Kensington ERC Help!

[nz1313]

Hi, this is my first posting and I'm hoping that you lot may be able to help.

 

I am currently going through court action with Kensington with the aim to claim back my ERC, which was charged when my mortgage was redeemed last year.

 

This action has been going on some time and is due to go to court tomorrow for Direction/Allocation.

 

At the time of redemption I was under a suspended repossession order.

 

Kensington's reason for repossession was that the mortgage was in default. This was their word in the court papers. They also used their standard mortgage conditions as evidence despite the fact that they claim the ERC to be 4% in the second year of advance, not the 6% stated in the additional terms supplied with the offer.

 

I saved my house by remortgaging.

 

However when looking at the Redemption Statement I noticed that they had charged the ERC, 6%, on not only the advance but the penalties and overdue interest.

 

I put this to Kensington and they refused to move on it.

 

Now they are saying that this was an error on their part and want to pay back the ERC charged on the interest. My arguement was that an ERC couldn't be charged on any sum already due i.e. overdue interest and penalties.

 

Has anyone out there been in a similar position? Could you look at you figures? The ERC should only be charged on the original sum (and any further advance). They are claiming this is a one off. Can I prove otherwise.

 

They are trying to claim that they can also charge an ERC on the redemption fee and deeds fee as these were charged as a result of my redemption. However I am arguing that they are as a result of my breach. I would not have remortgaged without being forced to, therefore these fees are a direct result of the breach.

 

Finally re: indemnity. As the ERC was charged on the penalties and interest which wasn't included in their mortgage terms I shouldn't have to provide indemnity.

[zootscoot]

Hi NZ13,

 

I've found your thread and will move it to the mortgage forum

[Esio Trot]

I have a number of mortgage tariffs and T&C's from various companies, but not Kensington.

 

I'm pretty sure though, knowing the depths that Kensington operate at, that their T&C's will have the ERC on the outstanding balance, not based on number of payments/term.

 

ERC's are difficult to deal with as some members have found to their cost. Most (all?) members probably think they are evil - particularly those that are not staggered. e.g. you have an ERC of 6% on a mortgage of £100K that expires 30 August 2006. The house is sold and completes on 20 August 2006: you pay an ERC of £6K. If the house was sold and completed on 1 September 2006, no ERC would be paid.

 

ERC's are meant to compensate the lender for maybe doing a discount or fixed term, or sometimes to compensate them for the administration of setting up the mortgage. If so, then logic says that their compensation should diminish on a straight line over the ERC term - not stay at the full rate until the tie-in is finished.

 

In this case you may have to use their complaints procedure then the Financial Ombudsman Service.

[nz1313]

Hi Esio Trot,

 

Many thanks for responding. Firstly their terms are not on the outstanding amount but for a fixed time.

 

Also, although my mortgage was discounted for a short term (which had long ended when the mortgage became in breach) this wasn't really the case. The initial rate was discounted by 2.00% for a few months, however they were charging us Kensington's variable rate + 2.25%!

 

Their solicitor has admitted that they have overcharged the ERC (1 day before court) and now want us to accept the part payment.

 

We no longer live in the UK and therefore probably have less to lose than most.

 

Watch this space.

[zootscoot]

Any news on the directions hearing today?

[nz1313]

Hi Zootscoot,

 

Thanks for asking. Due to the time difference I wasn't able to find out last night (your morning). The woman at the court said I should call back tonight (your morning). As soon as I hear I will post the response.

 

I will dig my heels in over the indemnity clause if it goes to Multi Track, which I'm sure it will. This clause is so unfair it beggers belief.

 

Wishing you well.

[nz1313]

Hi, Just a thought. I have been reading up on the indemnity clause and have come upon a report by OFT. The link is below and the relevant page is 19, 5.3 last point.

 

Basically is says that the words indemnity and indemnify are objectionable as legal jargon, along with saying that they could be unfair. Worth reading.

 

 

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft311part2.pdf

[nz1313]

Well, the Judge has given a load of directions but the court administrator can't read the writing. They will be typed up and faxed to me next week.

 

The case has been assigned to the Multi track, which doesn't shock me. However there are two points here. First one is that I can afford the costs if need be. Second relates to the stand likely to be taken by the likes of OFT.

 

I got the courts to fax me Kensington's defence, which was filed in December. In this they admit that they have overcharged however they didn't bother to tell me!

 

It would be very hard for a Judge to award costs to Kensington at the moment as Kensington have clearly charged outside of their terms.

 

Watch this space. I am here to see justice.

[nz1313]

Hi All,

 

I'm still awaiting the directions from the court.

 

I am already forming my case and just wanted to run it past you all.

 

As you are aware I was in default of my mortgage at the time of redemption and under a suspended possession order.

 

The ERC was charged on the original amount + arrears and monthly penalties, which Kensington admitted was a mistake.

 

However they say that the ERC, which was charged on the Redemption fee and Deeds fee, remains.

 

My arguement is that as the mortgage was in default the mortgage was already due. Therefore an ERC shouldn't become payable.

 

This can be backed up by The House of Lords appeal on the case, West Bromwich Building Society (Appellants) v Wilkinson and another (Respondents).

 

In this case the issue was when the clock started to tick. The upshot was that Lord Hoffmann set out six specified events. The second of them, default by the borrower is the event which entitled the building society to sell the respondents house.

 

In most mortgage conditions there is a term which makes the money payable under Section 101 of the 1925 Law of Property Act within a certain time upon default.

 

In my terms with Kensington (2003 - 1st Edition) that says:

 

On Default or in certain other circumstances

 

14.3 No matter what any other Conditions say, we have the right to demand immediate repayment of the Debt in any of the following circumstances;

 

1. If you fail to pay a Monthly Payment or any other money due under your mortgage;

2. If you break any of the terms of your mortgage

etc etc..

 

So, following that line upon my default the sum became immediately due as agreed in the House of Lords (worth reading).

 

Therefore the ERC was not payable. The terms laid out by Kensington clearly call it an Early Repayment. There is no way that I could have repaid my mortgage early as the sum was already due as can be demonstrated.

 

As for the indemnity (and the above clause for that matter) the OFT says that all terms should be easily understood? Well there are some very clever people on this site and none of us really took much notice of this clause. Furthermore as the ERC applied to my mortgage redemption was clearly outside their terms I fail to see why I should pay their costs. They're legal costs surely can't be covered by the indemnity clause?

 

Anyway I intend to push this all the way and will gladly make a donation to your fund on winning!!

[Bona]

Im very interested in your case took advice from a Barrister who said that if you were in default that was no reason for erc not to be valid he felt that as no erc had been to court and there was no precident it would be difficult to prove hios advice was to go as far as you can without incurring charges and then see what happened he felt some would pay up some would not. Iam going for erc as I had a clause in mymortgage saying if we gave them notice it would not be charged , they had a repossession they new we were selling so they had notice

[nz1313]

Hi Bona,

 

Sorry to hear about your problems.

 

I have read about Jamorgons case, which seemed to say that as there was no breach of mortgage terms the ERC was payable. The mere act of redeeming the mortgage is not a breach as its a right expressed under the terms.

 

However people like you and I are clearly in breach. The House of Lords have stated that in cases like ours the mortgage sum is due upon default. It follows therefore that the sum charged is not an ERC. Cannot be an early repayment of a sum due and therefore can only be a penalty. That then becomes an Unfair Terms.

 

In the 'Analysis of Unfair Terms in Schedule 2 Feb 2001' (available from OFT) points there are many points of interest and again, worth reading.

 

If it can be argued that the ERC is not an ERC (which given above shouldn't be hard in the face of a definate breach) but in fact a penalty then, going back to the 'Unfair Terms', Schedule 2, Paragraph 1,

[nz1313]

Hi Bona,

 

Sorry to hear about your problems.

 

I have read about Jamorgons case, which seemed to say that as there was no breach of mortgage terms the ERC was payable. The mere act of redeeming the mortgage is not a breach as its a right expressed under the terms.

 

However people like you and I are clearly in breach. The House of Lords have stated that in cases like ours the mortgage sum is due upon default (this could be within a month or immediately. Terms differ). It follows therefore that the sum charged is not an ERC. It cannot be an early repayment of a sum due and therefore can only be a penalty. That then comes under Unfair Terms.

 

In the 'Analysis of Unfair Terms in Schedule 2 Feb 2001' (available from OFT) there are many points of interest and again, worth reading.

 

If it can be argued that the ERC is not an ERC (which given above shouldn't be hard in the face of a definate breach) but in fact a penalty then, going back to the 'Unfair Terms', Schedule 2, Paragraph 1, states that terms maybe unfair if they have the object or effect of;

 

(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation.

 

It also goes on to say that:

 

Other kinds of penal provisions which may be unfair are damages and costs clauses saying that the supplier can:

 

Claim his costs on an indemnity basis.

 

The words 'indemnity' and 'indemnify' are also objectionable as legal jargon.

 

Furthermore:

 

Penalties do not have to be excessive in all cases to be unfair. A penalty that states a fixed or minimum sum, to be paid in all cases, will be open to challenge if the sum could be too high in some cases.

 

It seems to me that unless you are in breach of the mortgage terms it will be very hard to claim a legal right to have the ERC's returned. However when there is a clear breach of terms I think its possible.

 

The problem is that these are the cases the mortgage companies are settling out of court. This means that no precident has been set.

 

I am hoping for any information that may help and in return I will ensure that all information regarding my claim will be posted here.

 

Hope to you all.

 

 

Furthermore

[Bona]

A Thought when we had the repossession oder made they had a money claim made at the same time for the amount of the oustanding mortgage if we had had the money we could have paid that and been in the clear this did not include erc so therefore when we sold the house and paid off the mortgage and the money claim same thing we shouldnt have paid erc

Im putting yours and this point to my advisor !!!!

[nz1313]

Hi All,

 

Firstly what is a CRP18 and do I to do anything unless order by a court? Also should this be something that I request from Kensington's solicitor? If so what information should I look to gain from it?

 

Any help gratefully recieved.

[Dangermouse]

I was in the same position with SPML, they had a possession order (not suspended) & a money order. I ended up paying over £18k ERC. Would love to get it back so really interested in outcome of this.

 

Dangermouse

[nz1313]

Hi, well it looks like I will have to amend my claim slightly as I added the monthly arrears charge and MEAF. I think I will need to remove these from the claim and deal with that seperately. That leaves the ERC and the overcharge. Interestingly I note that another CAG member had also been overcharged the ERC with Kensington. Kensington claim that my overcharge was an oversight. They admitted that it shouldn't have been charged in their defence filed with the court in December. They didn't contact me until the day before the Allocation hearing in May to arrange repayment and I didn't get a copy of their defence until then either. I didn't agree the amount they then wanted to repay and this still remains part of my claim. The overcharge was ERC charged on the arrears and monthly penalties etc. In other words the full amount I owed at the time of redeeming. The ERC should only be charged on the amount you first borrowed plus deeds fee and MEAF. They say that they didn't have my contact details (I'm in NZ). I pointed out that I had it in writing that they did. Their solicitor is now claiming that they want to amend their defence as they didn't know that I was claiming the ERC was a penalty! They are also asking the court to make me pay for their amended defence! I will be asking court to allow me to remove the monthly penalties and MEAF, point out that I had made it perfectly clear in all communications with Kensington that I thought the ERC was a penalty, and in my particulars of claim and allocation questionaire. They still owe nearly 900.00 pounds, which they admit but have made no effort to repay. Obviously this amount would not be covered by any indemnity clause as its in direct breach of their own terms! I will post the courts reply when it arrives. In the mean time if anyone checks their redemption statement and finds that they too have been overcharged please let me know. I just have a feeling this will be something that happens. If your not sure just send me a private message with your figures.

[Guest DEATHLORD]

Hi Nz1313,

Any luck with your claim as yet as Ive now done the same to Kensington as they say The ERC is becuase they need to cover there losses and costs becuase people like us and the amount is over all there mortgages.

Some thing Ive faxed to the Mods but never heard any thing back.

[nz1313]

Hi Deathlord,

 

At the moment I am waiting to hear from the court on my request to have the arrears fees and MEAF removed from my claim in order to proceed with the ERC charge.

 

Obviously the ERC is a tricky thing to take to court and I certainly wouldn't have done if 1. I wasn't under a suspended possession order 2. my mortgage was discounted (at the time of redemption my mortgage was over 11%).

 

Kensington tried to send me a copy of my mortgage statement in response to my SAR. When I phoned them to ask where all the rest was they said that they must have misunderstood my request. They dug out my SAR and agreed the mistake was theirs (I used the SAR from this site).

 

TodayI recieved a box of papers which cost them 37 pounds to send here in NZ.

 

There all pretty boring but they do show time and time again I claimed the ERC as a penalty, which they are claiming is a new charge on my part. I do think it funny that they have recently had lower profits, which they put down to more people waiting until the ERC period is over. However this doesn't help much if they have a legal 'right' to do so.

 

Maybe all Kensington claimants should buy a share in the company in order to have legal access to their next AGM. Then we could put some of our questions to the board!

 

I do think it funny that Kensington have recently ha