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Miscalculated Mortgages

Miscalculated Mortgages

Our many years of success in obtaining compensation for PPI claims have brought us a great deal of industry knowledge and a reputation for creating and managing tenacious, not to mention successful, cases. We have used our experience and know-how to look into how mortgages have been either mis-sold or miscalculated in recent times, and this is a field that has brought us many wins.

Banks, building societies and other mortgage providers offer their customers a very clear set of information about how they calculate payments at the start, at the end and of course on an ongoing monthly basis. The details are very specific, but we’ve found many instances where they have failed to calculate correctly, and then ignored their obligation to inform the mortgage holder.

We use our knowledge and expertise to systematically review payments which have been made from day one of the mortgage onwards. In some cases, miscalculations were the result of an oversight or an error in the original set-up, but even one mistake on its own can have a significant impact on future payments. The overall discrepancy can ultimately amount to a very significant sum of money.

You may not even know that errors have ever been made

The problem for most people of course is that they are likely to be completely unaware of any such problem. And even if they are made aware they wouldn’t usually know how to calculate the damage. If you’ve been the victim of a miscalculation, the specialists from Beat the Banks should be on your side at the earliest opportunity.

There are so many aspects of a mortgage that could lead to a miscalculation, including:

• Changes in base rates not applied correctly
• Unfair and unnecessary charging errors
• Mistakes in the first and second payments
• Base rate changes not applied within the right time scale
• Switches from repayment mortgages to other types
• Further advances on the existing mortgage
• Charges made for mortgage arrears
• Different lenders taking over the mortgage
• Unsecured loans linked to the mortgage offer
• Charges not listed in the terms and conditions
• Overcharging of arrangement fees
…and many more.

The mortgage document itself is a complex one, and the average mortgage holder can’t possibly expect to understand every word that appears on it. If errors were made due to mistakes or even because of a deliberate act the chances are you wouldn’t have been aware of them. You need someone in the know on your side, and that’s where we come in.

The only call you ever need to make

One call to our specialists on 0800 193 1234 is all you need to start the process, and from then on we can take things from there. We go through all the documentation in fine detail, and our years of experience in the financial sector give us the knowledge we need to know what to look for. If there are miscalculations, there is every chance that we’ll find them.

You may be surprised by just how many mortgages have been miscalculated in recent years. Here at Beat the Banks, we have found that up to 85% of mortgages that we’ve reviewed contained errors, some relatively minor and some extremely worrying. It’s not always easy to find the errors, but with our knowledge and experience we’re in the best position to do just that.

A significant number of people continue to pay their mortgage repayments every month without ever knowing that they could be paying too much. This is one of those payments that many tend not to question, but of course it represents what is usually the most expensive purchase we ever make. Why on earth wouldn’t you want to find out if it’s fair and accurate?

Remember, we’re available today on 0800 193 1234 and we’re here to help. Instead of continuing with monthly payments without being sure of their accuracy, get in touch with the professionals to see if you could be due compensation. We have helped so many people to mount successful compensation claims for a wide variety of financial products in recent years, and we’d be more than happy to see what Beat the Banks can be done for you.

Rate drops have not always been passed onto the consumer within the correct timescales. Even a delay of a few days in passing on this decrease and then amplified through the mortgage term could see significant interest incorrectly added to the borrowing.

The first one or two payments on a new mortgage contract are often much different from the subsequent standard payments.

The change in rate hasn’t always been applied in sufficient time, meaning additional interest cost. The more frequently these changes have occurred, the greater the likelihood of multiple interest miscalculations.

Altering the mortgage repayment type can easily cause overpayments of interest to happen, especially if, for example, the change occurs mid-month and normal repayments are scheduled at the start of each month.

Further advances were unlikely to be offered at the same rate as the initial borrowing, or over the exact remaining mortgage term.

In 2010, the FSA – who were the Regulator at that time – warned banks about precisely how they should deal with mortgage arrears and related charging. This was the culmination of a two year review. Incredibly, in 2016, a further review by the FCA determined that around 750,000 mortgage customers had seen their arrears capitalised by their lender.

A policy that saw mortgage customers who were already having financial problems being effectively forced into repaying their borrowing at an accelerated rate. In July 2013, following discussions with the FCA, Lloyds Banking Group set aside a provision of £283 million to cover for incorrect mortgage arrears handling and inappropriate charging on these accounts for the whole period from January 2009 up until January 2016.

It’s estimated that as many as 590,000 customers of Britain’s biggest bank could be affected. Back in 2009, GMAC-RFC, now known as Paratus AMC, were fined £2.8 million by the FSA for mistreating around 46,000 mortgage customers that found themselves in arrears. The compensation bill back then was £7.7 million.

Since the financial crash at the end of 2007, many lenders have either been sold or required to transfer their total lending book to a new provider. The most famous is, of course, Northern Rock, where mortgage borrowings were transferred into Northern Rock Asset Management and some were even bought and transferred to Landmark. There have been many others, such as Edeus. Edeus collapsed in 2008 and then saw their mortgage book being returned to its joint major funders, namely Wave and DB Mortgages. Calculation and charging models between lenders are not always identical.

Kensington, a specialist sub-prime lender hit hard during the financial crisis, was bought by Investec in 2007. In 2014, they were sold once more – this time to two private equity firms, namely Blackstone and TPG. Again, in these situations, interest and charging mechanisms can vary.

There were many mortgages that offered this type of facility. An example of this is Bank of Scotland through their “Personal Choice” mortgage. This was offered on a self-certification basis and with a borrowing limit of up to 85% of the property value. To withdraw funds, customers simply wrote a cheque directly from their mortgage account. The continual drawing and repaying of mortgage borrowing laysitself open to calculation errors.

Again, a very complex model to compute. Borrowers often had the ability to use savings held with the lender to reduce their monthly repayment or the mortgage term. Many lenders offered this type of borrowing, such as Intelligent Finance, Barclays through their Woolwich brand, Scottish Widows, Yorkshire Building Society, Accord and The Coventry to name just a few.

The most notable being the Virgin One Account. Incredibly complex, it was where mortgage and personal account were rolled into one product. This meant the borrowing was both flexible and off-set. Initially a joint venture with Virgin and RBS, the latter took a majority shareholding in 2003 and rebranded it as the One Account at which point it was sold aggressively through their branch network.

Originally an Australian concept and first offered to the UK market via Clydesdale Bank. Customers were encouraged to review their mortgage on an annual basis with a view to increasing payments in-line with inflation or increases in salary and in turn shaving years off their original mortgage term. In 2013, the Clydesdale Bank were fined £8.9 million by the FCA for miscalculating the payments on more than 42,500 mortgages.

A mortgage amount representing 95% of the property value and an unsecured borrowing portion of another 30% on top. These types of mortgages were offered by the likes of Northern Rock, Alliance andLeicester and BM Solutions. Many customers took the option of re-mortgaging further down the line, but leaving the unsecured portion with the existing lender. Laterally with Northern Rock, this could see the interest on the unsecured element increase to a whopping 8% over their standard variable mortgage rate. Once again, potentially complex calculation models for the lender.

Although lender KFI’s (Key Facts Illustrations – or quotes) and mortgage offers had an obligation to be “penny perfect,” they often weren’t and some of the opening charges applied by some lenders did not appear anywhere. A good example of this would be a “CHAPS” fee debited to the mortgage by the lender when the initial mortgage funds were sent to the solicitor to settle the transaction.

KFI’s, Loan Offers and Terms and Conditions were all based on English law and adapted for customers based in Scotland and Northern Ireland. Often, they may not have actually reflected the set-up fees and charges.

Opening mortgage fees may have been substantial. Arrangement fees of £999 were entirely normal. Some lenders, however, charged significantly more than that – especially on Sub Prime and Buy to Let borrowing. How these were added to the borrowing and the interest in turn how these were applied to them, may have varied from what was outlined in the Terms & Conditions.

For many years banks have suffered from what we call Successive Short-termism. With banking more than any other business, it’s all about delivering a constant and increasing return for shareholders. Bank CEO’s focus all their efforts on delivering now and enhancing CV’s and their personal worth in the marketplace.

Our established banks have constantly avoided the issuing of tackling ageing and ineffective legacy systems, the cost of which can be enormous. Back in 2008, Nationwide made a £1 billion commitment to transform their IT systems. Aside from Santander, not one single one of the other traditional banks have faced up to this massive commitment.

It’s not just that. Banks in the UK have been on the acquisition trail since the turn of the century. They haven’t done anything to replace any of the individual core systems operated by each bank and it’s even claimed that one High Street bank, following many takeovers, now runs off up to forty legacy systems. The industry standard worryingly would appear to be dozens. Additionally, it’s also become an industry dominated by contractors who constantly move on. This, in turn, means little continuity and an often fundamental misunderstanding of the core issues.

RBS, Santander and Lloyds Banking Group are just three of the banks to score massive IT own goals in recent times. In 2011 Tracey McDermott, the then Head of Enforcement at the FCA, commented that unless these issues were addressed, “it will be their [the bank’s] customers who suffer.”

Since then, these banks have chosen to do little to address this massive issue of potential customer detriment. This is despite them all being subsequently written to by the FCA on this very specific issue.

An announcement in February 2018 by Lloyds TSB sums this up perfectly. Incredibly, despite spinning off from Lloyds Banking Group back in 2013, it still continues to use its former parent’s IT technology. All of which in the previous year meant a huge £122 million increase in outsourcing fees.

With all of this as a background, what is the likelihood that all of the millions and millions of mortgages in the UK have been calculated exactly in accordance with their original loan offers and terms and conditions, which often can be complex?

With results showing discrepancies in 80 to 85% of mortgages checked to date, the proverbial writing may be on the wall for banks in what will be a massive and totally avoidable own goal.

Although scarcely if ever seen these days, mortgages based on 3 month LIBOR rates were fairly common from the end of the 1990’s right through to the crash of 2008. As many as 5% of all mortgages taken during that period would have seen the borrowing priced on this much more volatile benchmark as opposed to traditional UK base rate. The rate for 3 months LIBOR is seen as more of a predictor as to how our base rate may be likely to change. Mortgages linked to this charging mechanism are far more likely to see frequent interest rate increases and decreases.

As with mainstream borrowing, the greater the number of changes, then the harder it is by definition for legacy calculation models to apply the changes accurately and on time.

This reference rate was mainly used by subprime lenders for both their mainstream and buy to Let offerings. They would take their funding from the money markets and then sell tranches of mortgage borrowing on to investors all over the world. Incredibly some lenders borrowed in packages linked to our standard base rate, but then lent on in 3 Month LIBOR. Kensington, one of the very first sub-prime lenders was in turn the very last one to exit LIBOR lending.

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  • Mrs C, Glasgow

    “From beginning to end, Beat the Banks have been very efficient. I am very pleased with the service from Jenna and the team. I am highly delighted and I have been recommending all of my friends.”

  • Shona, Dundee

    “Huge thank you to the team. After attempting to claim PPI myself and getting absolutely nowhere, I got Beat the Banks involved and ended up getting  £12,000. What a result. Beat the Banks made it so easy and were committed right to the end.”

  • Mr A McQuillian

    “From previous experience of PPI claim companies, I was a bit dubious if anyone could help me but I thought I would try Beat The Banks. To say I am pleased with the service and conclusion to my claim is an understatement. Beat the banks and my claim handler in particular handled all aspects of the claim from Clydesdale Bank with professionalism, courtesy, and efficiency to secure a positive result on my behalf. I would certainly recommend the services of Beat the Banks to anyone who thinks they have PPI claim, especially with the Clydesdale Bank.”

  • Mrs S, Falkirk

    “I was apprehensive about using a company to claim my PPI as I had previously responded to a “cold call” and was pestered with calls. I heard about Beat The Banks on a local radio station and because they were based in Scotland I felt comfortable approaching them. I have had a very positive experience with Beat The Banks. They are not pushy and answer any queries timeously. All the Agents I have spoken to were knowledgeable, polite and friendly. After the initial information gathering conversation, they understood my needs and just got on with my claim. No hassle. Even when it was clear that my claim was of a relatively low value they processed without delay. I would definitely recommend using Beat The Banks …. they put all the other companies out there to shame.”

  • T & A, Dundee

    “Down entirely to Mike’s hard work, we previously had a successful claim with Clydesdale Bank. Mike was convinced we had more loans with PPI and he was relentless in efforts to recover our paperwork from the bank. Finally, after many attempts, enough records were recovered to submit several claims. We have now received much more compensation, covering loans going back many, many years. If it had not been for Mike and the team at Beat the Banks this would never, ever have happened. Literally, all we did was sign our name and bank the cheque.”

  • Mrs S, Falkirk

    “I was apprehensive about using a company to claim my PPI as I had previously responded to a “cold call” and was pestered with calls. I heard about Beat The Banks on a local radio station and because they were based in Scotland I felt comfortable approaching them. I have had a very positive experience with Beat The Banks. They are not pushy and answer any queries timeously. All the Agents I have spoken to were knowledgeable, polite and friendly. After the initial information gathering conversation, they understood my needs and just got on with my claim. No hassle. Even when it was clear that my claim was of a relatively low value they processed without delay. I would definitely recommend using Beat The Banks …. they put all the other companies out there to shame.”

  • Mr & Mrs M, Shetland

    “We really appreciate the doggedness and professionalism of Jenna and the team at Beat the Banks. This is something we’d never have gotten round to doing and we’re so glad we went through the process with professionals as we’ve now had great results. Only positives have come from the experience.”

  • Mrs S, Falkirk

    “Excellent service so helpful, I received a substantial sum back that I had no idea I was due, thank you again to Beat The Banks especially to Gary who was so helpful and efficient in every way.”

  • Dave & Linda , Dundee

    “We had no paperwork but £52,500 reasons to say thank you, we are now living our Spanish dream! Exceptional service.”

  • Mr S, Dingwall

    “Have just found out I have won all my cases with the bank, going back many years and been awarded compensation of just over £15,000!”

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