Homeowners win refund of unfair mortgage charges

UK, 25th January, 2010 - Hundreds of thousands of home owners could be in line to collect hefty refunds for unfair mortgage charges.

Lenders face being forced to hand back millions of pounds in fees imposed on customers who missed their monthly loan payments.

One firm has been fined £2.8million and made to return £7.7million to borrowers when it was found to have acted unfairly.

The FSA fined lender Gmac-RFC for how it treated customers between October 2004 and November 2008.

The fine was partly due to the £45 a month levied on borrowers who went into arrears.

The watchdog said this was “excessive” and did not reflect administration costs.

However as many as 30 lenders – including Bradford & Bingley, the Derbyshire and Cheshire Building Societies and specialist lenders like Kensington and Morgan Stanley – have a similar charging structure.

According to the Council of Mortgage Lenders 195,000 borrowers are currently in arrears and this figure is expected to rise to 205,000 this year.

High street banks, particularly those in receipt of government bailout funds, have been forced to adopt a more tolerant approach to struggling borrowers. But many non-mainstream lenders like Gmac-RFC outsource the administration of their loan books to companies that are not so sympathetic.

Outsourcing firm Homeloan Management (HML), part of the Skipton group, processes loans for more than 400,000 other borrowers, including customers of the Derbyshire and Cheshire Building Societies.

Although HML refuses to publish statistics on arrears, a similar pool of 400,000 loans from Gmac-RFC shows that 20 per cent of borrowers are behind with payments.

This suggests that as many as 80,000 customers with loans processed by HML are being charged a monthly fee that the FSA deems unfair.

An industry insider said: “It’s a question of when, not if, this will apply to other lenders.

“It is causing a mighty problem as lenders and HML do not have the staff to look at individuals on a case-by-case basis.”

The FSA is set to release a report later this week and five more mortgage lenders are in line for fines.

Cerris Tavinor, an FSA spokeswoman, said: “We completed our investigation into Gmac and published the results of that case.

“We have made the point publicly that we have referred other lenders to enforcement, so other work is carrying on.” Call DebtFC now on 0800 007 5307 a Scottish debt advice company based in Livingston, West Lothian,  but covering all over the Uk.

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