FCA think it might be OK for lenders to ignore contractual terms

FCA think it might be OK for lenders to ignore contractual terms

11:51 AM, 8th July 2014, About 8 years ago 32

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This week our favourite journalist at The Telegraph (Nicole Blackmore) wrote an article entitled “Should mortgage lenders be allowed to change mortgage terms” FCA think it might be OK for lenders to ignore contractual terms

What an outrageous question you might think. However, it’s not Nicole’s question, it is a question posed by the FCA!

Mark Smith from Cotswold Barristers commented …

“This is the line that worries me most “The FCA stated: “Lenders can change their regulated mortgage contracts after the point of sale without treating their customers unfairly.”

He then went on to add ….

“This is utter rubbish. 

A contract cannot be ‘changed’ by one side without agreement of the other side. A term can be varied only if the contract permits it. This is the whole nub of the argument we are having with West Bromwich Mortgage Company.”

David Lawrenson, a consultant at Letting Focus and an expert on the residential property market responded by writing the following letter to the FCA …..

“Dear Sirs, 

I see at the FCA you are asking for the public’s views on whether mortgage lenders should be allowed to alter mortgage terms and conditions mid term.

Funny that, but I thought a contract was a contract, was a contract – and was for life. I must have missed that in the small print.

Perhaps I should now write to all the lenders I have mortgages with and tell them that due to changes in “the funding environment” (i.e. I fancy a yacht and a racehorse) I will now be paying off their buy to let mortgage loans at rate of 0.1 per cent per annum. How would they like that, I wonder?

How on earth can you, at the FCA, even have the gall to be not upbraiding these lenders, never mind seeking advice from Joe Public on whether they can cheat in this way.

The landlords affected by the West Bromwich and Bank Of Ireland’s decision to cheat in this way was appalling – and you let them get away with it, so now the landlords affected have to go to court to enforce their rights. You really should be ashamed of yourselves and are now seen as something of a laughing stock and stooge for the financial services amongst the landlord community.

These landlords made a bet with the lenders on tracker mortgages – and they won. They often paid high application fee and high initial interest rates to get the benefit of a long term “rest of life” tracker rate later on in the term of the mortgage.

Now the tide has turned and the lenders are losing money, do not like it and would like to wriggle out of the contract.

Tough! They would not let their borrowers wriggle out, so why should they be allowed to.

And you should stand up against lenders – because this is simply cheating. You should not be wasting time asking for consultation on whether or not this is cheating.”

You can read my response in the comments section below the article The Telegraph – LINK HERE

If you would like to express your disgust directly to the FCA their email address is mortgage.dp@fca.org.uk

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Comments

Mark Alexander - Founder of Property118 View Profile

13:50 PM, 8th July 2014, About 8 years ago

Reply to the comment left by "Giles Brown" at "08/07/2014 - 13:25":

"what can one do?"

Read your original mortgage terms. If they say that portability is subject to fresh underwriting at the time of the request and subject to the lending creteria at that time then you haven't got a leg to stand on.
.

Romain Garcin

14:00 PM, 8th July 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "08/07/2014 - 13:44":

Certainly the FCA in their paper is making a lot of 'gymnastics' to present terms permitting variations as generally legitimate and fair.

I'd like to see what would happen if landlords had similar terms in their tenancy agreements...

Giles Brown

14:34 PM, 8th July 2014, About 8 years ago

I did actually find the "Woolwich guide to our Mortgages"p12 Portability
THE NEW MORTGAGE IS SET UP ON THE SAME TERMS AND
CONDITIONS AND FOR THE SAME AMOUNT AS THE OLD ACCOUNT
ETC ETC
I may have been knocked over but I am still trying to stand!!

Ian Burton

14:52 PM, 8th July 2014, About 8 years ago

The big thing that comes to my mind is I thought the quango was set up to oversee, if so and they are now asking for the public to do the overseeing, should we not disband the FCA , give us all a tax rebate for the costs saved and then, oversee by what the majority think (pretty much what I thought we voted the government in to do!).

As an aside this would also mean we could do away with lawyers (in totality) saving us yet more money.

In fact anarchy seems pretty near if this is allowed.

Mark Alexander - Founder of Property118 View Profile

14:55 PM, 8th July 2014, About 8 years ago

Reply to the comment left by "Giles Brown" at "08/07/2014 - 14:34":

What have you done so far to challenge the decision?
.

Giles Brown

15:20 PM, 8th July 2014, About 8 years ago

Innumerable phone calls (20mins min wait) with comments as variable as their mortgages.basically a waste of time.The complaints dept. have registered me with a long number and I still await their written response. I also have a Broker chasing but in the meantime I will probably lose the new property!

Mark Smith (Barrister-At-Law)

15:21 PM, 8th July 2014, About 8 years ago

Reply to the comment left by "Ian Burton" at "08/07/2014 - 14:52":

Steady on

Mark Alexander - Founder of Property118 View Profile

15:26 PM, 8th July 2014, About 8 years ago

Reply to the comment left by "Giles Brown" at "08/07/2014 - 15:20":

Have you considered involving lawyers?
.

Mark Alexander - Founder of Property118 View Profile

15:29 PM, 8th July 2014, About 8 years ago

Reply to the comment left by "Ian Burton" at "08/07/2014 - 14:52":

Just for you Ian - maybe the ghost of Syd Vicious is advising the lenders and the regulators?

Carol Thomas

15:56 PM, 8th July 2014, About 8 years ago

In your opinion, Mark, should we as landlords, fill out the DP14/2 Response Form?

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