.

 

The type of misrep here is likely to be fraudulent (requirements set out in Derry v Peek (1889) 14 App Cas 337) as they made the statement knowing it to be false. However, it would be much easier to go for negligent misrep under s.2(1) Misrepresentation Act 1967 as the burden of proof passes to them to prove that they believed the statement to be true Howard Marine & Dredging Co v Ogden & Sons [1978] QB 574 so evidentially this makes things much easier for you. Also the same level of damages are available whether the misrep was fraulent or negligent Royscott Trust Ltd v Rogerson [1991] 3 WLR 57.

 

Hope this helps

 

Zoot

[storm]

Update on this and have only just read zoots thread as I this thread has dropped off the radar

 

Have been offered all fees back, extra interest etc with a letter obviously asking us to sign that we accept this

 

Really seem to have the over a barrel now though as I believe this part of their letter admits liability

 

'I tend to agree that, in retrospect the information provided by Halifax in its letter of 10 September 1999 (this is when they informed Chelsea there had been a mistake and I had conducted my mortgage excellently) could have led to the application being proceeded in the sole name of Mr Storm on a standard mortage product. This complaint has therefore, been upheld'

 

To be fair they could hardly deny it, I had copies of all their internal memos

 

Should I take this further or accept their offer?

 

The moral of this story, is always get all data on yourself when doing your SAR's, you never know what nuggets are hidden away

[zootscoot]

Hi Storm,

 

Congratulations!

 

If the offer is full you have to accept.

[sammyjammy]

What a shocking disgrace, its no wonder people get in such a mess with mortgages when companies behave in this manner. I'm glad you got your money back.

 

Sam

[storm]

Hi Zoot

 

Can you just re-itterate about the potential of discharging of the mortgage.

 

Currently we have an interest only mortgage

 

Are you saying if the mortagage was say £55,000, and we had paid £15,000 towards it so far, if we were successful in getting the mortgage discharged we would then owe £40,000 on a unsecured type loan basis

 

Obviously if there are grounds for potentially succeeding in this surely we should go for it? (if I am understanding correctly)

 

Obviously then it would free up equity, and we would actually be paying it off with regular repayments, rather than relying on a separate policy

[storm]

These companies don't like you creating waves do they

 

We didn't pay our mortgage bang on the due date and the following day we received a letter demanding the full arrears, not just the monthly playment

 

Sad really