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Have
you ever had mortgage arrears?
If so your
lender will have applied 'arrears fees' of £35 to £75 per month. Is
this lawful? Not
if
these
fees
are a penalty or 'unfair' charge.
This website tells you about UK
law on unfair mortgage charges, how to reduce mortgage arrears and
get your
money
refunded for free.
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Navigate the links to find out how to get
a refund. |
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"A
Govan Law Centre client family were subject to mortgage
repossession. The case was suspended in 2006 for payment of the
monthly mortgage plus £60. In late 2007, the lender sought
to reactivate the case claiming only £10 had been paid to
arrears each month. The family had paid £60. The
lender had been charging £50 'arrears fees' each month while the
case was frozen." |
What are
'arrears fees' for? Most lenders say they are for 'the extra costs
incurred in supervising the account until arrears are paid or the
matter is placed in the hands of solicitors'. What
supervision or administration takes place? Some lenders say
they have to telephone or write to the debtor, and instruct
enforcement action.
Some customers
may receive a phone call and letter early on but not thereafter; and
when a lender instructs a solicitor it charges a separate fee for
this (in addition to the solicitor's own fees). The difficulty
lenders have is very little extra work appears to take place, and
after the first couple of months of arrears there is generally no
evidence of any extra work at all (except legal enforcement work
which is charged separately under solicitors' fees).
Yet lenders
continue to levy 'default' charges indefinitely while homeowners are
in mortgage arrears. These charges are similar to bank or
credit card default charges - which the Office of Fair Trading (OFT)
has concluded are legally unfair in terms of the Unfair Terms in
Consumer Contract Regulations. In other words, a charge will
not be fair if it exceeds the lenders actual administrative costs.
The legality
of default charges has yet to be ruled on by a senior UK court but
these will not be enforced if they are found to be 'penalty' or
'unfair' charges. The law is clear on that. |
