~~~**IMPORTANT** Mortgage Claimants ~ PLEASE READ ~~

[Deepthroat]

I think the problem is that they can easily prove that they have been financially disadvantaged.

 

As explained above by zooman and myself they don't have to prove this.

 

For example, ERC's are only payable if you have an interest rate lower then their standard rate (excluding most trackers)

 

Not true - a sub prime lender will charge higher rates to reflect the risk they are taking by lending to someone with adverse credit and still include an ERC in the contract.

 

So by agreeing to stay with them for 2, 5 or 10 years, they give you a lower interest rate.

 

Say for sake of arguement 1.5% discount. Effectively, they are losing 1.5% interest on your mortgage each year, when you could have been paying their standard rate.

 

I am no expert, but I think this will allow them to show in court that they have made a financial loss.

 

As we have said they don't have to prove financial loss.

 

I am not saying that they are righ, just trying to put a possible argument into perspective.

 

Sorry, the point I was making is that the banks do consider that in this instance they have made a financial loss.

 

My knowledge of sub prime is very limited, but my knowledge of high street banking is in depth and extensive....

[gizmo111]

Ok then, because my brain is fryed will someone please tell me in simple terms what arguments we were using that gave us so much confidence that we thought we could win in Court? I'm not being argumentative I just want to understand in layman's terms what the basis of this fight was all about.

 

Wxxx

 

If you go back and read your prelim - we used case law, UCCT and OFT statement - saying that even if a right was exercised an excessive ERC could still eb deemed a penalty and therefore unenforceable, and we used the argument that a breach did in fact occur as the contract was xx years long - in the beginning some started to pay out and our (well certainly mine) confidence grew in that, also the beleif that we would only be responsible for a max £750 costs in court. We were wrong.

[Guest willowb]

If you go back and read your prelim - we used case law, UCCT and OFT statement - saying that even if a right was exercised an excessive ERC could still eb deemed a penalty and therefore unenforceable,

Yes I know, that's why I'm finding all this so hard to swallow, I had 'got my head' around that and now it is being blown out of the water!

We were wrong

No one is looking to apportion blame here, least of all me. We all have the right to choose hun, I don't feel anything like that from the members here. there is nothing but respect for Zoot, you and everyone else who have taken this so far and continue to work so hard.

Wxxx

[gizmo111]

Yes I know, that's why I'm finding all this so hard to swallow, I had 'got my head' around that and now it is being blown out of the water!

 

I know - and the costs that people are having is devasting

 

No one is looking to apportion blame here, least of all me. We all have the right to choose hun, I don't feel anything like that from the members here. there is nothing but respect for Zoot, you and everyone else who have taken this so far and continue to work so hard.

Wxxx

 

Thankyou - zoot has always said and I agree that the mortgage forum is one of the friendliest - and it continues to be so even in light of the events of the past week.

[kennyh]

Any chance of some guidance on #92 please

[DarcyCarter]

Another thing is the actual amount of the charge which is usually an obscene amount of money and does not relate to a genuine pre-estimate of the company's losses. If you have entered a mortgage contract for a reasonable fixed rate but then interest rates fall, how can they argue that they have lost anything? they have gained more from you in the interest you have paid and have then grabbed a huge penalty off you aswell!

 

They don't have to be a genuine pre estimate of losses as they are not a penalty for breach of contract - they can charge what they like - from 10p -£100k it is an explicit term in the contract for exercising your right to redeem. They are not arguing they have lost anything - they don't have to - but as an aside they will be borrowing from the money market at fixed rates also.

 

I'm not saying I agree with the charges and some of the redemption clauses are grosly unfair and put people who are already struggling in an even worse position if they have to redeem - but we have no legal argument that will stand up in court- we won't win however much we try to justify it - the mortgage co's are used to litigation far more than the banks and as has been proven sadly to the cost of 4 members it's not worth continuing with these claims.

 

 

Not sure I agree. I think there are good arguments that the ERCs could be covered by the law against penalties. There are some very pertinent judicial statements on exactly this point. It looks though as if the courts are currently rejecting these arguments - they are still good arguments though. In my view the no breach = no penalty is too simplistic.

[Glenn UK]

Darcy

 

Having read through some of the posts by Zooman much of which i agree with at least in respect of what the courts are used for and our exposure to costs, I think the questions is how much do you want to gamble on your arguments?

 

JMHO

 

Glenn

[DarcyCarter]

That is indeed the question.

 

I still think I'm right though!

[ANNALH]

 

Sorry, the point I was making is that the banks do consider that in this instance they have made a financial loss.

 

My knowledge of sub prime is very limited, but my knowledge of high street banking is in depth and extensive....

 

 

I worked out that during the period i had my mortgage, the bank of england base rate went down 3 times! Therefore it was me that was losing out by paying their fixed rate when i could have benefited from a reduction in interest rates on a variable or tracker mortgage.

[Guest willowb]

Mortgage Terms, ., cvr, fin, , law-bytes@swarb.co.uk, David Swarbrick, Solicitor, Wrigley Claydon

 

Within that it says this....

 

1. Indemnity. The mortgagee agrees to indemnify the lender. Whatever it costs the lender to manage the account, the borrower agrees to foot the bill. For example, you may fall out with the lender, and end up in court in a dispute. You win, the court awards you your costs, the lender pays up, and away you go. On your next statement will be the costs paid to you, and the costs of unsuccessfully defending your claim. Of course, it might take a lender with some courage to make such a charge, but there is no rule against it.

so, they could pursue costs from us even if we win?????

 

Wxxx

[Guest DEATHLORD]

well I for one am not taking this lying down, look at ome of there account they make MILLIONS out of charges and that why they do it.

If some one can not make a payment for what ever reason for say 2 or 3 months look at the charges they pay the MORTGAGE companies do NOT pay this on the money they have taken on the open market and the rates for them are about 3% and if they do Bonds they pay less and charge the Bondholders fees for admin of the mortgages.

So they WIN WIN.

[catherinebear]

Hi there

 

We have decided not to pursue the ERC with GMAC Kensington and SPML but would like to hear from others out there is it still safe to pursue for charges made for unpaid direct debits etc on mortgages as in bank charges? Thanks for your help.

Catherine Bear

[Guest willowb]

Karn, I was just about to do the same thing myself after reading properly!!!!

 

I'll type a few extracts out here for the record.

 

Wxxx

[gizmo111]

Originally Posted by gizmo111

Sorry, the point I was making is that the banks do consider that in this instance they have made a financial loss.

 

My knowledge of sub prime is very limited, but my knowledge of high street banking is in depth and extensive....

Something went wrong here I never posted this!

[Glenn UK]

That is indeed the question.

 

I still think I'm right though!

 

Sadly being right doesnt cut in in the court, winning the argument does, and unless you have deep pockets, and bearing in mind the forum were talking on i doubt that theyre particualrly deep, and can afford the right advice/support/barrister/QC then you probalby dont stand a chance bearing in mind the differences between this and bank charges.

 

JMHO

 

Glenn

[asalique]

Thank you Zootscoot.

I will not take my claim with ge money any furher.

[Guest willowb]

I don't know of what use this may be but I'm just posting the points that I found interesting.....

----------------------------------------------------------------------

 

The Mortgage indemnity clause is not a straight-forward contractual provision. It arises from Standard Condition 12, Schedule 3 of the Conveyancing and Feudal Reform (Scotland) Act 1970 (the 1970 Act), which provides:

 

'12 The debtor shall be personally liable to the creditor for the whole expenses of the preparation and execution of the standard security and any variation, restriction and discharge thereof and, where any of those deeds are recorded, the recording thereof, and all expenses reasonably incurred by the creditor in calling-up the security and realising or attempting to realise the security subjects, or any part thereof, and exercising any other powers conferred upon by the security.

 

 

 

At least three strategies to challenging the imposition of full agent/client expenses can be suggested in mortgage repossession cases. [****A standard contractual requirement in secured loans is for the debtor to indemnify the lender in the event the standard sequirity requires to be enforced, for example by *calling-up the loan* or raising repossession proceedings.****]

 

[1] Human Rights Act argument

Where there is an agreement between the parties to dismiss proceedings, the debtor's agent should seek to do so either on the undefended ordinary clause scale or where the client is legally aided for no expenses due to or by, failing which a motion should be made to modify expenses to nil.

 

 

[2] Unfair term of contract

Debtors have protection against unfair or unreasonable terms in consumer contracts. section 4 of the Unfair Contract Terms Act 1977 prohibits the imposition of indemnity clauses unless the term is 'reasonable', as defined by Section 11 and Schedule 2 to the 1977 Act. An indemnity clause which is not reasonable will be of no contractual effect.

 

Accordingly, it is arguable that there is no reason why the standard conditions once incorporated into the contract between the parties should not come under the auspices of the 1977 Act and the UTCCR; afterall they are contractual terms between the parties. Assuming this hurdle was overcome, a debtor would then have to make out a case that the indemnity clause was unfair, and similar arguments to those mooted in the above HRA argument could be utilised.

 

[3] Expenses 'not reasonably incurred' argument

The final suggested argument is perhaps more straight forward and relies upon the requirement in Standard Conditions 12 for the creditor's expenses to have been 'reasonably incurred'.

 

 

Wxxx

[DarcyCarter]

Sadly being right doesnt cut in in the court, winning the argument does, and unless you have deep pockets, and bearing in mind the forum were talking on i doubt that theyre particualrly deep, and can afford the right advice/support/barrister/QC then you probalby dont stand a chance bearing in mind the differences between this and bank charges.

 

JMHO

 

Glenn

 

 

Thanks for that Glenn. I'm a solicitor so I know that it's winning in court that matters. It usually helps to win in court when if are right (I meant right in law - it wasn't a moral point).

 

I could argue the case myself- but if the courts are going against this I won't do so until I know why. It might just be that the points haven't yet been compellingly argued, or it might have been that they have been properly argued but rejected as point of law. I haven't seen anything in the reports of lost cases to make me think the arguments I've thought through on this are not credible. There are of course differences but they are not as clear cut as the lenders would have you believe.

 

If it wasn't for the consumer credit act, I think there would almost certainly have been a court finding that these types of clauses are subject to the rule against penalties.

 

Having said all that, it's all a bit up in the air at the moment and I won't be issuing a claim until I know more. There is no point throwing good money after bad after all, depth of pockets notwithstanding.

[Guest willowb]

Darcy, if you think that the points made in the cases were good points but not constructed well enough to 'win over' a Judge then given your expertise could you maybe format your arguments here in simple point form for the use of those who are facing Court very soon.

 

Just a thought

Wxxx

[Bona]

Did anyone hear you and yours yesterday ? there was an item on unfair charges and penaltys to do with othere things holidays etc but what was said was that if your contract said that your erc would be a certain amount and they then put it up that was illegal any amount that is different from your originbal agreement was wrong and if at the time of your contract it said a penalty charge was 20.00 it has to stay that way though the term unless the contract says diffrently

I do not have a redemption fee I have redemption interest but cont find my original letter of offer to seee what it says

[Guest willowb]

Isn't redemption interest just the projected interest for that month until the mortgage is redeemed? that's not claimable is it?

 

Wxxx

[Bona]

I paid interest for the month of November we redeemed on the 21st they credited me some interest then slapped on two items of redemtion interest totalling 4500 aprox

[Guest willowb]

sorry me no understand......have you got a thread going?

 

Wxxx

[gizmo111]

Did anyone hear you and yours yesterday ? there was an item on unfair charges and penaltys to do with othere things holidays etc but what was said was that if your contract said that your erc would be a certain amount and they then put it up that was illegal any amount that is different from your originbal agreement was wrong and if at the time of your contract it said a penalty charge was 20.00 it has to stay that way though the term unless the contract says diffrently

I do not have a redemption fee I have redemption interest but cont find my original letter of offer to seee what it says

 

This probably refers to exit fees which are around £200 usually

[age9000]

I know the advise is not to claim for early repayment fees at the moment due to the fact thay we may get stung for costs against us, I am in the position that I would get legal aid,does the group think it would be an idea to pursue it in these curcumstances ? It would mean that if they fight it all they way we could end up with a good test case, as would be willing to appeal etc and go as far as required. at least then we will all know for def it its worth doing anything about. On one of my mortages if we settled two months later we would have had no repayment charged but by doing so sooner (had no choise) we got stung for £4,600 , that does not seem fair.