Jan/100
Mis sold Mortgages
Mortgage mis-selling case could impact on repossession
The Financial Ombudsman Service (FOS) has found that a previous homeowner, whose property has been repossessed by their lender, was actually mis-sold their mortgage in the first place.
The petitioner had already lost her home at the time of the FOS ruling but was awarded compensation once it was established that the mortgage had been mis-sold.
According to the Guardian newspaper, on 25th March 2009, 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’. Nevertheless, some lawyers who have considered the case are hopeful that in future the ‘suitable advice’ clause could be used to actually prevent repossessions occurring in these circumstances.
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’.
The report was based on 1,200 case studies from 360 Citizens Advice Bureau across the United Kingdom.
It found that many lenders and brokers were not ensuring that borrowers understood the risks of entering into a mortgage or were aware and agreed with what the policy entailed. The research also revealed that in some cases, it seemed that the lenders did not check whether the borrower could even afford the mortgage repayments from the outset.
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