Losing Your Home, Crawford Style

[Worzel Gummidge]

I am also unsure about the statements regarding banks not wanting to reclaim properties. This has not been my experience, I have seen cases where banks have been unable to foreclose due to measures introduced for consumer protection, if that is what is meant.

[Tuco]

Who said anything about no repayment vehicles?

I was referring to endowments that have underperformed. Are you saying that those with an endowment that can satisfy 80 or 90% of their original loan will be kicked out onto the street unless they sell up?

If companies did that, there would be every justification to stop evictions.

If there's an outstanding balance after any endowment has paid out, the borrowers will need to pay it off. They'd be given enough time to raise the money, but if they don't take any steps to repay the balance or engage in any way with the lender, it's the same as any other debt and would need to be recovered. Banks aren't benevolent associations or landlords and, as commercial enterprises, their primary duty is to their shareholders.

Yes we know all this.

How many people do you know (being at the coalface) who pay large amounts of their income into a mortgage for 25 years do not take steps to repay?

In many cases, the interest is just continued to be paid for 27 or even 30 years, instead of the original 25 agreed. This does not affect the banks or their shareholders and is the route that many people with underperforming endowments have taken over the past few years.

[Worzel Gummidge]

Who said anything about no repayment vehicles?

I was referring to endowments that have underperformed. Are you saying that those with an endowment that can satisfy 80 or 90% of their original loan will be kicked out onto the street unless they sell up?

If companies did that, there would be every justification to stop evictions.

If there's an outstanding balance after any endowment has paid out, the borrowers will need to pay it off. They'd be given enough time to raise the money, but if they don't take any steps to repay the balance or engage in any way with the lender, it's the same as any other debt and would need to be recovered. Banks aren't benevolent associations or landlords and, as commercial enterprises, their primary duty is to their shareholders.

Yes we know all this.

How many people do you know (being at the coalface) who pay large amounts of their income into a mortgage for 25 years do not take steps to repay?

In many cases, the interest is just continued to be paid for 27 or even 30 years, instead of the original 25 agreed. This does not affect the banks or their shareholders and is the route that many people with underperforming endowments have taken over the past few years.

That would mean a new agreement wouldn't it ? Why would the mortgagee want to do that ?

[Worzel Gummidge]

I think that probably what has happened is that at some point the bank has monitorised the agreement. That is they have transferred any arrears of interest onto the principle.

[mufc1959]

Blah blah blah

Whatever.

[wserra]

Two posts each from Gummidge and Tuco deleted. In addition, they'll be out of action for a while. Hopefully they'll decide that it's not worth returning.

[jcolvin2]

... probably what has happened is that at some point the bank has monitorised the agreement.

I think the poster meant "monetized." When I read the post, an image of monitor lizards purchasing mortgage backed securities popped into my mind.

[grixit]

Would those be alien monitor lizards?

[mufc1959]

... probably what has happened is that at some point the bank has monitorised the agreement.

I think the poster meant "monetized." When I read the post, an image of monitor lizards purchasing mortgage backed securities popped into my mind.

And driving round in a Special Purpose Vehicle.

[Kay Powell]

I didn't get to read the offending comments, but I do agree with Worzel Gummidge, as I have personal knowledge of a bank that demanded that the full amount of the mortgage debt had to be repaid immediately at the end of the mortgage period on an interest only mortgage.

[Burnaby49]

Two posts each from Gummidge and Tuco deleted. In addition, they'll be out of action for a while. Hopefully they'll decide that it's not worth returning.

Damn it, you beat me to it. I was at court all day watching Michael Millar rambling on about how he made an Oath of Innocence to his Creator (capitalization assumed) and this allowed him to exempt himself from paying tax. I'd rather have been banning Tuco.

[aesmith]

We had an under performing endowment from the '80s. We also moved house twice, and once did a re-mortgage in place in order to get a better rate. During that time the banks had an increasingly arms-length attitude towards the endowment, from the original lender needing to approve the policy (and I think had an interest noted?) to latterly where they simply didn't ask about it's details. All the warnings about possible shortfalls, and reminders to take action, all came from the endowment company, not the bank.

The point being that if I'd cancelled the endowment in 1992 there'd have been nothing to warn about.

[Footloose52]

My endowment policy underperformed massively. The difference was I anticipated that and made other arrangements.

[ForumWars]

I think that probably what has happened is that at some point the bank has monitorised the agreement. That is they have transferred any arrears of interest onto the principle.

You mean the arrears have been capitalised? If there is equity in the property, many lenders would agree to capitalise the arrears. I know a few who have done it, your monthly mortgage repayments increase but it works well for those who fell into arrears due to a temporary change in circumstances as opposed to people who can't afford their mortgage repayments.

[ForumWars]

I didn't get to read the offending comments, but I do agree with Worzel Gummidge, as I have personal knowledge of a bank that demanded that the full amount of the mortgage debt had to be repaid immediately at the end of the mortgage period on an interest only mortgage.

I also had an interest only mortgage and it was in the terms that the capital would have to be paid up in full at the end of the term. It wasn't the lender's responsibility if your endowment under-performed. The mortgage didn't include a provision not to repay the capital and stay in the property by making monthly interest payments indefinitely or for a set period of time after the end of the term. This would require a new agreement with the lender and would amount to renting the property from the lender, or, in the case of a partial capital repayment, it would be akin to a shared ownership scheme where you buy a share in the property and pay rent on the rest of its value. It would require a completely new agreement to be made. You couldn't just keep paying the interest and expect the lender to allow you to keep the house. What sort of agreement would you be living under?

[longdog]

Much of the above is more theoretical than practical as anybody who gets to the end of a mortgage with and outstanding balance to pay is almost inevitably going to be able to come to a mutually acceptable agreement IF they engage with the lender. Crawford chose not to and that's what doomed him.

[Bones]

Much of the above is more theoretical than practical as anybody who gets to the end of a mortgage with and outstanding balance to pay is almost inevitably going to be able to come to a mutually acceptable agreement IF they engage with the lender. Crawford chose not to and that's what doomed him.

Very true, the below is from the case


11.On 31st August 2013 the twenty-five year mortgage term expired. However Bradford & Bingley maintained that the mortgage loan was still outstanding to the tune of £45,000 or so. On 27th September 2013 Mr Crawford applied to remove the charge from his property on the basis that it had been applied illegally. He also ceased making further monthly mortgage payments. The application to remove the charge was struck out as an abuse of process.

12. Having ceased making monthly mortgage payments, Mr and Mrs Crawford put themselves in breach of the terms of the suspension of the original possession order made on 19th September 2012. Bradford & Bingley sought to enforce the possession order by obtaining a warrant for possession.

[Bones]

I think that probably what has happened is that at some point the bank has monitorised the agreement. That is they have transferred any arrears of interest onto the principle.

You mean the arrears have been capitalised? If there is equity in the property, many lenders would agree to capitalise the arrears. I know a few who have done it, your monthly mortgage repayments increase but it works well for those who fell into arrears due to a temporary change in circumstances as opposed to people who can't afford their mortgage repayments.

42. The statements of account may be significant in that Bradford & Bingley conceded that from time to time there has been capitalisation of arrears. Six such capitalisations are listed for the main account the last being in December 2006. On the £5,000 loan there were three capitalisations the last being in December 1996.

We know from the above that he had been in arrears 6 times on the main mortgage, with the 7th time being when he stopped making payments altogether. As the arrears were capitalised, contrary to all the shouting from Amanda, it means that those arrears were not repaid by Tom, they were added to the balance of the loan.

[Bones]

I didn't get to read the offending comments, but I do agree with Worzel Gummidge, as I have personal knowledge of a bank that demanded that the full amount of the mortgage debt had to be repaid immediately at the end of the mortgage period on an interest only mortgage.

I also had an interest only mortgage and it was in the terms that the capital would have to be paid up in full at the end of the term. It wasn't the lender's responsibility if your endowment under-performed. The mortgage didn't include a provision not to repay the capital and stay in the property by making monthly interest payments indefinitely or for a set period of time after the end of the term. This would require a new agreement with the lender and would amount to renting the property from the lender, or, in the case of a partial capital repayment, it would be akin to a shared ownership scheme where you buy a share in the property and pay rent on the rest of its value. It would require a completely new agreement to be made. You couldn't just keep paying the interest and expect the lender to allow you to keep the house. What sort of agreement would you be living under?

In a lot of cases, especially with Building Societies, the Endowment would be with a different company, so whilst the endowment was assigned to the Building Society (when it matures the money is paid directly to the Building Society), the Building Society had no idea and to be frank no interest in how the endowment was or was not performing.

From the case

27. Seventhly, there was a complaint made by the Crawfords to the Ombudsman in April 2013. The complaint was that there was a lost endowment. The Crawfords complained that they had been making payments into the endowment until 1999 and that until the endowment was found they should be treated as still making payments into the endowment. The Ombudsman rejected the complaint on 18th July 2013 finding that Bradford & Bingley were not responsible for paying the policy target of £41,800 (or a separate lump sum of £11,000 which appears to relate to a Mortgage Indemnity Guarantee).

[Bones]

Does anyone have a link to Crawfords ombudsman decision ?

The Ombudsman has only been publishing decisions since April 2014, and I think Tom's involvement with the FOS pre-dated this.

From the case

27. Seventhly, there was a complaint made by the Crawfords to the Ombudsman in April 2013. The complaint was that there was a lost endowment. The Crawfords complained that they had been making payments into the endowment until 1999 and that until the endowment was found they should be treated as still making payments into the endowment. The Ombudsman rejected the complaint on 18th July 2013 finding that Bradford & Bingley were not responsible for paying the policy target of £41,800 (or a separate lump sum of £11,000 which appears to relate to a Mortgage Indemnity Guarantee).

The FOS started to publish Ombudsman Decisions (but not Adjudicator views) on 1 April 2013.
http://www.ombudsman-decisions.org.uk/

However, as the above states that Tom complained to the FOS in April and the complaint was not upheld in July - I am guessing that an actual Ombudsman decision was not issued and it was an Adjudicator's view that he received, as the timeframe is too short.

That is unless it was rushed through because there was pending legal action. However, I have had a quick look through the decision's and I have been unable to find one that matches Tom's circumstances. Prior to 1 April 2013, the Ombudsman did also publish some decisions as case studies, this was to publish the thinking of the FOS when it came to certain issues