Dolly v Redstone Mortgages (ERC Charge)*Closed*

[dolly]

Sent Prelim letter and decided to wait against sending LBA until I got their response. This arrived today, with their apologies for the delay.

 

Have bolded the parts I find particularly interesting!

 

As I am sure you will appreciate, there are substantial costs involved in originating and administering mortgages and we seek to recover these costs over the terms of the mortgage. For this reason, the minimum loan term we allow is 5 years. Had we been informed at the time of your application that your mortgage was to be repaid within the first 3 years, the mortgage would not have been offered to you. When Customers repay their mortgage early, we seek to recover the costs by way of the ERC.

 

The ERC represents a genuine pre-estimate of the costs we incur, which include the following:

 

* Fees payable to intermediaries involved in introducing the loan, which are calculated as a percentage of the loan.

* Costs in relation to the funding of the mortgage, also calculated as a percentage of the loan.

* Operational costs

 

As you will see from the above examples, certain costs are determined by the size of the loan as they are equivalent to a % of the initial advance. I fully believe that the way by which we calculate an ERC, as a % of the amount repaid, is a reflection of the true costs and is fair and reasonable.

 

The ERC which you incurred upon redemption of your mortgage was clearly detailed in the offer, namely clause 290 (** incidentally, redemption is 4% year 1, 3% year 2, 2% year 3)

 

We have provided details of our ERC's to both the OFT and the FSA and they have not stated that they are excessive or disproportionately high. Having said that, it is not our policy to provide a detailed breakdown of these charges and I'm afraid I cannot assist you further with that particular aspect of your complaint.

Then goes on about compaint procedures etc.

 

Any thoughts ?

[dolly]

Good letter isn't it?!!

 

I am claiming from Halifax on Arrears - £390 - but no ERC with them.

 

I came to the same conclusions as many of your points.

 

This one

 

Quote:

Fees payable to intermediaries involved in introducing the loan, which are calculated as a percentage of the loan.

 

Is this correct or did you pay the financial advisor? Or was an extra fee levied for this at the commencement of the mortgage as is often the case? Either way you could invoke s.4 Unfair Contract Terms Act - in that they can not require a consumer to indemnify their expenses.[/Quote]

 

We did actually pay the broker (I know we shouldn't now but at the time we were desperate as everything had already gone through when our other lender pulled mortgage offer). I think it was £500 and there was the mortgage application fee of £395 added to the mortgage as well.

 

Think I will send the LBA letter addressing those points.

 

Thanks

[dolly]

LBA typed and ready to go tomorrow

[dolly]

LBA delayed slightly for one reason or another but got another response today from them where they are still refusing to give a detailed breakdown. I must say though that I am impressed with the responses to the letters, they are not standard at all.

 

MCOL being issued on pay day next week.

[dolly]

I am hoping that as they are very personalised responses that they might refund without court...yeah right!!! Can't see them bucking the trend unfortunately but you never know - got a phonecall this afternoon asking me to hold off issuing court proceedings for a week while they look into it more. Suits me fine as I am not doing MCOL until next wednesday so I told them they could have one more week!

[dolly]

Letter thanking me for allowing them a further 7 days in the hope that they can respond positively without the need for court action.:o

[dolly]

Mine wasn't actually a 5 year - it was a 3yr tie in which we stopped after about 19mths. As for the minimum term allowed being 5yrs, that is just rubbish!

[dolly]

Bog off letter back.

 

With reference to my first letter (above), Zoot can you look at this and see what you think:

 

The ERC is not a penalty as we do not consider you to be in breach of your mortgage contract with us. For a penalty to a apply there needs to have been a breach of contract. In this instance, you have abided by the terms of the contract in repaying the full amount due as well as the ERC charge. The question of a penalty does not arise.

 

I can confirm, however, that the initial set up costs included a fee of £1092 paid to your broker.

 

In the event that you decide to take this to court, I can confirm we will defend our position.

 

First letter stated this:

As I am sure you will appreciate, there are substantial costs involved in originating and administering mortgages and we seek to recover these costs over the terms of the mortgage. For this reason, the minimum loan term we allow is 5 years. Had we been informed at the time of your application that your mortgage was to be repaid within the first 3 years, the mortgage would not have been offered to you. When Customers repay their mortgage early, we seek to recover the costs by way of the ERC.

[/Quote]

[dolly]

MCOL issued this morning

 

Total £2547.06 + Interest of £334.53

[dolly]

Claim status is now issued on 23/10/06.

 

Deemed served 28/10/06, they have until 11/11/06 to reply.

[dolly]

Claim Acknowledged yesterday. Boooo!!! Was hoping it could sneak to Saturday and I could have requested judgement!

 

MLP, am at work at the moment so will respond later

[dolly]

Just checked MCOL here at work and a defence has been entered.

 

Will let you know what they say as soon as I get the copy from the court.

[dolly]

Paul,

 

Just got it today - all legal jargon speak. Will try and post it later but it is nothing new - just what they put in their response to the LBA but flowered up a bit!! In 3 points - we could have gone elsewhere, they did not take advantage of us and we agreed to the terms when we took the mortgage.

[dolly]

Zoot, do you fancy helping me with some fancy legal jargon for this bit in the defence, pretty please??

 

It talks about ERC's being due to set up costs and then....

 

 

In a typical case, the set-up costs would be recovered from the interest paid by the borrower in the first three years of the mortgage term.

The ERC payable if redemption occured during the first 3 years of the mortgage term was set at a level which might reasonable be expected to recoup the set up costs, so far as not recovered from the interest paid by the borrower prior to redemption.

Now, alongside the ERC charge, on redemption of the mortgage we also had to pay £4136.74 in lost interest.... I am assuming that this can be mentioned in relation to this statement?

 

Thanks

[dolly]

No I am not claiming that...should I have done? Bugger!!

[dolly]

Had a letter from the solicitors today, basically saying that they will ask for it to be transferred to a court suitable for their client...that their client has taken advice from a leading barrister and that we WILL lose the case should we proceed, and that we will be liable for their costs which will be substantial.

 

Oh, but if we want to drop the case, as a gesture of goodwill they will give us our £120 court fees back!

 

Yeah right!!!

[dolly]

Edited: I am no longer posting on this thread.

[dolly]

AQ filed - not adding any 'details' as I am definitely being watched.

[dolly]

Update:

 

Well, I have decided, stuff them. If they want to read what I put on here they can be my guest.

 

Received notice of Allocation Hearing this morning, to be held on 27/03/07.

 

Reasons:

 

1. Defendant says MULTI-TRACK because of complex matters of claim

2. Disclosure of advice to claimants by financial advisor at the time of redemption

3. Where the contract was made

4. Defendant asks for transfer to LONDON.

 

The first point is ludicrous - the claim is for £3k including costs and interest. 2 and 3 I have no idea about. The fourth, I knew would happen as they are trying to make it as difficult as possible - I live in Lancashire and the Solicitors in Newcastle....why London then???!!!!

[dolly]

I only got the paperwork this morning. The AQ hearing is at my local court anyway before a 'final decision about allocation can be made'.

[dolly]

Requested copy of Redstones AQ and got it this morning....very brief to say the least:

 

A: They have requested a stay for a month to try and reach settlement.

 

B: Location of Hearing - want to be changed from Blackburn CC as :

 

The defendant intends to call one of its directors to attend as a witness and it is more convienient for him to attend a county court local to his office in Moorgate, London.

c: Track - they want it allocated to Multi Track instead of small claims as:

 

...the case involves some complex matters of law and could be regarded as a test case for the lending industry and could, as a consequence, save the courts valuable time if a ruling coud be made on the issue. Allocation to the Multi-Track, notwithstanding the relatively small amount involved, would be proportionate in the defendant's view.

 

G: Other Information : (and this is all of it)

 

The defendant would like to know who advised the claimants to remortgage to their current lender in March 2005 and incur the early repayment charge claimed from the defendant. Given the claimants remortgage took place some 18mths ago, their financial advisor would have been required under the FSA's mortgage conduct of business rules to advise the claimants as to the costs or repaying the defendants mortgage early.

 

Love that last bit - completely avoids the whole issue!!!

 

Going to draft a letter to the court as the AQ hearing is not for another 3mths almost.

[dolly]

Just a quickie - they asked for a stay for a month to attempt settlement but apart from the 'we'll give you £120 fees back if you close the case' there have been no further discussions. Anyone know where I can find a well-worded response to send to both the court and the solicitors?

[dolly]

I am thinking of giving up.

 

Very worried it will be allocated multi-track and I will lose.

 

Sent an email to the (very nice, actually) solicitor regarding the fact that they had asked for a month to try and settle and got this:

 

The allocation questionnaire we submitted indicated that we would try to resolve the matter with you by informal discussion or ADR. We have made the offer to refund the Court fees together with a referral to the Financial Ombudsman (the means of ADR required to be used by our client) in our letter of 24 November 2006 ( a copy of which was sent to the Court) but you appear to have rejected this approach. I would suggest, in the light of the potential costs implications if my client's application to go down the multi-track is successful, that you give this approach further serious consideration. For the avoidance of doubt, this is the extent of our client's offer to mediate this matter out of Court.

[dolly]

Thank you all - I think I was having a bad day yesterday. My husband is away in China this week and I am almost at the end of having radiotherapy and I feel absolutely shattered. The kids have been hard work and because my mum is also recovering from a major op I don't have any real backup so am having to do everything. I am usually so full of optimism but yesterday I felt so down and very much 'I wish I had never bothered'. I'll pick myself up, give myself a virtual slap and get on with it!

 

Still got TSB to do as well but was hoping to get this one out of the way before making a start on that one but this looks to be a very long, drawn out process.

 

sammyjammy - I would really appreciate seeing the letter you wrote....one less thing for my befuddled brain to have to do!

[dolly]

Letter sent to court this morning incorporating the above - thanks to you all

xx