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March 25, 2009    

Mortgage mis-selling case could impact on repossession

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by Gill Montia
Mortgage mis-selling case could impact on repossession

The Guardian has reported on a case in which the Financial Ombudsman Service (FOS) has ruled that a previous homeowner, whose property has been repossessed by their lender, was mis-sold their mortgage in the first place.

According to the newspaper, the ruling could set a precedent that would prevent repossession where it can be shown that a mortgage has been mis-sold.

The case hinged on rules covering “suitable advice” for borrowers contained in the Financial Services Authority’s handbook for mortgage advisers.

The petitioner had already lost his home at the time of the FOS ruling but was awarded compensation once it was established that the loan had been mis-sold.

However, some lawyers who have considered the case are hopeful that in future the “suitable advice” clause could be used to actually prevent repossessions.

The scandal of mortgage mis-selling in the UK was addressed in a Citizen’s Advice Bureau report published in 2007, entitled “Set up to Fail”.

This report was based on 1,200 case studies from 360 Citizens Advice Bureaux in England, Wales and Northern Ireland.

It found that many lenders and brokers were not ensuring that borrowers understood the risks of entering into a mortgage.

The research also revealed that in some cases, it seemed that lenders did not check whether the borrower could afford the mortgage repayments from the outset.

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4 Comments »

  1. Fantastic, I am really pleased that this concept is becoming wider knowledge.
    We have stopped several repossessions on the basis of a proceedable miss-selling or compensation claim.

    Comment by Phil Martin — March 25, 2009 @ 2:05 pm

  2. This could have huge implications for the future.

    Let’s face it, the vast majority of endowment mortgages were mis sold. Independant brokers selling on greed and most have folded thier businesses now in order to avoid any compensation claims.

    A dirty industry that will take a long time to clean up. Again sadly the poor householders become the victims.

    I hope this ruling allows a lot more people to fend off repossesions.

    Comment by Monty Burn — March 25, 2009 @ 8:38 pm

  3. useful tip, thanks for sharing.

    Comment by ngan hang — July 23, 2009 @ 1:29 am

  4. ive been left with interest only repayment mortgage but my FI dissapeared from the scene when i could no longer keep up with my pension payments. i will be left with a huge shortfall so im glad that something can be done now to these people
    mark woodhams

    Comment by mark woodhams — February 8, 2010 @ 2:56 pm

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