In 1994 my my partner and I approached Britannia Building Society. We were advised that it was better if I was left off the mortgage, due to my status as a freelancer. Recently however, I began to question why I could not ask simply questions about it, like 'questionable rates'. The Data Protections Act was quoted. Apparently, because I had signed a document 'postponing' my rights Britannia determined that I had no right to know - whatsoever!

Fortunately my partner gave her 'permission'. Unfortunately, I discovered a number of 'errors'...

We sold the property in 1999. But we were charged an early redemption penalty; even though Britannia advised us to take out a different product - and the penalty had five weeks to run.

After some time, Britannia apologised for the 'error' 'decision' etc and returned the amount in full. However, having delved into its mortgage dealings, I also discovered something curious... A cheque had been drawn for £195 in Britannia's name (PRIOR TO THE MORTGAGE BEING ACCEPTED) - but this amount was also added to the mortgage.

After some time, Britannia apologised for the 'error' - and returned the amount.

But Britannia's accounting still appeared odd...

Our money was loaned back to us via two mortgages, the first at the lender's SVR. Is it not reasonable to match the same rate? Unfortunately, Britannia felt it had 'exhausted' its investigation, and suggested I go to the Ombudsman - again.

I had also discovered that a Higher Percentage Arrangement Fee (aka MIG) had been charged to the first mortgage. Britannia had taken the purchase price of the property rather than its 'true' value, having ignored the equity I had in it (as a sitting tenant). In short, the equity was postponed - ignored.(The purchase prices to my partner would have been considerably higher at the market rate. (It seems I did more than postpone my rights in favour of Britannia's - so be warned!)

But can a lender ignore the true value of a property and charge a MIG? Something else...

The first mortage was taken out as a two-year fixed rate product at a rate of 6.25%. However, amounts deducted via direct debit were raised to 6.5%.

When presented with the findings Britannia became confused and seemingly evasive - initially agreeing then, finally, disagreeing. Britannia now claims that the rate was increased because we failed to take out Homeguard Insurance. This too was strange...

Direct debit payment had been going out to Britannia from the commencement of the mortgage. What for? No one seemed to know. I simply placed a call to Britannia's insurance branch which confirmed -'Homeguard Insurance'.

I faxed the results of these findings to Britannia's chief executive, along with a deadline, but received no response. And there were other anomalies...

The mortgage offer held by Britannia differed somewhat from the one in our possession - it contained 'attachments'. These additional pages allowed the lender to tie us in for an extra three years after the fixed rate ended. (Something I feel sure was not agreed as it was a two year fixed rate - with no mention of a tie in.)

Why do we not have these 'attachments' in our possession? Has anyone out there had a similar experience with Britannia?

JPM

-- John Paul Morgan (jpmorgan@onetel.net.uk), July 06, 2002

Answers

I'm baffled - sorry. I think it what you are asking is if Brittania acted within the Law when they repossessed a property you had no rights over. Your status in all of this is far from clear and it would help enormously if you could summarise what it is you need exactly!

Thanks

-- Too scared to say (iwasduped@yahoo.com), July 06, 2002.

I did not realise that the only persons who could express a view on this site had to be repossessed. I thought my letter was clear.

Britannia ignored a sitting tenants rights which seems to have allowed for the 'cancellation' of the property's true value; thus incurring a MIG. (Whether I have any rights in the property is another matter.)

However, other errors may be symptomatic of either complancy or incompetence - or corruption. And if any of the Repossessed had similar 'errors' in a mortgage then s/he might consider fighting on several fronts.

Perhaps our experience was a one off. But if a property is undervalued before commencement of the mortgage surely the lender is already indemnified against any potential loss/risk. If so, why the need to charge a MIG? (In our case the property was valued by the Lender's own valuer.)

JPM

-- John Paul Morgan (jpmorgan@onetel.net.uk), July 07, 2002.

I don't think the fact that you were a sitting tenant necessarily affects the value that the lender would attach to the property for the purposes of lending. You talk about 'equity' you had in the property as a sitting tenant, but only the owner would have the value of equity so I'm not sure what you mean by this. It's difficult to follow your argument, but you seem to be angry that a MIG policy was taken out by the lender. This would have been done to cover the lenders risk above a 75% loan to value level. If your partner had a mortgage that was more than 75% of the lenders valuation then reducing the value of the property because of your tenancy situation would have made this ratio worse not better! Although it sounds as if the Britannia is a bit at sea with it's records and may have made errors in it's administration for which you can claim some recompense, I think it would help your case if you presented your points more clearly. Perhaps you should write to Britannia on separate issues at a time rather than bundle in all of the grievances contained in your posting, some of which may be unfounded. If you fail to obtain satisfaction from your lender then make a formal complaint to the FSA.

-- Gordon Bennet (arsenewhinger@hotmail.com), July 08, 2002.

Gordon

If a council tenant approached a lender with a property available for purchase at £53,000 but its open market value was £86,000, the difference between the two, unless I am wrong, can said to be the equity.

However, I hear you say that the lender has the right to take the 'purchase price' of the property or the 'valuation' (its own that is), 'whichever is the lower'.

In actual fact, although I was a private tenant, Britannia's own (low) valuation was £65,000. (The property was banded for Council Tax purposes through the courts at £88,000.) But offered to me for £53,000.

My point is - and I don't think it was expressed in an 'angry' (negative) manner - that Britannia asked me to sign a document postponing any rights before my partner was granted the mortgage. Paragraph three of the document reads 'I will not assert or maintain against the (Britannia Building) Society as mortgagee of the Property any right interest or claim in equity or by way of over-riding interest or whatever.' (Lack of punctuation not mine but signature on the document is.)

This might suggest to all reasonable persons that an equity interest was aknowledged by a Lender, then 'postponed' - then totally ignored. This also aknowledges that the property was worth more than the (mortgage) purchase price (even if you don't). The actual mortgage was £49,875.

[Note. In fact I believe these terms should be written to read 'the current market value of the property - with the equity therein - or the lender's valuation, whichever is the lower'. Does it for Council tenants?]

Since the lender's valuation was £65,000 let's do the sums with that:

Lender's mortgage offer £49,875 divided by £65,000 X 100 = 77%. For any nitpickers, the lender would normally pay for the MIG at level between 75%-90% - and not charge a Higher Percentage Arrangement (HPA) to the borrower. However, the 'errors' mentioned in my initial contact with this site (and now I'm begining to regret it) ensured that additional charges pushed the account over this percentage - across the MIG threshold. (In actual fact it was the HPA fee of £830 that pushed the borrowing into this band and another wrongly charged sum of £195, the latter since refunded.)In other words... the risk assessment was manipulated.

These complaints have also been listed individually over many months to avoid the confusion you speak of. But I would have thought that undervaluation was something many on this site have experienced. I merely suggest (without having been subject to the the pain many have gone through by repossession) that it is this same undervaluation (through postponement)that I found curious. Could there be a link?

-- John Paul Morgan (jpmorgan@onetel.net.uk), July 08, 2002.

I'm sorry if you took offence at the use of the word angry - I assume people who use BLOCK CAPITALS are expressing indignation! In order to lend weight to your view that the lender significantly undervalued your property in order to manipulate the LTV ratio in favour of a MIG policy you would seem to me to need some corroborating evidence such as estate agents valuations carried out at the time of the mortgage offer valuing your property at £86,000. My own property was undervalued by £7000 when I applied for a further advance loan to build an extension, compared to it's 'market value'so you can't necessarily argue that the lender's valuation should be the 'market value'. As to the wisdom of using this site all I can say is that it has brought me a lot of useful help and advice and given me enormous moral support and encouragement in a difficult situation.

-- Gordon Bennet (arsenewhinger@hotmail.com), July 08, 2002.

Gordon Bennet!!!

i used block capital because I cannot use itlaics on this system to express emphasis. Since

-- John Paul Morgan (jpmorgan@onetel.net.uk), July 08, 2002.

Well at least you have understood the meaning of my nom de guerre :-)

-- Gordon Bennet (arsenewhinger@hotmail.com), July 09, 2002.

Unlike you.

-- John Paul Morgan (jpmorgan@onetel.net.uk), July 09, 2002.