Record mortgage complaints as borrowers struggle to make payments
A new record number of complaints were made to the Financial Ombudsman Service about mortgage lenders last year.
The Financial Ombudsman Service received a record number of mortgage complaints last year.
More than 13,500 people took their issues with mortgages or secured loans to the Ombudsman, with difficulties making repayments a common theme.
A third of those making complaints had slipped into mortgage arrears before seeking help with their mortgage arrangements. And of the remaining cases, many were either unable to admit they were facing significant financial problems or were concerned about what would happen if they told the lender about their situation.
Making a successful complaint
The Financial Ombudsman reported it upheld around 30% of all mortgage complaints. That’s up from 26% in 2012/13, but still relatively low compared to other areas like PPI (65% in 2013), current accounts (34%) and savings accounts (42%).
The Financial Ombudsman provided us with some examples of cases it has adjudicated on to give an idea of what issues it tends to deal with and how it handles those cases.
Compare mortgages with lovemoney.com
Treatment of struggling borrowers
Mr and Mrs C had a mortgage on their property. Mr C lost his job after being found guilty of misconduct, so they couldn’t afford their payments and went into arrears.
They contacted their lender and offered to pay what they could afford each month. The lender declined, saying it could not negotiate lower payments. Mr and Mrs C complained, asking for a mortgage holiday or to make lower payments. Lender again declined, saying Mr C was responsible for losing his job so full repayments should continue.
This complaint was upheld, as the lender did not enter into any meaningful discussions about the repayment proposals and had not treated them fairly by using the circumstances of Mr C’s job dismissal as a reason to not properly consider their suggestions.
The lender was ordered to agree a repayment plan with the borrowers, refund disputed arrears charges and pay £250 compensation.
Excessive fees
Years after taking out a mortgage Miss T fell ill and had to reduce her hours at work. As a result she missed a number of repayments and incurred “arrears management” fees. When her health improved, she started making repayments again, though could not make payments towards the arrears balance. While the lender accepted this, they continued to add fees to the account.
They later started adding “litigation fees” too when they began legal proceedings.
Miss T contacted the lender and arranged a repayment plan, but complained that adding more and more charges had made matters worse. The lender declined this complaint.
However, the Ombudsman upheld it. By the time the repayment plan was agreed, a “significant portion” of the arrears balance was made up of fees. The Ombudsman said the lender had not treated Miss T fairly and ordered it to refund the fees added from the point Miss T informed it that she could not make payments towards the arrears balance, as well as £200 compensation.
Repossession and sale
Mr J bought a bungalow. Years later he moved out to live with his new partner, but did not tell his lender his new address. He left some belongings in the property.
Mr J then fell into financial trouble and decided to sell the bungalow. He fell behind on his monthly payments and arrears were added to his account. The lender tried to contact him, but when it could not get in touch with him, it began legal proceedings.
The lender eventually repossessed the property and sold then sold it. Mr J complained, saying higher offers had been made for the property, which the lender had not accepted. His belongings had also disappeared.
The Ombudsman partly upheld the claim. The lender said it had not been told about the higher offers, though the estate agent selling the property confirmed they had been received. The lender failed to obtain the best price available, so was ordered to pay the difference - £3,000 – to Mr J. However, his complaint about his missing belongings was dismissed.
If you think you're being treated unfairly, read How to complain to the Financial Ombudsman Service
Compare mortgages with lovemoney.com
What to do if you’re struggling with your mortgage repayments
If you are struggling to meet your monthly mortgage repayments, you should speak to your lender immediately.
There are a number of ways they can help, including increasing the repayment term of your mortgage or accepting reduced payments for a short period.
You may be able to get State help in the form of Support for Mortgage Interest (SMI). This is available to homeowners receiving certain income-related benefits who are having trouble with their mortgage. However, bear in mind that it only covers the interest portion of your repayments and is normally paid directly to the lender.
It is also a good idea to get some specialist debt advice. Charities like Shelter, StepChange Debt Charity and Citizens Advice will all be able to sit down with you, go through your monthly budgets and help you find ways to save a little bit of money each month. For more on what they do and how to contact them, read Where to get free debt advice.
It may be something as simple as switching your gas and electricity supplier or moving to a different supermarket.
Compare mortgages with lovemoney.com
More on property:
What's happening to house prices?
Seven reasons mortgage lenders turn you down
Is your home in a repossession hotspot?
Comments
Be the first to comment
Do you want to comment on this article? You need to be signed in for this feature