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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 18742
Experience:  I have been practising for 30 years.
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Being asked to pay a shortfall from our mortgage, Liverpool,

Customer Question

Being asked to pay a shortfall from our mortgage
JA: Where are you? It matters because laws vary by location.
Customer: Liverpool
JA: What steps have you taken so far?
Customer: contact bank and solicitor
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: yes, we never received a redemption statement from our solicitor, we only received a completion statement which did not include the early repayment charge that we are now being told to pay. We never believed we would incur a fee as we were remortgaging with the same lender. It would appear that as the rate was different the product is different and therefore the mortgage is not portable so we are liable,
Submitted: 16 days ago.
Category: Law
Expert:  F E Smith replied 16 days ago.

Welcome to Just Answer.

I will be happy to assist with your question today. I need some time to consider this and compose a response. There is NO need to wait online because you will get an email when I respond. Sometimes it will be minutes, sometimes longer.

I apologise for any unavoidable delay, but rest assured I have not forgotten your question.

to clarify -

were you told this when you enquired about remortgaging?

Customer: replied 16 days ago.
I used a mortgage broker and I was never directly informed about an early repayment charge. I have since looked back at the mortgage offer I had been sent once the mortgage was accepted, had underwent underwriting and they had agreed to give us that amount. In the terms and conditions it does mention about an early repayment charge only being payable if the fixed rate mortgage and term had been changed. I didn’t read this at the time, but we were keeping the same term and we kept a fixed rate mortgage with them for the same length of years the same it is just that the rate had changed. We were paying 1.29% but now it’s 1.49%. I don’t believe it is very clear that we would be expecting to pay. Our solicitor even commented in an email earlier today that they had received the early repayment figure from the bank, which we were never shown, but this wasn’t included in the completion statement as she believed the mortgage was portable based on the guidelines they had received. I have asked her to send these guideline to me.
Customer: replied 16 days ago.
I am not sure whether we have been misinformed by the mortgage broker and mislead by the bank but the solicitor has admitted that they have not disclosed information to ourselves prior to completion regarding a redemption penalty.
Expert:  F E Smith replied 16 days ago.

If the solicitor got the redemption statement from the mortgage lender and the early redemption fee was in it but they didn’t ask you for it, then you have a claim against the solicitor in negligence.  In fact, particularly with remortgages it’s a very common ommission.

It comes down to whether the redemption statement the solicitor had included that figure or whether it was a mistake by the lender.  If it was a mistake by the lender when your grievance/complaint is with the lender and if they still don’t agree to do something acceptable with it, then a complaint to the Legal Ombudsman

You would have been aware yourself that there was an early redemption figure if the mortgage was redeemed within a particular period of time but that would have been when you took the mortgage out.  You would not necessarily get told of the existing mortgage redemption figure when you got details of any new mortgage.

It seems, from what you say, that the solicitor screwed up because they have admitted that they receive the early repayment figure but didn’t include it.  It seems the solicitor misinterpreted what was happening with the new mortgage compared to the old one.

I am not convinced that the mortgage broker is at fault here but the solicitor almost certainly is.  You need to ask the solicitor’s proposals to remedy this and of the solicitor will not agree to take it on the chin, then you need to make a complaint to the Legal Ombudsman.

Make a complaint in writing to the firm’s Complaints Partner and if that doesn’t work, make a complaint to the Legal Ombudsman.

Please note that you have to have exhausted the solicitor’s own complaints procedure or have not had a reply within eight weeks before you can refer it to the Ombudsman.

I am glad to help.

Hopefully, I have answered your query in a way that is simple and easy to understand.

I would be more than happy to clarify anything else for you. In the meantime, thank you once again for using our services.

I am happy to answer any specific points arising from this.

Please be aware that my answer is based strictly upon the information you have given me.

If you still need any points clarifying, I will be happy to reply because the thread does not close. In fact, it remains open indefinitely.

I am always happy to answer any further questions you have on any new thread in which case, please start your question with, “ For FES only”.

That only applies to new threads, not this one. You have me exclusively on this one.

Thank you.

Best wishes.


Customer: replied 15 days ago.
Hi, thank you for your email. I have now received the redemption certificate from my solicitor which clearly states the early repayment charge. My solicitor has said ‘ You will note on the statement there is no indication of the current fixed rate applicable and the details on when to deduct the ERC. We are currently await a call back from HSBC to enquire regarding this.’ Surely they should have known the early repayment charge was due in the day of completion. Not only that but to have not informed us if it is not acceptable. I will speak with the solicitors first to see if they will pay this charge due to negligence. If not I will follow your advice. My only concern is that Hsbc may try and take this payment from my account before this is sorted or I will get a mark on my credit file if I do not pay it. Should I contact HSBC directly? I have already emailed. Thanks
Expert:  F E Smith replied 15 days ago.

Yes, they surely should have done.  If they had any queries, they should have asked you or the lender.

The default situation is that it needs paying.  If you “port” the mortgage (actually a misnomer, it just means go with another mortgage at the same lender) you can transfer the redemption penalty from one to the other but that’s not the default situation.  The default situation is that it needs paying.

This is a problem with the solicitor you are the one who is obliged to pay because it’s your mortgage.  Substantial complaint to make to the solicitor

Customer: replied 15 days ago.
Sorry, I’m not too sure what you meant in your last message. Should I pay the amount to my. Mortgage company and then claim back from the solicitor? Do you believe I have a case for claiming this full amount back?
Many thanks
Expert:  F E Smith replied 15 days ago.

I certainly would do because they were under a duty to tell you how much money was needed to repay the mortgage and therefore you could have adjusted the money raised accordingly but now, you can’t do that.

In my mind, there is no doubt that they have been negligent.  It just depends how much they are willing to pay to get rid of it.

Expert:  F E Smith replied 15 days ago.

PS Yes, you need to pay in the interim

Customer: replied 15 days ago.
Many thanks, ***** ***** you believe we will get the money back from the solicitor?
Expert:  F E Smith replied 15 days ago.

It depends how robust the solicitor is going to be about defending your claim.

Customer: replied 15 days ago.
Ok, so by me paying the amount to the mortgage company is not admitting liability at all, or will not make it more difficult to claim the money back? Thanks
Expert:  F E Smith replied 15 days ago.

You are liable to pay the lender.  End of.  It is whether you can recover it from the solicitor because of the solicitor’s negligence, not allowing you to plan properly, which is going to be the battle.

You need to start with a formal complaint in writing and ask them for their proposals how to deal with this because it’s their liability.  Ask for details of their insurer.

Until you know what they are going to say, we can only speculate

Customer: replied 10 days ago.
Hi, just wondering if it would make a difference that this was all dealt with by a paralegal? The solicitor who was dealing with all our enquiries initially had left the firm a few weeks ago. I was informed by the paralegal working on the case a few weeks before completion. Everything after the sale was dealt with by the paralegal. Including sending me the copy of completion certificate and dealing with the formal exchange and completion. We were never informed of a solicitor who had taken over our case following the previous one leaving. Many thanks
Expert:  F E Smith replied 10 days ago.

It makes no difference.  The firm of solicitors is vicariously (jointly) liable for the actions of their employees.  Many conveyancing matters are dealt with by paralegals and some of the best conveyancers I know are paralegals.  So it doesn’t make any difference.

Customer: replied 8 days ago.
Hi please could you read over this email I have just received off our solicitor claiming they have not been negligent. Just do you are aware they mention sending out a redemption statement in December to ourselves which included an early repayment fee. This is true they did, but this was for when we were purchasing another property and we were going with another lender, NatWest. That sale did not go through, we bought another property and changed our mortgage provided to HSBC. That was our previous lender. Therefore we believed the mortgage was portable. Regardless of whether it was or not we never received a redemption statement from themselves for the new purchase. Am I correct in thinking that they are still negligent?
Customer: replied 8 days ago.
We have spoken with HSBC regarding the ERC applicable to the loan and explained that there is no reference to your current rate therefore it makes it extremely difficult for us to determine when these rates are and are not applicable. HSBC have advised me that you have made a payment in the region of £1000.40 today which has been accounted for towards the ERC however the remaining balance is still outstanding. HSBC did however advise me that you, as the customer, should have advised us of your current interest rate applicable to your mortgage as this would have allowed us to ascertain confirmation as to the payment of the ERC. Upon reviewing your client care information there was no mention of this. It is also noted that an initial redemption statement was issued to you on the 1st December timed at 13:15 with a file named tm6498. This email was acknowledged as you replied requesting an update. Within this redemption statement you will have noted that there was an ERC added to the loan and detailed in the statement. The reason we request an initial redemption statement in the first place is;
1. To ensure there is sufficient sale proceeds to repay the mortgage.
2. To highlight any issues like this and it provides the opportunity for you to raise any queries on the redemption statement.
As no further comment was made on the ERC from yourselves, we can only take this as your acknowledgement that the ERC should have been payable.
In light of the above, you will see that there has clearly been no negligence on our part in this regard and we look forward to receiving your payment to close your account with HSBC.
Customer: replied 8 days ago.
I will attach the redemption quotation sent on 1st December 2020 and a co[y of the redemption statement sent to us following our completion last month. I have also attached the letter from HSBC stating the reason for shortfall.
Customer: replied 8 days ago.
Please can you confirm if you believe we still have a case for negligence following their response. As I am not legally trained I was hoping that I would be able to get some help compiling a letter to them. Is this a service that you provide? Should I look at involving a solicitor who work on a non win no fee basis to try and claim this back for me?
Expert:  F E Smith replied 8 days ago.

I apologise for every word having a capital letter.  For some reason the formatting has gone awry although it seems to have corrected itself now.  It is of no significance so please ignore.

Well Have They Not Been Looking Hard to Find a Statement from December Which Included the Penalty.

However You Weren’t Relying on That Statement You Were Relying on the Current Statement and to My Mind, If They Admit Including It on the December One I Have To Admit Not Including on This One.

If They Could Include It Then, Regardless of How Difficult It Is to Make the Calculation, Then They Could Have Included It Now.  They Should Have Done.  They Didn’t.

To My Mind 1 December Statement Is Irrelevant.

I Think You Need to Ask Them the Question As to Why It Was Included in December and Why It Was Not Included Now.  If They Did Not Include It in the Statement, Then How Are You Supposed to Know about It.

I Would Ask Them for Details of the Indemnity Insurer and Tell Them That You Are Going to Seek Advice from Another Firm of Solicitors with a View to Bring an Indemnity Claim against Them.  Do They Wish to Come to Arrangements to Settle?

The HSBC Statement Says the Amount Required to Repay the Borrowing at 20 April Is 231,000.

It Then Says “an Early Repayment Charge May Be Applicable”.

Do Remember That the Solicitor Deals with These Kind of Redemption Statement All Day Long and They Are Expected to Read It States.  It Can Be Misleading Because the Redemption Figure Should Be Said to Be Subject to a Early Repayment Charge and It Should Be in the Same Sentence

but Nonetheless, It’s Right Next to It.  I Mention Once Again They Should Be Used to This.

If We Then Go to the Redemption Breakdown Figures on the Last Page, It’s Confusing Because There Is No Total.

However If You Add Them up It’s 229, 620

on the Front Page It’s 231.390

so Looking at This Statement, That’s All the Solicitor Has To Go on, I Wouldn’t Have a Clue What the Redemption Figure Was End of Its 231.390 Which Is the Highest Figure on the Paper, That’s What I Would Have Gone with.

The Difference between the Additions at the End Is 1770 and the Small Difference Amounts for Daily Rates of Interest.

The Redemption Statement of 30 November Is Irrelevant Because That Has Been and Gone.  It Wasn’t Being Repaid in November Last, It Was Being Paid in This April.

So Looking at the Front Page of the Statement I Cannot See Why They Did Not, As I Did, Query Why the Figures on the Back Are Different Than the Figures on the Front.  Ask the Question

Customer: replied 8 days ago.
Hi, thank you so much for your response. I will attach the completion certificate I was sent on the day of completion. It does not include the early repayment charge and this was all I had to go off as they never sent me the redemption statement until 8 days after completion, following my request to see it. I will send a formal complaint to them, however, I understand they will find every loophole to get out of compensating me for their negligence. As I am not trained legally it may be difficult to back my self up should they continue to claim they have not been negligence for reasons x,y and z. Do you think I should instruct another solicitor should they not accept negligence? Or should I then take it to the legal ombudsman?
Customer: replied 8 days ago.
Based on all the documents I have sent you and the response from my solicitor today, do you believe I still have a strong case to claim?
Expert:  F E Smith replied 8 days ago.

I cannot see a response from your solicitors today.  I just have a Completion Statement with a redemption figure

The completion statement shows a redemption of 229774.82.  That is the figure that was sent to HSBC and which is incorrect.

the FRONT page of the redemption quotation of 16 April 2021 shows a figure of 231390.99

it says they may be further redemption penalties but I read this that any redemption penalties are included because there is no way that you can get a higher figure anywhere else.

If you add together the figures the last page of that statement, 38671.96+192719.03 = 231, 390.99

as I said earlier, (unless I’m missing something) what they did was add together the principal balances which are not in bold on the very last page, rather than the total repayment amount.

They also did not use the figure on the front of the redemption statement which is also involved.

In short, (as I said, unless I’m missing something) they used the non-bold figures having use their own addition, rather than the bold figures on the last page which added up on the front page.  I can see no logic whatsoever for sending 229,000 rather than 231,000.

In my opinion they simply screwed up.

I would ask why the did not use the figure which is in bold quite clearly on the front page.

I cannot see how they have not been negligent if my reading of what they sent and the additions is correct.  In fact, they did a whole load of additions it seems but didn’t need to do so.

Assuming that my explanation and my maths are correct, they screwed up.  Simple.  I think you would struggle to get them to pay the shortfall.

BUT they charged you GBP688.80 p plus VAT for doing the job.

They marked up the bank fee because the telegraphic transfer fee is not GBP36, depending on the bank, it is about GBP15.

The ID checks the they have to carry out although I would want to know how much they actually pay for that because they may have marked that up also.

There is another stealth fee which is the leasehold fee because that should be included in their fees for acting on the sale.  It’s dressed up so that it appears differently.

I would want the 856 quid back less whatever the bank charged for transferring the money and less whatever the identification check company charged for doing that.

Otherwise it’s a complaint to the firm’s complaints Partner and ultimately to the Legal Ombudsman.