Mortage underpayment

[roomtobreathe]

Would welcome any thoughts on this.

Had a letter from the Nationwide re arrears on my mortgage. Apparently I have been underpaying my combined mortgage and insurance by a few pounds each month since March 2011 as the insurance component had varied, not the mortgage. Have yet to look back and see whether I was notified as I'm sure that I never received anything and my statements haven't said anything about arrears.

Anyway, Nationwide say I have two options - cough up the £80 or spread it over a few months. However, if I spread it over a few months then they will mark my credit file as 'in arranged repayment plan' or whatever term it was, can't remember.

If it does turn out that I am in arrears of my own fault then would there be any long term issue in having my mortgage account tagged in my credit file? Credit file has been slashed and burned by the credit card companies so no issues there, just wanted to know if it was a wise thing to do?

Suppose the third option would be to drag it on for a few months until I could get the £80 together?

Ta.

[PlanB]

Re: Mortage underpayment

Had a letter from the Nationwide re arrears on my mortgage. Apparently I have been underpaying my combined mortgage and insurance by a few pounds each month since March 2011 as the insurance component had varied, not the mortgage.

I'm not sure that there is such a thing as a "combined mortgage and insurance" product only a mortgage with an obligation/agreement that the lender will provide insurance cover and the borrower will pay for it. I can't see a DJ ordering a property to be repossessed if the only outstanding sum was for insurance premiums which is not the same thing as mortgage arrears.

Nevertheless the money is owed (unless your Ts & Cs didn't allow them to provide cover on your behalf) and if you can possibly afford to make them modest payments by arrangement then that would be a good idea because it'll take you out of the "Collections Team" spiral into hell.

Check if their insurance provision is compulsory or whether you can get cheaper elsewhere if you shop around and buy your own policy. Even if it says it's compulsory I know of cases which have been upheld by the FOS on the basis that's it's unfair to make you pay more for something you can get cheaper on the open market.

[roomtobreathe]

Re: Mortage underpayment

Thanks, it's not a combined product, they just supply both so I make a combined payment. No need to change as it's quite competitive.

What seems to have happened is that they've taken the combined payment, paid for the insurance and the underpayment has been assigned to the mortgage. Not an issue with that.

My question revolved around whether getting a marker on my credit file specifically relating to the mortgage would cause issues later on in addition to any credit problems relating to my knackered credit file.

I think you've answered my question so I'll call them and get them to spread the repayments over the next few months.

Ta.

[Undercover Elsa]

Re: Mortage underpayment

Hi RTB,
That puts a different slant on it entirely. Was this paid by Direct Debit or Standing Order?

Elsa x

[Undercover Elsa]

Re: Mortage underpayment

Damn, I see you've just gone offline. Don't ring them yet. Best to keep it in writing anyway.

If this is the first you've heard about this then I would think you'll have cause for complaint that you haven't been treated fairly.
If it was me I would write a formal complaint to them on the grounds that:

• You weren't informed until now of the change of rate for the insurance, or the mortgage arrears.

• (If it was Direct Debit) Why was the debit not automatically increased at the time, and if this wasn't possible why weren't new payment details supplied to you.
• They have not treated you fairly by choosing to apply full payment to the insurance at the expense of the mortgage. Your mortgage is clearly a priority payment, arrears of which put your home at risk and are detrimental to your credit file, and as such should have been given priority.
• No shortfall would have occurred had you received notification of the need to increase your payments, but in any event it was the insurance payments which had varied, therefore the shortfall should have only affected the insurance, not the mortgage.

Ask them what they are going to do to correct this error. State that you require that the money paid in good faith should be reassigned to the mortgage which should be correctly accounted as up to date, with no detrimental markers on your credit file. Furthermore while you are quite prepared to discuss repayment of the insurance arrears, in view of the fact that it was their internal error you hope that they will be waived as a goodwill gesture, to prevent any need to escalate this matter to the Financial Ombudsman.
I would also ask that they provide separate payment details for the mortgage and insurance so that this can never reoccur in the future.

[PlanB]

Re: Mortage underpayment

What seems to have happened is that they've taken the combined payment, paid for the insurance and the underpayment has been assigned to the mortgage. Not an issue with that.

My question revolved around whether getting a marker on my credit file specifically relating to the mortgage would cause issues later on in addition to any credit problems relating to my knackered credit file

I think the big issue is that the lender has decided to allocate the money you pay to the insurance premium first and then the remainder goes to the mortgage account leaving you with arrears which could flag up as a negative on your CRA.

You need to get this corrected retrospectively because if you ever did get into difficulties with your mortgage, your account would have a history of arrears which is not helpful especially if you find yourself in court. Or if you applied for another mortgage in the future the previous payment history of this one would be relevant and your application could be declined.

Why didn't they tell you that the insurance premium increased? And since they were in control of your DD (unless you pay by SO) the lender has a duty to give you 14 days pre-notification of any change to your regular payment etc.

I would raise it as a mild complaint in case they have added interest or charges on those 'phantom' mortgage arrears.

EDIT: I've just seen Elsa's post above which is much better than mine

[Undercover Elsa]

Re: Mortage underpayment

Snap

Edit..just seen PlanB's edit..no probs, same answer in essence

[roomtobreathe]

Re: Mortage underpayment

Just had a shufty back at the paperwork over the past few years and they are right, there have been changes to the costs which I've not noticed. My own fault.

My 'mortgage payments' include the mortgage, insurances and PPI. I went to paying by BACS in 2010 when my credit life hit the buffers so it was up to me to make the payment changes.

Since 2010 the mortgage has stayed the same, the PPI has reduced and the buildings + contents has gone up.

Looking at my 2012 statement I was £72.12 in arrears. With the 2013 statement (which they have now titled 'Arrears Statement') they've told me I'm £808.32 in arrears as they've kindly included the mortgage payment for March in there. When I called them they told me the actual arrears are £80.34. Don't know why they were happy to let £72 of arrears float but have thrown the toys out of the pram now it's at £80.

Can't get together the £80 to clear this in one go so any suggestions now this is a bit clearer?

Ta.

[roomtobreathe]

Re: Mortage underpayment

And some other information.

Letter arrived 14th March and is dated 3rd March.

Covering letter demands payment within 7 days of the date of this letter.

They're also letting me know about additional charges should the arrears not be cleared - £23 a month arrears charge, £115 arrears visit, £10 final collections letter, £10 for a default notice, yes that is £10 for s default notice!!!

Ta.

[MrsD]

Re: Mortage underpayment

does it say they can do that in their t&cs?

[Undercover Elsa]

Re: Mortage underpayment

Good point MrsD! They think they can do as they like don't they?

Taking what you've said into account RTB, if it was me I'd send them something on the following lines:

Account ref:
Formal Complaint

Dear Sir/Madam,
I refer to your letter dated 3rd March 2013 which however did not arrive until 14th March.

Thank you for bringing this matter to my attention, as I was not aware that my mortgage payments were in arrears, however in the circumstances I do not feel that this is correct.

As you are aware, I have made one combined monthly payment to you by BACs for both my Mortgage and Insurance for some time.
Having now checked, I can see that it escaped my attention that the insurance payment required had varied, confused by the fact that the PPI payments have reduced while the Buildings and Contents insurance has increased.
I apologise that I did not pick up on this, but feel that it was not adequately brought to my attention at the time that I would need to increase my payments. Had I realised I would have done so.

However, notwithstanding this, the mortgage payment itself has not increased, only the insurance. Clearly the mortgage is a priority debt, arrears of which can put my home at risk and be detrimental to my credit file.
In view of this, I believe that your decision to assign the combined payment to the increased Insurance at the expense of the unchanged mortgage amount is in error, and therefore I do not feel I have been treated fairly.

I would therefore be most grateful if you would rectify this error and reassign the full payments, which I made in good faith, to my mortgage, so that it is correctly accounted as up to date, with any detrimental markers removed from my credit file.
I appreciate that this means that the Insurance will therefore be in arrears, quite correctly, and of course I am willing to discuss a payment arrangement.
However in view of your error and the distress this has caused I would hope that you will consider waiving this amount as a gesture of goodwill.

I would also be grateful if you would provide specific seperate payment details for the Mortgage and Insurance so that I can pay them seperately to prevent any future reoccurrance.

I look forward to your urgent response and trust that we can resolve this speedily and amicably without need to involve the Financial Ombudsman.

Yours faithfully

[roomtobreathe]

Re: Mortage underpayment

Thank you for putting that together, appreciated! I will get that off to them, least it should buy some time.

They have notified me that the insurances will be separated from the mortgage repayments from 1st April so will leave the last bit out.

[roomtobreathe]

Re: Mortage underpayment

OK, got a recorded message to call the Nationwide re the arrears.

They are insistent that the arrears will be applied against the mortgage debt and will not consider writing off the outstanding amount of £80 as the payment was made to the mortgage account through which the insurances were paid. They stated that if they had not have done that then the insurances would have been invalid. I insisted that I will not accept this interpretation and would pay back the arrears over a period of time only if they were against the insurances and did not involve them placing an arrangement to pay marker on my credit file re the mortgage. Stalemate so they will confirm their position in writing.

For reference the arrears in March 2012 were about £74 which had accrued over part of the previous year. The March 2013 arrears statement put the arrears at £80, about 50p per month. They seemed content not to take any action when the arrears were at £74 but now have done so when they've got to £80.

So will wait to get their latest letter but any suggestions in the meantime?

Ta.

[Undercover Elsa]

Re: Mortage underpayment

Have they put that in writing and said it's their final decision?

[roomtobreathe]

Re: Mortage underpayment

No, they're going to send out their response in a letter but I don't know if it's going to be a final response as such.