Monday 23 May 2011

GLC challenges excessive mortgage charges

Govan Law Centre (GLC) is raising a number of actions seeking repayment of excessive and unfair fees applied by lenders when homeowners fall into mortgage arrears.

The worst offenders are 'sub-prime' mortgage lenders who typically levy four types of monthly fees: ‘Unpaid Direct Debit Fee’ (£25), ‘Arrears Management Fee’ (£50), Late Payment Management Fee (£25), and ‘Litigation Management Fee’ (£115).

GLC believes these fees do not reflect the actual administrative cost to lenders, and if so, are contrary to legal rules made by the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000. Separately, many of the charges are unfair or excessive to consumers in terms of FSA rules.

Several sub-prime lenders have already been fined by the FSA for failing to treat mortgage customers fairly. In October 2009, GMAC-RFC was fined £2.8m, while in December last year the Kensington Mortgage Company Ltd was fined £1.22m for the unfair treatment of its customers in arrears.

GLC's Principal Solicitor, Mike Dailly said: "Although some lenders have already been fined for excessive mortgage arrears charges, the reality is such charges have simply been added to customers' mortgage accounts. Lenders should voluntarily refund excessive charges, but they won't, which is why GLC hopes to establish a quick route to refunds for our clients".

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