Jan/100
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 was based 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. 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 at the time of arranging the mortgage.
This report was based on 1,200 case studies from 360 Citizens Advice Bureaux in England, Wales and Northern Ireland.
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