Underselling
A reader has written in with the strange story of his attempt to buy a house repossessed by Halifax. Here's part of his message:
"Asking price £15,500.00. Halifax Property Services were unable to let me view the property as they had 'lost the file' however I persisted but merely viewed the property from the outside. Whilst I was there a local builder passed by and said that he had offered £15,750 but his offer was refused. Nevertheless I made an offer of £15,000. I was told almost immediately that my offer had been refused and the property was to be placed in the auction. (Guide price £11,000 - £18,000)."
Our reader then hit the phone and eventually got the Halifax to accept his offer. I mention this because several readers have discovered that their lenders turned down higher offers before selling their repossessed houses and chasing them for the shortfall. The lenders were the Mortgage Corporation and Abbey National. In the first case, the reader discovered it as he prepared to go to court over a shortfall claim and began to see the lender's documentation. In the second case, the reader served a Data Protection Act notice on the Abbey National.
Faced with this, both customers felt more comfortable about going to court to discuss the issue in front of a judge and offered the lenders a couple of grand and told them to be on their way.
Do lenders under sell? Would the shortfall claims you face be unsustainable if you challenged them in court or were able to reassure yourself that the lender has not acted properly? The only way you are going to find out are by:
Abusive lawyers
Different types of complaint tend to come in phases. This week it's been the turn of the abusive lawyer (or debt collector actually - most of the folks writing threatening letters to you from lenders' lawyers are lowly, unqualified "fee-earning" trainees). A couple of readers have reported that these people have sworn at them. If anyone can tape this I'd love a copy of the tape.
The Home Repossession Page is no good
Thanks to the reader who contacted the Sunday Times to tell them how my partial and unreliable web site helped them reduce a £57,000 shortfall claim to £1,500. He had to deal with my panic when he told me he had been on to the press over it so a double thanks to him for that. Thanks also to the reader who posted a comment about last week's Sunday Times article on the Home Repossession Page itself.
Cheltenham and Gloucester
A Sunday Times journalist and an experienced mortgage broker posed as prospective borrowers at a London Branch of Cheltenham & Gloucester (the same bunch that handle mortgages for Lloyds TSB). The manager, er, failed to tell them about early-redemption penalties even when directly asked. The customers asked the manager to tell them all about the company's two-year discounted rate mortgage. What he should have told them was that they would be forced to pay the standard variable rate for another three years after they paid off the mortgage if they paid it off early.
The current rate for Cheltenham & Gloucester's standard variable rate mortgage is £1,200 per month. So let's just do some maths with that:
1200 monthly payment
x 12 months in a year
------------------
14400 is the yearly penalty payment
x 3 years penalty period
------------------
43200 is the cost of the penalty
The Cheltenham & Gloucester's two-year discounted mortgage is currently weighing in at £700 per month. So by taking this deal without knowing about the early redemption penalty you'd think you were going to save:
500 monthly saving
x 12 months in a year
------------------
6000 yearly saving
x 2 number of years the discounted mortgage lasts for
------------------
12000.
But if you did pay off the mortgage early, and therefore triggered the early redemption penalty, the total cost to you would be:
43200.
- 12000.
------------------
31200.
However I look at it - £43,200 or £31,200 - I think the penalty is a lot of money. Especially when you have not been told you will have to pay it. Even after you asked.
Confronted with this evidence of their excellent customer service, Cheltenham & Gloucester said they were convinced that all their advisors were properly trained and constantly monitored. Cheltenham & Gloucester then apologised to the Sunday Times that its service was "not up to standard on this occasion".
First Active has launched one-year discounted mortgage. The discount ranges from 3.74% to 4.24%, depending on how much you borrow. There are no early redemption penalties but the discount does only last for one year.
BBC mortgage help
The BBC's added a lot of mortgage-related material to its web site, including links to several very useful mortgage-related web sites. Address is:
http://www.bbc.co.uk/rightmoves/
[ends]
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