thehomee vs Northern Rock ERC *WITHDRAWN*

[thehomee]

Hi all.

Northern Rock charged £4,606.57 erc for a 66,000 mortgage in 2001, so here I go...

Sent prelim letter 4th December. Received no reply, so sent LBA 20th December. Today I received a reply dated 18th December. I am not sure how to respond, so have posted their reply in the hope someone can advise me. Here goes.............

 

Thank you for you letter dated 4 december 2006 referring in particular to the redemption fee in relation to your mortgage account. Your comments have been referred to me for reply as a senior manager within the mortgage review customer support team.

I am sorry to learn of your dissatisfacton with Northern Rock plc and note your comments regarding the redemption fee incurred on your mortgage account.

Northern Rock plc refutes any suggestion that the redemption fee applied to your mortgage account represents a penalty. In redeeming your mortgage early you are not in any way in breach of contract. As a matter of law the courts will only find that a contractual term represents a penalty where, on breach of contract, that term provides for a measure of damages that is not considered to represent a genuine pre-estimate of loss. Because there is no breach of contract the issue of a penalty does not arise.

You make reference to a regime that is 'unlawful at Common Law, Statute and recent consumer regulations' without identifying the common law, statute or consumer regulations or indeed the specific sections or regulations you seek to rely on. Further, you should specify with particularity any conduct on the part of Northern Rock plc that you consider has been unlawful or has not complied with UK law.

Northern Rock plc also disagrees entirely with the suggestion that the redemption fee applied to your mortgage account is either a penalty or is unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR"). You should be aware that Regulation 6(2) of the UTCCR sets out that the UTCCR do not apply to core terms of the contract and nor do they apply to the adequacy of the bargain between the parties to a contract. The redemption fee applied to your mortgage account is an express term that goes to the heart of the contract between Northern Rock plc and yourself and, in addition, very clearly goes to the adequacy of the bargain between it and you. For these reasons, in accordance with Regulation 6(2), the UTCCR are not applicable to the early redemption charge applied to your mortgage account and nor is it an unfair term.

You also make reference to the OFT report dated 5th April 2006, in which high levels of penalties were considered to be unfair. This pronouncement was in relation to default charges on credit card accounts and not early redemption charges, as is the case here. As an aside, it is for the courts rather than the OFT to decide what is or is not unlawful.

In summary, the redemption fee applied to your mortgage account represented a core term of the contract you made with Northern Rock plc. It went directly to the heart of the bargain between you and Northern Rock plc. It did not represent any form of damages for breach of contract and was simply the agreed charge for early redemption of your mortgage. You were clearly and unambiguously notified of the charge, as an express term, prior to entering into the mortgage agreement.

Furthermore, please set out in detail the amount and nature of the fees in question in order that Northern Rock plc may respond accordingly to your request.

With regard to the threat of court proceedings, Northern Rock plc looks forward to receiving your substantive response to the legal points raised above, prior to the issue of any proceedings. For the reasons set out above, Northern Rock plc does not consider that your letter 4 December 2006 discloses any reasonable grounds for bringing a claim against it, and nor, if such a claim were issued, that it would have any prospect of success.

In the event that proceedings are issued without your having provided a substantive response to the legal issues raised, Northern Rock plc reserves the right to bring such failure to respond and the content of this letter to the attention of the court in relation to its costs.

If you are in any doubt as to the meaning of any of the above it is strongly recommended that you seek independent legal advice.

I hope I have resolved matters fully for you. I have enclosed details of our internal complaints procedure which explains what you should do if your complaint has not been resloved satisfactorily and identifies the timescales for dealing with complaints. NB This was not actually enclosed! If you remain unhappy please contact me as soon as possible with any queries or concerns.

Alternatively, if I do not hear from you within eight weeks from the date of my letter I will close your complaint for you.

 

I suppose my biggest question is this; does anybody know whether I actually have to respond to this letter, or can I just proceed to court after the 14 days after LBA has passed?

Thanks in advance all - and MERRY CHRISTMAS EVERYBODY!!!

[paulpb123]

Hi Thehomee,

This just looks like the usual "stop being a nuisance and sod off" letter. You have asked for your money back and given them plenty of opportunity to refund your money. They have said no. Yes, I think you should respond to their letter. Issue your claim and no need to wait any longer as that is their final answer. Best wishes,

Paul

[thehomee]

OK, sounds like good advice! I seem to remember seeing a very similar letter somewhere on this forum, but I can't find it now. Still, I'll let 'em have a nice Christmas and go for it in the New Year. Thanks again for your advice.

[thehomee]

I have discovered that other people on this forum have replied to such letters as this before actually taking court action. I have completed MCOL and added 8% interest. The interest adds on another £2000. I can only claim interest if it goes to court, so does this mean that I have to reply to their letter (see above) to give them a chance to settle out of court without them having to pay interest, or should I go ahead now, pay my £250 court charges, and claim interest? Thanks in advance for any help.

Happy New Year all!!

[paulpb123]

So that was their response to your prelim. Sorry, I was a bit confused. This is Zoot's letter in response to the no breach and terms and conditions argument:

 

http://www.consumeractiongroup.co.uk/forum/mortgage-companies/51946-letter-response-no-breach.html

 

All the best,

Paul

[thehomee]

OK. thanks again for your help.

[paulpb123]

Also...you say you have completed MCOL. Have you actually issued the claim or just worked out how much it is for? The 8% interest is applied when you issue the claim and because your original claim is for under 5K the fee is £120 and not £250.

[thehomee]

I have completed the MCOL form but not submitted it. There is a section that asks if you wish to claim interest, then it tells you to add 8 percent per year. Once I did that it calculated the total to be over 5k, so it automatically adjusted the fee accordingly. Without interest it is 4,606.57, but with interest it is over 6k! Mebbe I've done something wrong with the interest calculation?

Cheers

[dolly]

Use one of these to work out your interest - you only need to put the ERC figure in and the date it was charged and it will calculate the interest for you:

 

http://www.consumeractiongroup.co.uk/forum/bank-templates-library/182-6-interest-calculation-spreadsheets.html

 

Edited: Actually looking at the amount and how long ago it was, that £2k interest seems right.

[thehomee]

Thanks for that. I'm a bit worried about stumping up 250quid 'cos I can't be sure I'll win, and 250 is a lot of money!

[dolly]

Understand completely where you are coming from there - but you WILL win. Can they justify over £4.5k, just remember that.

 

Have you claimed any bank charges back? I think most of us claiming the ERC's have successfully claimed other things back so we are more confident as we know it can be done.

[thehomee]

Haven't claimed bank charges back yet, but Barclays are way up on my list! Thanks for your advice and Happy New Year...

[thehomee]

I have just done MCOL and then I read the thread where another forum member has been stung for over 4.5k charges by Kensington. I really feel for you.

I can in no way afford such a charge, so do I now cancel MCOL? Any advice greatly appreciated.

Thanks

[thehomee]

Hi

Can anyone advise me on this please?

Ta

[paulpb123]

If your claim is under 5K no need to panic. All you can lose is your £120. Surely its worth having a punt and causing NR some inconvenience into the bargain.

[thehomee]

Hi. Thanks for that. You're absolutely right - if I lose 120 it's still a lot of money but it's a hell of a better risk than ending up with 4.5k fees to pay!

I'll carry on with it and no doubt they will send me a part 18.

It could've been over 5k because there's about 2k interest, but then the fee would've been 250 I think, so that's why I kept it under 5.

Cheers again for advice. I'll let you know what happens....

BTW -Kensington should be ashamed of themselves treating people like that.

[thehomee]

Well, tomorrow's the day by which they have to have defended and the only thing I have had is a letter today replying to my letter of 2nd Jan telling them I was going to take court action. It is a standard letter you've all probably had.

No word about the actual court action and no defence.

Tomorrow I will be able to claim judgement by default. Will this mean that they can apply for a set aside? If so, I think there are a few Northern Rockers out there with the same situation, so the courts should be made aware of NR's MO!

[stig1953]

Hi thehomee,

I am currently at a similar stage to you but NR have acknowledged my claim and indicated they will defend . They did this within one day of receiving the MCOL. Have you checked the MCOL website to see if they have acknowledged-If so this buys them an extra 14 days. Remind me are you claiming bank charges or an ERC?

Stig

[thehomee]

Hi - it is an erc only. I have checked MCOL every day and it always says the same thing. The defendant has 14 days to defend the claim. Nothing else has changed on there. Having said that, today is the 14th day and it won't let me click on judgement by default! So perhaps it is because it is Sunday. I will try tomorrow. Will let you know.....

[thehomee]

Hi everyone! I am trying to obtain Judgement by Default, using MCOL, but it keeps saying I have to wait 14 days. According to the forms I received from the courts after I first filed using MCOL, the 14 days is up on 4th Feb. It is now 5th Feb but it still won't let me obtain Judgement by Default. Does anybody know what I need to do now? Thanks

[zootscoot]

There is generally a few days grace. Expect a last minute defence.

[dolly]

I think it is because it fell on a weekend,they get an extra day or so. Best trying tomorrow.

[thehomee]

OK. thanks everyone. They'll probably apply for it to be se aside anyway......

[thehomee]

Hi. I'm sorry everyone, but I have searched this site for hours and can't find the answer to these important questions, so hope someone can help me;

I am about to click on 'obtain judgement by default' , which it will now let me do.

If I do that and they then apply for a set aside, it will probably be granted as far as I can tell, and this seems to be their MO.

My questions are;

1) Does that mean that I have to attend court in person at a later date?

2) If I lose, what are the likely costs, apart from the fee I have already paid?

Thanks all!

[thehomee]

Can anyone advise? Ta