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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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We have an odd mortgage problem! 5 years ago a 5 year mortgage

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We have an odd mortgage problem! 5 years ago a 5 year mortgage on the property (1 of 3) expired. We were starting a new business and hoped we would get a return quicker and clear the debt in time but not to be.
We arranged a new 10 year for the same sum, we met the criteria and only had to sign. The girl handling the mortgage had a nervous breakdown and left the bank, weeks went by and we were contacted by the bank to say we no longer met the criteria. (we were still paying the mortgage). Our local manager said continue to pay and he would try and sort the mess. He left, The next one left. 5 years later after filling in forms and sending accounts time after time we are still paying a non-existent mortgage with no arrears.
The bank is now calling in a debt collection agency to recover the complete non-existent mortgage. The "business" is actually a charity and is performing well but is based on the property and will be forced to close as only 2 years remain on the lease and the bank has refused an extension.
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.

May I ask if the business has fewer than ten employees and a turnover of less than 10m Euros (don't ask me why they denominate the criteria in Euros rather than sterling - I assume it is due to a Brussels regulation).
Customer: replied 2 years ago.

The business is a registered charity. Originally set up as a Company Ltd by Guarantee and then became a full charity in 2009. There are no employees, all volunteers, and turnover is just under 100k.

Paul

Expert:  Joshua replied 2 years ago.
Thank you. On the basis of what you say your charity appears to have suffered financially due to either negligence or at least poor service by the bank. If you have evience by way of a paper trail for the above series of unfortunately errors/events you may have grounds for a complaint and compensation in terms of monies that you have lost as a result. The initial step would be to contact the bank and make a complaint drawing their attention to the fact that you are a registered charity in a thoroughly healthy financial position notwithstading the unfortunate treatment you have received from the bank and given in particular that you are a registered charity you could also point out the potential adverse publicity it might generate that a charity failed due entirely to mismanagment by a bank. You cold go on to say that you have no wish to draw such publicity to attention but you feel that the years of empty promises and mishandling by the bank of your business and now the threat of debt collection must be brought to attention as you have a duty to attempt to protect the charity where you can.It is important that your correspondence makes it clear that it is a formal complaint and that you would like a reposne in line with their complaints procedure. You may also wish to provide a summary of what you consider your losses to be as a result of the banks handling of your accounts.If you are not satisified with the response of the bank then you can consider referring your complaint to the financial ombudsman service under the small business redress scheme they operate free of charge. They have the power to independently review your complaint and examine any evidence you have to put before them and where they find in your favour, an award the bank to take steps they consider appropriate and to pay compensation. The decision is binding upon the bank but not on you and the service is free of charge.https://help.financial-ombudsman.org.uk/helpI hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me I'd be very grateful
Customer: replied 2 years ago.

Apologies, just re-read the original and might have mislead slightly, what seems obvious when writing obviously isn't to others!! The mortgage is personal not business but there is a loan secured against the house by the charity. As we are directors of the company/charity it is all in one mess, house on site!

As we have paid the mortgage without arrears for 5 years despite there being no agreement we hoped that would give us a form of de-facto agreement - we just need the time to get permission from the Charity Commission to perform the land sale (possible conflict as a trustee) and CharityBank to set up the facility. This could take up to 6 months :-(

Thanks
Paul

Expert:  Joshua replied 2 years ago.
Thank you for the clarification. Obviously in this case there is less or probably no scope for making claims about publicity though if you feel you can still show that the bank has mishandled your mortgage account, you still have grounds for a complaint. You cannot complain that the bank will not lend money to you but it is possible to complain that the bank mishandled the original application so as to cause you to no longer be eligible. The process is the same as above and the process is esentially risk free as it does not cost anything.You may also consider at the same time as the above, discussing the position with an independent mortgage broker (or two) as they will have access to a much wider set of products than your bank alone and may be able to offer you a suitable product allowing a remortgage to solve the position and take off the pressure. Different brokers have access to different products so it can be worth trying more than one.I hope the above is helpful? Can I help you with anything else or has the above answered your questions satisfactorily? If you could drop me a quick message to let me know I'd be very grateful.
Customer: replied 2 years ago.

Thanks, ***** ***** what I thought. I had hoped that them taking the money for 5 years would would have given us more leverage but there you go.

Many thanks

Paul

Expert:  Joshua replied 2 years ago.
I am not sure that element is determinative in and of itself. It is relevant for sure but when a mortgage fixed term finishes the bank can continue to offer a variable rate product for as long as it wishes beyond any expiry date of original mortgage. It does not create a new mortgage or a non mortgage but rather it is just a continuation of the original mortgage but on revised loan terms (usually variable standard rate). However it is relevant because it goes to the question of whether they have treated you fairly as a customer and whether they have mishandled your account which could form the basis of a claimfor compensation using the above approach.Please let me know if I can be of any further assistance on the above.
Customer: replied 2 years ago.

Thanks again.

Presumably that continuation would still require a signed agreement? At the moment since the original term finished we have signed nothing, the bank does the DD each month at the original sum.

Not sure how to proceed really, need a Lawyer? They have asked a company called NCI to "call on us".

Thanks

Paul

Expert:  Joshua replied 2 years ago.
It would not usually require a new agreement because most mortgages contain a condition that after the end of the fixed rate term or whatever conditions attach to the initial term the loan will revert to the lenders standard variable rate or words to this effect. If there is no such condition then there is a questionmark on what basis the bank has been charging interest because the right must flow from the mortgage loan document. However I would be most suprised if there isn't a condition such as the above in the original mortgage loan agreement on which the bank would rely. You can also ask for a copy of it if you want to check and have misplaced the copy you originally had.You should not need a lawyer to follow the above Ombudsman process. It is dangerous to go to court as costs and escalate quickly hence why the Omhudsman is such an attractive process.Have I been able to help you with all your questions on the above?
Customer: replied 2 years ago.

Many thanks, ***** ***** big help.

Paul

Expert:  Joshua replied 2 years ago.
A pleasure. Good luck in resolving the matter
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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