abbey mortgage early redemption penalty?

[JULI99]

I Am Just Starting Out To Reclaim For Early Redemption Penalty On Our Abbey Mortgage. However The Computer Print Out We Have Got Back Is Virtually Unreadable.

 

So Will Have To Write For A Better Print Out.

 

I Have Looked Thru What Is Readable And Am Trying To Get My Mind Around Lines Such As

 

Debit.................. Payment Type.............. Movement Type................... Movement Code

Amount

Xx.......................... 080........................ Debit Sundry No Grace................. 1

Xx.......................... 081........................ Debit Sundry No Grace................. 1

Xx.......................... 082........................ Debit Sundry No Grace................. 1

 

The Payment Types 080 081 082 Are Not Listed On The Sheets Of Codes And Descriptions And The Line Debit Sundry No Grace Without A Number In Front Says That They Are Arrears Costs.

Given These Arrears Costs Add Up To In Excess Of £20,000 And The Most We Have Had In The Arrears Balance Column Was One Months Mortgage Repayments Which Was Paid 9 Days Late.

 

I Know We Had An Early Redemption Penalty But Didn't Think It Was This Much. However Given The Dates We Took This Mortgage Out And Then Redeemed It I Have To Say My Brain Was In La La Land. I Was About To Give Birth Or Pregnant At These Two Times And Had Left The Finances To My Other Half (big Mistake).

 

I Have To Say My Memory Got So Bad I Had To Ring A Friend To Remind Me How To Make A Cup Of Coffee. I Had Stood, Coffee Jar In Hand Infront Of The Kettle For Several Minutes Trying To Work Out What To Do. Knowing That I Should Know What To Do But At That Time It Had Completely Escaped Me.

 

So Is There Anyone Out There Who Are Also Taking On Abbey Mortgages. Any Ideas What These Codes Mean And What Should I Expect.

 

Am Going To Write For A More Legible Copy Of Print Out And Will Ask What The Above Codes Etc Mean When I Get It Back Just In Case There Are Other Codes I Cannot Identify.

 

 

 

Juli99

[rascal3103]

Hi Julie,

 

My customer statement does not have those vodes on from Abbey.

I did not understand my statement either, so I basically phoned the Abbey, asked the nice lady which figure was the penalty for early redemption and she told me, plain as day. I even asked her if it was a penalty and she said yes.

So that is the figure I included on my Pre-Lim. Only posted it a few days ago so no reply yet

[JULI99]

Thanks Will Do That. Just Been A Bit Busy Lately.

[JULI99]

Right, Found Out That The £20k On The Redemption Statement Consisted Of A Cashback Of £10k That They Took Back

 

A Penalty Period Of 270 Days Which Came To Nearly £10k Which Was If We Got Rid Of The Mortgage Before The Time Period Was Up We Would Be Charged 9 Months Interest.

 

A Discount Of .95% Which Had 11 Days Penalty Period On A Mortgage Of £60k Which Came To Over £500. This Am Not At All Sure About As 11 Days At .95% On £60k Comes To More Like £17 And The Mortgage I Did Not Think Had Any Penalties Attached To It.

 

The Remortgage Was At 5.7%. The Original Mortgage Which Attracted The 9 Months Penalty Was At 7.95%.

 

I Have Read Around This Site And Am A Little Confused On What I Can Claim.

 

Can I Claim The Whole Of The Penalty Amount Nearly £10k Plus The £500 Or Do I Claim A Proportion Of It. I.e. The Difference Between The 5.7% And 7.95% Which Would Come Out At Nearly £3k.

 

Anybody Actually Achieved It With Abbey Yet?

 

Or Any Other Mortgage Company Related Penalty Redemption.

 

Any Views On This Would Be Most Appreciated.

 

 

Juli99

[JULI99]

AM JUST ABOUT TO SEND OUT MY PRELIM LETTER AND ASK IF SOMEONE WHO KNOWS ABOUT THESE THINGS TO LOOK OVER IT FOR ME.

TO GIVE YOU SOME BACKGROUND WE SIGNED UP FOR THIS MORTGAGE WHICH LOCKED US IN PAYING 7.95% INTEREST FOR 7 YEARS IN 1998 WITH A 9 MONTHS/270 DAYS PENALTY IF WE LEFT BEFORE AUGUST 2005. WE REDEEMED IN OCTOBER 01 SO WE ARE NOT LIKE THE OTHER PEOPLE I HAVE COME ACROSS ON THIS SITE WHO LEFT WITH ONLY A FEW MONTHS TO GO SO (I MIGHT BE WRONG ) THE BIT ABOUT COMPENSATING THEIR LOSSES DOES NOT COME INTO PLAY AS WE HAD NEARLY 4 YEARS TO GO. HOWEVER I DO HAVE A "REDEMPTION STATEMENT" WHICH STATES THE 270 DAYS IS A PENALTY PERIOD. AND AS SUCH, AM I RIGHT IN THINKING NOT ENFORCEABLE.

 

Request for repayment of charge

 

We are writing to ask you to refund the charge which you have levied from our account in respect of a redemption fee to the sum of £XXXX, We now understand that such a fee is unlawful at Common Law, Statute and recent consumer Regulations.

 

In the case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract as oppose to a charge which represents a penalty. This law was confirmed and upheld in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. A charge will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach. A penalty clause is void in its entirety and unenforceable. Enclosed is a copy of the Product Related Charges Per Loan in which you clearly state that the £XXXX is made up of a 270 days PENALTY PERIOD

 

In addition your charge appears to represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). Our account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as we are consumers. Your charges constitute an unfair penalty under Schedule 2 of the said Regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation. We would vigorously contend that this is the position regarding the fee of £XXXX which you deemed fit to apply to our account.

 

Furthermore a fee levied requiring us to indemnify you against any commercial risk to yourself in offering us a reduced interest rate in order to attract our cutom is also contrary to s.4 Unfair Contract Terms Act 1977. We are confident that a court is likely to consider this clause to be unreasonable within s.11 of the said Act as a large commercial institution such as yourselves is in a far better placed position than us as consumers to bear the burden of the vicissitudes of business.

 

I would like to bring your attention to the following statement by The Office of Fair Trading:

 

"A term in a mortgage agreement which requires the borrower to pay more for breaching the contract terms than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressed as the price for exercising a right rather than a consequence of breaking the agreement."

As you clearly state this is a penalty and therefore is unenforceable.

 

PLEASE COULD SOMEONE CONFIRM THE POINTS THAT HAVE BEEN MADE IN THIS LETTER REFER TO THE FACT THAT PENALTIES ARE UNENFORCEABLE AND I HAVE GOT HOLD OF THE RIGHT END OF THE STICK WITH REGARDS TO NOT BEING ABLE TO USE THE COMPENSATION ARGUEMENT.

 

JULI99

THANKS

SORRY TO ASK THIS BUT THIS SORT OF THING HAS NEVER BEEN MY STRONG POINT

[dolly]

Looks fine to me but you might want to PM Zootscoot to have a look as she is our resident expert in these matters

 

That is one hell of a redemption charge as well you are claiming for.

[JULI99]

thanks. will do.

[zootscoot]

Hi Juli99,

 

You are right that a penalty clause is unenforceable, however, by simply calling it a penalty clause does not mean that it is automatically unenforceable. This still needs to be decided by a judge and if you challenge them they are likely to deny that it is a penalty (I'd love to hear their response lol).

 

In much the same way if they named their ERC the Ultimate Fairness Charge, this would not make it lawful. Its not the name which counts its the the content. They are obviously making it a whole lot easier for you to establish that it is a penalty should it go to court, but don't expect them to just say, 'oh yes its a penalty, here have your money back'. You're still likely to have to make your court claim.

 

You're right to draw attention to the fact that they have in fact called it a penalty charge. ... I predict a lot of recalling of paper work and shredding goingon in that office lol

 

 

Best of luck

 

Zoot

[JULI99]

Thanks For That.

 

In This Case The 270 Days Would Still Have Been Payable If We Had Redeemed In July 2005.

 

I Would Suggest That Anyone Out There With This Type Of Mortgage From Abbey Looks For Their Redemption Statement. I Cannot Be The Only One Who Has Kept This Paperwork.

[tamadus]

Thanks For That.

 

In This Case The 270 Days Would Still Have Been Payable If We Had Redeemed In July 2005.

 

I Would Suggest That Anyone Out There With This Type Of Mortgage From Abbey Looks For Their Redemption Statement. I Cannot Be The Only One Who Has Kept This Paperwork.

 

I have spent all day looking for my redemption statement. and glad I have now as it has an early redemption charge of £2119.00. They don't actually refer to it anywhere as a penalty but its name shouldn't make any difference. I redeemed the mortgage about 10 months into a 2 year period for a reduced interest rate, so its clearly been applied as a penalty.

 

Letter all typed up and ready to go, just need an address now to send it so going to use the PO Box 287 at Stockton until I find their registered address.

[JULI99]

Prelim Letter Sent Today Together With Copy Of Their Redemption Statement With The Words Penalty Period In One Of The Columns.

 

I Feel That Some People At Abbey Are Not Going To Be Too Pleased About This Piece Of Paper.

[JULI99]

Just Received My Prelim Letter Back From The Postman With A Sticker On The Front Saying Royal Mail Were Unable To Deliver The Item. The Boxes Which Someone Should Have Ticked To Give A Reason Why Were Not Ticked.

 

So Back To Square One.

 

So Frustrating.

 

Juli99

[sammyjammy]

Juli99

 

Which address did you send it to? YOu can send it to any address, why not try their registered one.

 

Sam

[JULI99]

Sent It To Same One As I Had Used All Along

 

Abbey

Mortgage Service Didsbury

Po Box 286

Manchester

M20 2zr

 

Seemed To Be Ok In the Past. Am Going To Try Prescot St, London And They Can Deal With It From There.

[JULI99]

Went To Local Post Office Who Asked Me Was I In Dispute With Abbey Only The Markings On The Envelope Meant That Someone Had Refused To Sign For It.

 

Anyone Heard Of This Before.

 

Can't Quite Believe They Would Act So Childish. As If Refusing To Sign For An Envelope They Could Ignore The Inevitable.

[sammyjammy]

How bizarre, they wouldn't have even had a clue what was in it? I wonder if its a postman problem, i.e posty cannot be bothered to post it so says it was refused (sorry to any good posties out there!) you could always pop it in the postbox of your local branch, you can deliver them to any address apparantly

 

Sam

[JULI99]

They Would Know Who It Is From. Our Name And Address Is On The Back. Maybe Abbey Has A List And Has Blackballed Us.

[rascal3103]

i will post the adress i used later on when i get home.

I am claiming £1600 ERC from Abbey and to be honest have found them very useful, no problems at all - YET.....!!!!!

[zootscoot]

I would just send it via normal post rather than recorded. If it is recorded they know its likely to be a claim. If you send normal post its deemed to be recceived to days after postagein any event.

 

I would also perhaps e-mail it to them if you have an address as that way it is instantaneous and you can prove its been sent at what time.

 

Hope this helps

 

Zoot

[JULI99]

I Put The Unopened Envelope In Another Envelope And Sent It Recorded To The Prescot Street London Address With The Instructions To Forward To The Relevant Dept.

 

Juli99

[rascal3103]

any news julie ?

[JULI99]

No News Yet.

 

Let You Know As Soon As I Recieve A Reply. Can't Wait.

 

Juli99

[JULI99]

Well Got A Reply From Abbey Today.

 

Thanks For Your Letter Dated Xx.xx.xx.etc

 

I'm Sorry You've Found It Necessary To Write To Us About The Early Repayment Charges (erc Formerly Product Related Charge) Paid On The Closure Of Your Mortgage Account In Month Year.

 

I Understand That In Particular You're Unhappy With Erc's Of £9000.00 And £500 And Consider That These Are Unlawful And Have Asked For A Refund Of £10000.

 

I Would Point Out That These Amounts Are Charges And Not Penalties. The Sum Of £9000 Related To Your Fixed Rate Of 7.95% And £500 Related To Your Discounted Rate Of 0.95%. You Were Advised Of These Charged In Your Original Mortgage Offer Documents.

 

When We Offer Special Products Such As Discounted Or Fixed Rates, Abbey Usually Funds These By Borrowing Funds On The Financial Markets At Certain Rates. A Date Is Then Agreed For Abbey To Repay These Funds Back Which Is Usually The Date The Special Product Ends. If A Customer Repays The Loan Off Sooner Than Expected, We Could Find That The Interest We Are Being Charged Is Higher Than The Returns We Can Make On The Money The Customer's Repaid. Also If Funds Are Repaid Early, We Need To Find Somewhere To Invest This Money Until We're Due To Repay It Which Can Mean Further Costs For Us . The Erc Ensures We Don't Make A Loss When A Customer Decides To Come Out Of A Product Early Or Pay A Lump Sum Off Their Mortgage When It's On A Special Rate.

 

Abbey Considers That Its Erc's Are Fair As They've Been Calculated So That We Don't Make A Loss Should A Customer Decide To Repay Their Mortgage Or Pay Off A Lump Sum Before The Date We Agreed.

 

I'm Sorry But For The Reasons Outlined Above I'm Unable To Refund The Charges As Requested.

 

You've Mentioned That You Intend To Issue A Court Claim If We Do Not Comply With Your Request. I Therefore Need To Advise You That Abbey Is Part Of The Financial Ombudsman Service (fos). This Service Allows Customers To Address Their Complaint Through The Company's Complaints Procedure (and To Fos) Free Of Charge. Due To This , Abbey Will Not Be Held Responsible For Costs Incurred By A Customer As A Result Of Employing A Solicitor Or Seeking Advice From An Independent Party During The Course Of A Complaint.

 

Then Says

 

I Hope Explained The Position Etc If You Are Unhappy Contact Complaints Dept Etc Etc

 

Well I Certainly Am Still Unhappy

 

The Fact That They Are Saying That Something Described As A Penalty Is Not A Penalty Just Beggars Belief.

 

On The Original Mortgage Document It Made No Mention Of Compensating Abbey For Their "losses." Just A Flat Rate Of 270 Days Interest If You Pulled Out Of The Mortgage Before The Due Date Whether That Was 3 Years Or 3 Days Before.

 

Anyone Care To Add Their Comments Is Most Welcome.

 

 

Juli99

[paulpb123]

Hi Juli99,

The fact that they haven't supplied you with a breakdown of their losses (or a pre-estimate of any losses) is telling. Not one mortgage company has done this so far to my knowledge. What strikes me is that it is one hell of a coincidence that their projected losses ALWAYS amount to 5% (or 4% or 3%, whatever). Can it really be the case that when you redeem after, say, one year of a 5 year mortgage, it really costs them the exact percentage of the mortgage that's stated in the initial contract? As for ERCs being fair because they prevent the mortgage company from making a loss, well that's just rubbish because that also means that they could make a big fat profit. This just looks to me like a rather pathetic fob off letter with no real attempt to justify the excessive charge. Keep at them and good luck.

Paul

[JULI99]

Will Do Tho Maybe Not Until Next Week. 6 Year Old Has Casting For Part In "silent Witness" Tomorrow So Spending Every Spare Minute Going Thru Script With Her.

 

Everything Crossed For Her.

 

Juli99