Mortgage Express forcing me to come off interest only mortgage.

[dwj2112]

Hi All,

Wondered if anybody had any ideas on how to deal with this.

I pay the interest on a friend's mortgage and rent out the flat to a great tenant. We did the deal legally and I have power of attorney to look after the mortgage.

It worked fine for a couple of years, but now Mortgage Express are insisting that we come off the interest only as we intially agreed and now go onto a repayment mortgage, so the payments are almost tripling (from £117 to £309 a month). Neither of us can afford to pay that.

We are now 6 months in arrears and Mortgage Express keep playing us off against one another - they won't consider my financial situation as the mortgage is in his name even though I make the payments.

When he tells them his financial situation they point out that I am getting a rental payment for the property (although it's nothing to do with him).

Basically they are completely refusing to accept an interest only arrangment and now threatening re-possession.

Can they do this?

Cheers,

Dewi

[MrsD]

Re: Mortgage Express forcing me to come off interest only mortgage.

no expert here, but I don't think they can force you to change the way you pay the mortgage but it would all be in the T&Cs. Have you accepted the change?

and I'm not sure about your arrangements, if it isn't your house why are you receiving the rental money and why do they know about this arrangement?

also how much actual rent is being paid as it should surely cover the £309 a month?

and do you have a vehicle in place to actually pay off the mortgage at the end of the contract?

[pompeyfaith]

Re: Mortgage Express forcing me to come off interest only mortgage.

Is the property in negative equity or more importantly is it's value enough to cover the mortgage as many interest only mortgage insurances are under performing and will not meet the cost at end of term.

These are what you need to weigh up.

[Still Waving]

Re: Mortgage Express forcing me to come off interest only mortgage.

and I'm not sure about your arrangements, if it isn't your house why are you receiving the rental money and why do they know about this arrangement?

also how much actual rent is being paid as it should surely cover the £309 a month?

It does seem a very odd situation, and as there are 6 months arrears it doesn't look as if the interest only of £117 was being paid from the rental income.

[dwj2112]

Re: Mortgage Express forcing me to come off interest only mortgage.

Thanks to all of you that replied to this thread. Sorry for not replying - I had forgotten that I posted this here.

It's still ongoing but the threats have stopped.

It is a really odd situation, I know, and it's a long long story of how it came about, so I won't bore you with the complicated details (unless any of you want to know), and thank you everyone that took the time to reply. There's a solicitor dealing with it at the moment, and hopefully it will all be resolved.

[Never-In-Doubt]

Re: Mortgage Express forcing me to come off interest only mortgage.

I'd speak to planB - she's our housing expert and pretty clued up with all what you mention in post 1

[PlanB]

Re: Mortgage Express forcing me to come off interest only mortgage.

It's still ongoing but the threats have stopped. It is a really odd situation, I know, and it's a long long story of how it came about, so I won't bore you with the complicated details (unless any of you want to know).

I'd like to know the details You won't bore me since I note that you are in Scotland where housing law is completely different to the rest of the UK and maybe I could learn from this.

Are you saying that your loan was interest-only from the start or was that a concession which Mortgage Express want to revoke and they are pressurizing you to return to the original terms of your contract? Or was this a residential mortgage which morphed into a Buy-To-Let situation when you took in tenants and ME are claiming you've breached the terms of the contract?

The only other question I have (to help me understand and learn more about the Scottish procedure) is what stage have the repossessions proceedings got or are they still a threat only?

As I understand it in Scotland you would receive a Calling-up Notice, then your local council would be sent a Section 11 Notice, and then before the lender can apply to the sheriff court for possession there are plenty of pre-action requirements which they have to comply with before serving you with an Initial Writ and a section 24 Notice. I have discovered that in Scotland an Eviction Warrant is called an Ejection Order which sounds a bit impersonal

I hope you get time to come back and post again and I'm sorry I missed your thread when it started.

[PlanB]

Re: Mortgage Express forcing me to come off interest only mortgage.

It does seem a very odd situation, and as there are 6 months arrears it doesn't look as if the interest only of £117 was being paid from the rental income.

The annoying thing is you don't have to miss six monthly payments to be six months in arrears. I know that sounds odd but the calculation is based on the sum of money owed not the calender. So for example you can be paying half the monthly payment due each month which would mean that after twelve months you would be six months in arrears. If that makes sense.

What a lot of canny borrowers do is pay a tiny bit towards the arrears as they get close to the six month timeline which can prevent repossession proceedings. The six month thing comes from pre-action protocol. So that's what I did with the Mortgage Express when I was experiencing cash-flow problems. But I wouldn't recommend it unless your back is against the wall. Mine was at the time.

[SaltnVinegar]

Re: Mortgage Express forcing me to come off interest only mortgage.

The annoying thing is you don't have to miss six monthly payments to be six months in arrears. I know that sounds odd but the calculation is based on the sum of money owed not the calender. So for example you can be paying half the monthly payment due each month which would mean that after twelve months you would be six months in arrears. If that makes sense.

What a lot of canny borrowers do is pay a tiny bit towards the arrears as they get close to the six month timeline which can prevent repossession proceedings. The six month thing comes from pre-action protocol. So that's what I did with the Mortgage Express when I was experiencing cash-flow problems. But I wouldn't recommend it unless your back is against the wall. Mine was at the time.

This is very true - something that I experienced with Northern Rock is that even if you missed a mortgage payment, as long as you paid sufficient so that you weren't a month in arrears then this wouldn't get reported to the CRA's too.

[dwj2112]

Re: Mortgage Express forcing me to come off interest only mortgage.

Thanks for all your comments everyone.

Plan B - happy to share all the details with you :-).

Briefly, I got into the property game and bought some flats when the banks were throwing money at me a few years ago. When things went "belly up" I got into difficulty paying my unsecured debts but managed to keep up the mortgage payments. I've gone down the unenforceability route with my loans and credit cards, and that's all ongoing (see my other thread http://forums.all-about-debt.co.uk/s...112-s-UE-Diary).

Happily, I have managed to keep up with my mortgage payments and just stopped paying all the unsecured debt. My properties are still in negative equity, but the rental payments I get cover the mortgages now that I've stopped paying my credit cards, so as long as the credit card companies don't come after me, then it's just a case of keeping going as I am.

The one I've mentioned in this thread with Mortgage Express is tricky because the account isn't in my name. When I acquired the property in 2010, I couldn't get a mortgage to purchase it. However, I was offered a "deal" by a company under something called a "lease option". Basically, as the owners couldn't sell it, and I couldn't get a mortgage, we completed a contract where I had the option to purchase the property at any time during the next 5 years. In return, the owners moved out and I agreed to pay the mortgage interest, any repairs and maintenance etc. and also collect any rental income from letting it out. I have a Power of Attorney over the property, but I am not the legal owner. The owner's originally were paying capital and interest, but we got the mortgage changed to interest only when I took over the payments. Without any warning, Mortgage Express have now changed the payments back to capital and interest and no pleading would convince them to revert the payments back to interest only.

Dealing with Mortgage Express is a nightmare - as the account is still in the owners name, they won't discuss all the details with me. Technically, I could just walk away from this (the contract says I have the "option" to buy the property but I can walk away from the deal if I want to). It's the owners, and not myself that would get repossessed. The problem is that I have a lovely tenant in the flat, and I make a (much needed) income of £200 a month from it. I can't afford to pay the capital and interest (£309 instead of £117) and lose any income that I'm making. It's really the responsibility of the owners to pay the capital part (but they can't afford it either) until such time as I actually purchase the flat. It makes matters a lot worse with the outstanding mortgage balance being around £55,000, but after the crash, the flat is only valued at around £35,000 now. (It's in quite a deprived area of Glasgow and prices are still going down here).

My hands are tied - Mortgage Express have said quite firmly that it's up to the owners to appeal and come to some kind of payment arrangement (I have continued to pay the interest every month). Unfortunately, getting hold of the owners is quite difficult too - they are really frustrated with the whole thing and regret ever getting into the deal.

If I was completely ruthless, I could just "cut my losses", lose the £200 I make every month, let the owners deal with the £20000 shortfall when the house is repossessed and just say "sorry" to the tenant and her kids when they become homeless - but that way we all lose. It might still come to that, but I really hope it doesn't.

The main issue is that, although I'm prepared to fight - write letters, find creative ways to deal with the situation etc., I'm not the one in control. I've got together with the owners a few times to look at various options, but the impression I'm getting from them now is that they're losing interest, and tired of dealing with the situation, and unfortunately, it's them that have to come to some arrangement. They apparently have a solicitor dealing with the situation on their behalf, but the information I'm getting back from them is sketchy.

Hope this clarifies the situation (and doesn't confuse you even more).

[Never-In-Doubt]

Re: Mortgage Express forcing me to come off interest only mortgage.

(It's in quite a deprived area of Glasgow and prices are still going down here)..

Parkhead area by any chance?

You know i'm a blue-nose, right?

[PriorityOne]

Re: Mortgage Express forcing me to come off interest only mortgage.

If you have legal Power of Attorney, then Mortgage Express should be dealing with you regardless of who owns the property.... otherwise, what's the point of it? It's a legal arrangement, after all.

Slightly different scenario... but, I arranged P of A for my mum's affairs before she was diagnosed with dementia and there were no problems at all.

[dwj2112]

Re: Mortgage Express forcing me to come off interest only mortgage.

Not quite Parkhead Niddy, but definitely in a green hoops part of town :-).

Thanks Priority One - totally agree with you and have pointed that out to Mortgage Express, but they still make up the rules as they go along and all financial decisions they base on the status of the account holder rather than myself!

I have the same situation with my Mum too, and have had no problems with the P of A. Seems like they are only effective when someone is incapable of making decisions for themselves!

[PlanB]

Re: Mortgage Express forcing me to come off interest only mortgage.

have pointed that out to Mortgage Express, but they still make up the rules as they go along and all financial decisions they base on the status of the account holder rather than myself!

Let me get back to you in the New Year because you have a complicated situation and not the normal type of quarrel with a lender (i.e. that lease option thingy).

The bottom line is there is a legally binding contract between the lender (Mortgage Express) and the borrower (not you). You may well have Power of Attorney to deal with their contract but that doesn't necessarily mean you can re-write that contract on terms to suit you just like the rest of us can't make a lender agree to something they don't want to agree to. The money was lent on the basis of underwriting the borrower which wasn't you. The POA gives you the power to 'step into the shoes' of the borrower (your friend) and speak on their behalf that's all. If Mortgage Express don't want to play ball I fear they don't have to.

Like I say let's take a good look at this in the New Year because legally speaking there are three of you in this relationship so it's not straightforward