Mortgage Express – Are they looking to break mortgage contracts?

Mortgage Express – Are they looking to break mortgage contracts?

13:49 PM, 5th April 2016, About 8 years ago 98

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Mortgage ExpressMortgage Express have written to many landlords warning about a review of current interest rates and repayment types.

The concern of readers is that Mortgage Express may be looking to break mortgage contracts on long standing tracker reversion rates in the same way the West Brom have done. The Property118 organised class action against West Brom is due to have the High Court Appeal heard this month 27th-28th of April.

The letters from Mortgage Express state:

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Your monthly payments may be changing

We are planning to introduce a new annual payment review to ensure your monthly payments remain on track. This review will consider your repayment type, current interest rate, your payment due date, all payments received, your outstanding balance and the remaining term for each of your mortgages.

The result of this review may lead to a change to each of your monthly payment amounts.

This will be implemented to coincide with the next annual mortgage statement for each of your accounts.

Your annual review

Your annual review will be detailed in all future annual statements, which will show any adjustments to your monthly payment amounts and steps, if any, you need to take as a result.

When you do receive confirmation of your new payment amount, in your next annual statement. please change your monthly payment accordingly. If you pay by Direct Debit, you don’t need to do anything we will automatically collect the new amount from your designated bank account.

Any questions you may have regarding the change to your monthly payment amount will be addressed in the Frequently Asked Questions we will provide with your annual statement. If you have any questions about this letter, call us on 0330 159 2591.”

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Bearing in mind how aggressive Mortgage Express have been in attempting to get as many loan accounts and as much of their lending repaid as possible we do not know how ominous a sign this is yet.

Are they looking to break tracker rate contracts and/or convert interest only loans to repayment?

We will keep you posted with the help of readers.


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Comments

Jon Pipllman

10:55 AM, 19th April 2016, About 8 years ago

I think it is a housekeeping exercise being done as part of the preparations for further sales of the loan book.

Maybe some bright spark at an investment bank advising a potential buyer has spotted some error in the 5th decimal place of the interest calculation formula that had been used previously and has demanded it be corrected before the sale can proceed?

That some borrowers would have been prompted to make contact with UKAR as a result of the correspondence arising, thus giving an opportunity to encourage repayment / moving the mortgage to another provider would be, as far as UKAR is concerned, a nice bonus.

David Lawrenson

11:16 AM, 19th April 2016, About 8 years ago

Reply to the comment left by "Jon Pipllman" at "19/04/2016 - 10:55":

It is typical of the way financial services operate.

If there was nothing nefarious going on here, (and there probably isn't), then you'd think it would have been sensible for MEx to make it more clear what is behind this rather odd letter... but maybe that is asking too much!

Trendo

12:12 PM, 20th April 2016, About 8 years ago

Scection 17. Interest adjustment.
In the cost redemption section there's an "interest adjustment" - What's this for ?

If you took your mortgage out with us BEFORE June 05 all or part of the interest adjustment will be for the following reason. If your mortgage completed AFTER June 05 then the adjustment will be as a result of a change to your account in the last 12 mths.

THE FOLLOWING IS ONLY APPLICABLE FOR MORTGAGES THAT COMPLETED PRIOR TO JUNE 05

To remain compliant wth industry regulationand to provide you with a better service, we introduced a new mortgage processing system in 2005. Your mortgage acc was converted to our new system on 4 June 05.
Prior to June 05, your monthly interest due was collected in the following month's payment. eg the interest due in March was collected in April's payment. We call this "collecting interest in arrears". the interest charging period was 4th month to 3rd of the following month - monthly interest was charged to your account on a later date.

Since June 05, the monthly interesthas been collecting your current month's payment. So the interest due in March would be colleced in March's payment. We call this "collecting interest in advance". the interest charging period is from 1st of the month to the end of the month.
Making this change meant that an extra month's interest - we call this the "conversion interest" - would need to have been paid in June 05, in order to adjust your acc to our collecting interest in advance. Conversion interest is simply the interest charged for the period 4th June to 30th June 05.

We felt that it would be unfair to ask you to make two interest payments in one month, so we calculated the conversion interest amount and set it aside to be paid when you eventually redeem your your mortgage. You have noy been financially disadvantaged by this adjustment. We have not charged interest on the (conversion) interest added to your loan and we can confirm the total amount of interest you will pay over the term of your mortgage will be the same.

Gary Wood

4:30 AM, 22nd April 2016, About 8 years ago

I too have a few accounts with mortgage express and was curious why the letter was sent...at the moment I am in a position where I am trying to sell one of the properties that is unfortunately in negative equity..although I have had several offers they fall short for me to redeem the mortgage, only by 6-7k ! I did contact UKAR on a few occasions attempting to negotiate a reduction of the loan...they wouldn't entertain me in the slightest, only interested in how I would pay the shortfall if I was to sell..

Chris Novice Shark Bait

14:13 PM, 24th April 2016, About 8 years ago

We have 2 ME mortgages. Our letters ask for increases of 2p &11p and terms are within 10-11 years, providing no Formal Demands generated. It requires us to alter our S.O.s by 01.05.16. Reason is obscure. Is it better to NOT be in arrears,or NOT to be seen to accept incomprehensible increases that depart however slightly from contractual agreement.
We are not in breach.
Anyone taken any advice or got any further thoughts?
Chris.

S.E. Landlord

9:03 AM, 25th April 2016, About 8 years ago

Reply to the comment left by "Chris Novice Shark Bait" at "24/04/2016 - 14:13":

It is very rare for mortgage interest to work out to an exact penny on monthly mortgage payments and therefore there tends to be rounding errors where the amount outstanding varies by a few pence each year. This is normally corrected when interest rates are changed and payments are adjusted for this. BBR has not changed for a number of years and therefore a rounding error has accumulated over a number of years and it is this I think that is being corrected.

I would make the adjusted payments.

Chris Novice Shark Bait

14:44 PM, 25th April 2016, About 8 years ago

Reply to the comment left by "S.E. Landlord" at "25/04/2016 - 09:03":

Thanks for your comment. Would be nice to hear just that from B&B/ME/UKAR though.

Trendo

1:11 AM, 26th April 2016, About 8 years ago

We have, this is with the annual statement ! ::::

Scection 17. Interest adjustment.
In the cost redemption section there’s an “interest adjustment” – What’s this for ?

If you took your mortgage out with us BEFORE June 05 all or part of the interest adjustment will be for the following reason. If your mortgage completed AFTER June 05 then the adjustment will be as a result of a change to your account in the last 12 mths.

THE FOLLOWING IS ONLY APPLICABLE FOR MORTGAGES THAT COMPLETED PRIOR TO JUNE 05

To remain compliant wth industry regulationand to provide you with a better service, we introduced a new mortgage processing system in 2005. Your mortgage acc was converted to our new system on 4 June 05.
Prior to June 05, your monthly interest due was collected in the following month’s payment. eg the interest due in March was collected in April’s payment. We call this “collecting interest in arrears”. the interest charging period was 4th month to 3rd of the following month – monthly interest was charged to your account on a later date.

Since June 05, the monthly interesthas been collecting your current month’s payment. So the interest due in March would be colleced in March’s payment. We call this “collecting interest in advance”. the interest charging period is from 1st of the month to the end of the month.
Making this change meant that an extra month’s interest – we call this the “conversion interest” – would need to have been paid in June 05, in order to adjust your acc to our collecting interest in advance. Conversion interest is simply the interest charged for the period 4th June to 30th June 05.

We felt that it would be unfair to ask you to make two interest payments in one month, so we calculated the conversion interest amount and set it aside to be paid when you eventually redeem your your mortgage. You have noy been financially disadvantaged by this adjustment. We have not charged interest on the (conversion) interest added to your loan and we can confirm the total amount of interest you will pay over the term of your mortgage will be the same.

S.E. Landlord

9:02 AM, 26th April 2016, About 8 years ago

Reply to the comment left by "Trendo " at "26/04/2016 - 01:11":

I think that is separate to the latest change of payment amounts and to explain the inclusion of an extra month's interest being showed as owed. My impression is that there will now be an annual adjustment to monthly payments of a couple pence to correct any rounding errors that have arisen in the previous twelve months.

Steve Harris

14:57 PM, 26th April 2016, About 8 years ago

Reply to the comment left by "S.E. Landlord" at "25/04/2016 - 09:03":

Arn't all payments via DD so no need to make the adjusted payments, they will be automatically taken.

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