Mortgage prisoners launch legal action

Specialist litigation law firm Harcus Parker has begun legal proceedings on behalf of more than 200,000 mortgage prisoners who have been trapped paying more than 5% interest on their mortgages for the past 12 years. Among those being represented include those who have lost their business and who have reportedly suffered health problems because of the strain they are put under due to the high cost of their mortgages.

The prisoners took out their mortgages usually with Northern Rock, Bradford & Bingley or its brand Mortgage Express which were taken into public ownership after the financial crash.

Once these were in public ownership, they were known as 'zombie' lenders or their mortgage books were sold to other such companies meaning when borrowers came to the end of their fixed-term mortgages they were not offered any new deals and instead placed on a high standard variable rate.

These borrowers were usually unable to remortgage with other lenders as they were deemed too 'poor' to make the repayments even though the amount was less than they were paying at the time and they were up-to-date with their repayments. Reportedly some borrowers with Northern Rock's 'Together Mortgages' have been paying rates of up to 15% on unsecured loans of up to £30,000. These customers claim that they have overpaid more than £30,000 in interest.

The core claim is that lenders were required to treat the mortgage prisoners fairly and to set their rates at a fair level.

Damon Parker, managing partner of Harcus Parker, said: “Our clients are regular, hard-working people who have done nothing wrong.

"Nevertheless, they have been unfairly treated and stigmatised by the failings of the banking system.

“Many of our clients have told us that, before they joined our group, they thought they were alone.

"Many have felt ashamed about being in financial hardship and of the impact it has had on their families.

"By bringing a claim as part of a group, they are benefiting from strength in numbers.”

Rachel Neale, who chairs the committee of mortgage prisoners that has instructed Harcus Parker, added: “This situation has affected my family severely, and made me want to campaign on the issue and organise the group.

“I have spent time with the all-party Parliamentary groups on mortgage prisoners and on fair business banking, and have tried to meet decision-makers at the major lenders in order to try to change their attitude towards people in our position.

"I have a particular interest in the effect of financial problems on mental health.

“By bringing this litigation I naturally want to help to ensure that we all achieve financial recompense, but I also want to highlight the issues so that others are not affected in the same in future.”