Monday, 15 December 2014

Bank of Scotland double-charged mortgagees, maybe committed fraud

There was disturbing news last week that Britain's biggest mortgage-lender had, contrary to a legal ruling, double-charged some of its customers in Northern Ireland.

The original [civil] case focused on the way the bank added arrears to the initial mortgage borrowing.

That is a standard practice for tackling arrears and is known as capitalisation. It has the effect of increasing borrowers' monthly repayments. The judge ruled that once capitalisation had taken place, the mortgage should no longer be considered as in arrears. However, the bank continued to treat such mortgages as in arrears and used that as the basis for bringing legal cases. The judge said this meant borrowers had been held in fear and were being threatened with repossession on account of an "erroneous and fictional arrears balance".

The province's chief law officer has now taken an interest and believes that a criminal act has been committed. There is more detail here.

BBC Radio's personal finance guru, Paul Lewis, reckoned that the aggrieved mortgage-holders were able to defend themselves against the bank's effort to repossess their properties because up until now legal aid has been available for this kind of civil case in Northern Ireland. This has not been so in England & Wales for some time, so it is likely that the bank will get away with it if it has been ripping off its customers here.

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