A serious new blow to mortgage borrowers

The bigger financial side is something I never get Paul, not my forte, I just concentrate on trying to save the home using regulations and laws., same as my landlord/tenant work.
 
I attend the county court user group meetings where us lot who find ourselves there several times a week get to chat to the judges over a tea and biscuits and moan about how there is no need to shout at us haha and I met a guy there recently who used to be the head of mortgage repossessions for a very well known high street building society, now working in social housing. I asked him why they fought so hard against us when we know from the off that their case wouldn’t get past the judge and his reply was this “We know you guys always quote section this and regulation that and quote case laws and we don’t even know what they are, it isn’t that complicated on our side, its just a case of ‘get the money or get the house”
 
He even fessed up, when questioned about missing consent letters (signed authorisation for us to talk to the lender) go missing, he looked a bit embarrassed and said “We just throw them in the bin Ben”. Every bank does this, so I knew it was no accident. I staple it about 10 times to the letter I send and I send it recorded delivery these days because it happens routinely with every lender but when you ring them to negotiate they always say “We have your letter on file but not your authorisation letter so we cant discuss the case with you”, and so the fees and charges keep rising. Its more income generation.
 
I have one woman in arrears paying a second charge mortgage at only £125 per month. She negotiated  her own agreement to pay £150 per month, thus in theory knocking the arrears down by £25 a month, but all the time she is in arrears the file remains with the litigation team and the litigation fee runs at £115 per month, so she is getting nowhere.
 
Another common dodgy fee trick is where a borrower takes out a second charge mortgage of £30,000 with payment protection insurance of say, £5,000 cover for unemployment, sickness and wot not and when you look at the small print you find the loan itself, has that £5,000 added to the loan, making it a £35,000 loan and when you work out the interest rates, yes the loan is at a decent rate, 4.4% for instance but the interest on the PPI is 60-70% and often the PPI cover ends after say 5 years but the monthly payments have to continue for 10 years. Its really scandalous the dirty tricks they get up. Most borrowers aren’t that savvy. I never was until I started doing this work.
 
I’ve put my years in facing down ‘Big Ron’ and his baseball bat in a scuzzy Old Kent Road bedsit trying to harass his tenant. Banks are doing the same thing but they just hide behind the law to do it. At least you can usually reason with Big Ron…..albeit from a few feet away haha

Sounds to me like the banks are behaving in a fraudulent manner and actually committing fraud by illegally disposing of your consent letters and lying that they haven't received it.
Don't banks copy every bit of correspondence that comes in.
I'd do a SARN or rather get the mortgage holder to issue one.
If it comes back as the consent letter was with the records and they say they never received it; you've got them for fraud.
I'd then report it to the police.

Doesn't the Interest Only/SMI equation change depending on how far the borrower is through the mortgage term? e.g. It's more advantageous to remain on a Repayment mortgage towards the end of the term when the SMI payment exceeds the interest due?

Knowing and proving it are different things unfortunately.

I do SAR letters requesting 6 years of fees and charges, talk about making a rod for my back haha the file comes back as thick as a phone book and I dotn have the time to wade through it

Because SMI is calculated on the outstanding balance, it doesn't matter about how far thru the term it is.  

Is it likely that a Judge would order (or otherwise force) a lender to convert the mortgage to interest only to allow the maximum benefit from SMI?

I dont think judges have those powers to interefre in the conduct of primary mortgages, I know that have wider powers in Time Orders, to vary conditions, rates and fees etc but I have always worked on the basis that the only 'In' you have defending a repossession that isnt subject to time orders is Section 36 Administration of Justices Act to adjourn and suspend etc.

In my experience judges always state they cannot interfere with the contracual provisions between lender and borrower and are even reluctant to deal with cases on a time order basis even when they apply

I have great sympathy with Ben's line of argument and agree that some lenders' attitudes to arrears are hard to understand.

Paul, NRAM are trying to reduce their mortgage book all round: I have two NRAM houses on BTL IO mortgages at 1% above base, on which I've never missed a payment and am making very good rental profits, and they've just sent me a glossy newsletter with dire warnings about the future and urging me to switch lenders and/or pay down my mortgage. It's the first time they've done this so clearly something's changed, perhaps within their own strategic plan to run down their closed mortgage book, or after advice from the FSA.

I'm going to ignore them and hang on to my pre-2008 mortgages as long as I can, because the interest rate is excellent and I don't wish to pay down a penny of my mortgages: as a small developer I want to hang onto as much of my capital as possible, so I can grow myself into a position where I can build my houses for cash and avoid dealing with any banks at all. At the moment the only loans available to small builders are mezzanine finance which charge credit card interest rates on both the loan to cover the land cost and the loan towards the buillding costs: that's 22-25% p.a. on £200K+ per property.

Repayment mortgages may be a sensible idea for the ordinary working person on an average PAYE salary, but these changes of policy on IO mortgages represent another attack on the self-employed and small business people, following the removal of self-certification mortgages. Both types of mortgage are great for anyone with a variable income and much of their capital tied up in businesses trying to make a profit, because they trust you to generate the income necessary to cover the mortgage and ultimatly pay off the debt. I will submit to the overpayments required by a repayment mortgage if there is no alternative, but I much prefer interest-only: the borrower gets to hang onto his or her capital, meaning you can use the capital more profitably elsewhere until you choose to pay off the mortgage, plus inflation is steadily decreasing the real value of your debt.

Ray Boulger from mortgage broker John Charcol commented: "The recent interest-only criteria changes are being driven by the draft Mortgage Market Review (MMR) published by the Financial Services Authority in December". This is still out for consultation, so perhaps Ben and his colleagues should make a submission to the FSA to explain the ramifications of what is being proposed for borrowers in arrears?

Bear in mind:
1) It is not a bad idea to place landlords in a position that they are paying off the capital as they go - since very few lenders want to keep the loan 'active' - so to speak - once the term is up. Suddenly a lot of landlords who thought they had pensions will have to let go of their property (something nobody seems to be worrying enough about). They will have nothing - except perhaps a huge debt as they are on top of the forced sale have to do so in negative equity. This is something that paying off the capital protects the lender from, but it also buffers the landlord's purse as well, lowering the final debt or negating it. Maybe, much as I like interest only, for people (perhaps including me) without top notch monetary skills and reaonable luck there is good sense to this as we (the hungry landlord masses) might all be children playing in the 'now'. Still, I will miss my favourite toy.

Yes Tony it is a hidden aspect of the changes. Because of the job I have to do when I read announcements like this I automatically see it in the context of home saving but it is always written from a purely financial perspective.
 
When the FSA produced their report in June frowning on IO mortgages we complained to the government’s Homes and Communities Agency who we work closely with to bring our concerns to the FSA but nothing changed, the FSA are concerned with financial markets not housing or homelessness.
 
Last week I did 6 mortgage repossession cases in court and won each case, based on adjustments of interest only coupled with SMI payments. If lenders crack down on IO mortgages then it is likely that when faced with a similar week in 6 month’s time all 6 families would be repossessed and have to be rehoused as homeless families.