Dear Sir,
Isn’t it time this sacred cow was slaughtered?
“What cow?”, I hear you cry.
The cow that is called, ‘one month’s interest payable in lieu of notice’, I reply.
As the Financial Services Authority (FSA), in its divine wisdom, is now at last deciding to examine exit fees on mortgages, surely it’s time former borrowers stopped paying lenders an extra 30 days interest on money that is languishing in their coffers and already attracting a first tranche of deposit interest from their bankers?
I looked closely at two of the mortgages we had the pleasure of completing this past week and I find that both lenders had included ‘automatically’ one month’s interest onto the already fat exit fees, closure fees, lawyer’s fees and whatever else they manage to weasel onto the debit side of the loan at closure.
I took both to task, only to be informed – perhaps from the same script – that ‘it’s automatic’, ‘it’s part of the original offer letter’, etc, etc, ad nauseam.
Deafened by the clang of dropping portcullises, I researched a bit on the lines of, “Tell me, if for instance in the future I wanted to avoid a 30-day interest penalty at closure, how would I do that?”
After furtive mutterings, the same reply from both houses of financial repute was identical.
“If you want to avoid it, the only way is to give notice exactly 30 days prior to the date of settlement.”
“So if,” says I, “I am unable to do that and say it will occur on or about the 28th, is that no good then?”
“Oh, no,” was the immediate reply. “Basically neither borrowers, nor solicitors, have control of the exact closure date 30 days prior to a final settlement, so that’s why we add 30 days to be sure.”
Heads – they win, tails – everyone else loses.
Helpfully, one suggested it was easier with reportages, as then a fair assessment of the closure date might be guessed 30 days before with some accuracy, but if it misses, for whatever reason, then the lender gets 30 days interest from both his banker, and from the settling borrower.
“So in reality the solicitor should give notice of 30 days every day for a month to ensure no penalty,” I suggested.
“We can only handle one notice of 30 days at a time,” was the helpful reply.
Hmm... So that will be called ‘Treating Customers Fairly’ (TCF) then, so that’s ok.
Just because its been the norm, does that make it right, proper, just, and fair?
It’s a loaded dice every which way up, and it’s time it was examined for TCF issues.
Stand back and watch now in the following weeks for lenders’ reasons why this involuntary regular contribution to the whores and gin account at a lender near you should not be strangled forthwith.
Bill Armstrong
Kendal Streete Brokers
AVM concerns
Dear Sir,
In response to the MI online article, where Moneyfacts.co.uk investigated who benefits from automated valuation models (AVMs).
There are two major concerns for me. Firstly, when buying in a chain, you only complete your purchase at the speed of the slowest buyer in the chain, so a faster survey doesn’t necessarily speed up a purchase unless all in the chain are using AVMs (but your offer may expire earlier). Secondly, AVMs could be abused by poor quality brokers who are aware properties may have structural problems. If this were the case there may be complaints lined up for the future. A lender which plans to sell on its lending book quickly may not be concerned; however a prospective buyer may feel more concerned.
M Belllangford
Via email
Convenient for clients
Dear Sir,
Basic valuations are used only for the lender’s purposes anyway, so for a remortgage surely an AVM is the most convenient for the consumer? No need to wait, no unnecessary delays, etc. I would like to see wider use of this, but hope lenders will pass on the savings with either free valuations or lower application fees.
Laurence Hughston
Mortgageupkeep
Single premiums ignored
Dear Sir,
In response to the Office of Fair Trading proposing to refer the payment protection insurance market to the Competition Commission. I, like most brokers, am concerned over single premium accident, sickness and unemployment, particularly in light of Essential Mortgages, which went into liquidation with 300 plus single premiums not passed onto the insurer. Why has the FSA not acted to stop single premium ASU?
Name and address supplied
A service nightmare
Dear Sir,
First light this morning, I opened MI and read the letter regarding Nationwide’s appalling service (or non-service). I could have written an identical letter many times over. Then I had occasion to telephone Nationwide regarding a mortgage application. Despite having sent the last two years’ audited accounts for my client’s business, a request had just been received from Nationwide for January 2006 accounts. As these have yet to be prepared, I telephoned to tell it and in no uncertain terms that the request was unreasonable. But to no avail – not even a letter from my client’s accountant would suffice. So one month on from the date of the mortgage application, I had to begin all over again.
Why did I use Nationwide when I was so fed up with it anyway? Because it offered the right product for my client, which boiled down to a slightly better rate and lower fees. I should’ve known better having had my fingers and reputation burnt by Nationwide before. In disgust and despair, I had to write to the chief executive and for good measure included a copy of the MI letter.
A telephone call to Standard Life Bank provided the solution within 45 minutes. From past experience, if I could, I would only ever use Standard Life. From the day it launched mortgages the service has been impeccable. Indeed I have just completed an application in less than two weeks.
Christopher Marsham
Principal
C&M Financial Services
MPPI madness
Dear Sir
I’m shocked that the Office of Fair Trading has deemed mortgage payment protection insurance (MPPI) worthy of an investigation by the Complaints Commission. Over the past year the industry has worked tirelessly to make sure brokers and consumers recognise the differences between PPI and MPPI. The OFT’s decision moves us backwards, not forwards.
PPI has a place in the market, but the concerns are more prevalent than those posed by MPPI, a sector that has been unfairly tarnished by the same brush as PPI. The OFT’s decision could have serious consequences for people who will view MPPI as a risky market and steer clear, when in fact more borrowers than ever will have to be reliant on this form of protection.
Bob
Via e-mail
I can only assume those are its own times because our telephone recording system shows that 83 per cent of callers to Berkeley Alexander have their call answered within 30 seconds and 99 per cent within two minutes.
Perhaps it’s just us that is efficient.
Ted York
Managing director
