Mortgage Mis-Selling, What Really Happened
Home ownership has always been a dream of UK citizens representing success in achieving a better life for their families and creating real property equity. In the last decade, government agencies and banking firms have worked together to assist low-income workers in qualifying for previously unattainable mortgages. Unfortunately, in their attempt to sell to the sub-prime debtor, brokers mis-sold mortgages, misrepresented payment amounts and hid extra fees that made it impossible for house holders to repay their loans.
“Mortgage and Home Finance: Conduct of Business (MCOB)”
As more hard-working UK citizens are in the process of losing their houses because they cannot keep up with the payments, they are deciding to bring litigation against the brokers who engaged in misrepresentation, fraud and negligence. The Financial Services Authority (FSA) has established the “Mortgage and Home Finance: Conduct of Business (MCOB)” standards to govern brokers. Section 4.seven of the MCOB ” requires a company to take reasonable care to ensure their advise is suitable.
” Under Section 150 of the “Financial Services and Markets Act 2000″, a “private person who suffers loss as a result” of a “breach of statutory duty” can bring a claim for damages. If a broker has not fulfilled his “statutory duty” to provide mortgage advice that is “suitable for that customer” then he may have been negligent.
“What Constitutes Mortgage Mis Selling?”
If one of the following circumstances applies to your mortgage, you might have a viable fraud claim:
Hidden charges or fees
Inappropriate for financial position or capacity
Interest-only loan
Mortgage Payment Protection Insurance (MPPI)
Debtor receiving welfare benefits
Pre-existing medical conditions
Repayment schedule extends beyond retirement age
Risk wrongly assessed
Self-certified income
Sub-prime loan due to adverse credit
Fraud charges can be brought for any mortgage type: regular, buy-to-let, remortgage or under the right-to-buy scheme for council tenants.
“Confusing Mortgage Calculations”
A house is the largest single purchase that most people make. The mortgage contract involves principal, interest and other fees that can be quite confusing for the average person. Many people, in fact most people don’t fully understand all mortgage calculations and the ever changing terminology.
With mortgage loan terms, such as “Interest-Only,” “Partially-Amortized,” and “Standard Variable Interest Rate”, it is not easy to understand how future monthly payments will be affected. Most house holders assume they are “paying down” there mortgages gradually; unfortunately, some of these fancy mortgages have higher monthly payments that are activated in the future. Lenders used clever tactics to make mortgages to sub-prime borrowers “more expensive” over time.
“Sensible, Affordable Mortgage”
Mortgage products must be compatible with the financial circumstances of the debtor. Mortgages must be sensible and affordable according to the FSA. There have been cases of mortgage brokers advising people to take a mortgage that they knew full well they would not be able to repay the loan, when all the hidden fees started to take effect.. These mortgage rip-offs were “guaranteed to fail.”
Mis sold mortgages represent one of the largest UK scandals and will have repercussions for decades to come. The FSA is investigating these mis sold mortgage claims to ensure that clients received fair treatment. If the broker or lender did not properly assess or failed to discuss the affordability of a mortgage, then this could constitute professional negligence.