Thousands could get compensation for mis sold mortgages, says Mortgage Claims Company
May 27, 2011 (PRLEAP.COM) Business NewsThis could potentially open the floodgates for tens of thousands of mortgage mis selling claims from disgruntled clients of the broker.
DB Mortgages received a fine of £840,000 and was ordered to pay out around £1.5 million in compensation. The former mortgage lender had specialised in home loans for those who could not prove their income or who had a poor credit history. However, it has been proved that the mortgage broker sold mortgages to those who could not afford them and then hit them with unfair and excessive charges when they ended up missing payments.
Director of the Association of Mortgage Intermediaries, Robert Sinclair, says: "DB Mortgages were fined for failing to follow their own internal policies and processes, as well as FSA principles."
Older clients were allowed to take out mortgages that extended into their retirement without being warned that their post-retirement income may not cover their mortgage. Self-certification customers were not shown the range of offers they would qualify for, instead being steered towards more expensive options instead. Finally customers taking out interest-only mortgages were not adequately counseled about the possibility that they could have to sell their home if they had not saved enough capital to pay off the remainder of the mortgage loan when the mortgage term had finished.
A spokesperson for Mis Sold Mortgage Claims Company, Writeoffloan.com says: "There will be tens of thousands of DB Mortgages' customers who will have been mis sold mortgages, but DB Mortgages are not the only broker out there doing this. In the last few years the FSA has banned 100 mortgage brokers for this sort of behaviour. To be honest, deliberately targeting people who have missed bill or rent payments, have IVAs or Trust Deeds, or have county court judgments against them for money-related problems is irresponsible anyway."
"In addition, racking up the interest rates on certain mortgage products during the recession just added fuel to the fire and it was only a matter of time before these sub-prime mortgagees started having problems. By the time they realised what was happening, the mortgage products market had dried up and they were unable to take their business elsewhere to get a better deal."
"Hopefully, the FSA's action against DB Mortgages has sent a clear message to other mortgage brokers to clean up their act or risk being fined, and possibly put out of business by crippling compensation claims."
Hugh Wade-Jones, of the mortgage broker Enness Private Clients, says: "I can imagine there are quite a few nervous lenders now as DB Mortgages traded for a relatively short period of time and dealt in the main part with smaller loans, so customer horror stories with some of the other predatory lenders will make DB look small-time."
Chief executive of the homeless charity Shelter, Campbell Robb, says: "Every day our advice services help struggling homeowners pick up the pieces after being irresponsibly lent money they had no hope of paying back in the first place. Reckless lending over the last few years, which saw some lenders giving out loans of more than 100 per cent and up to seven times people's salaries, helped to fuel the rise in arrears and repossessions, not to mention an unsustainable house price bubble."