# Proposal to clear arrears refused!



## doubledeb (16 Jan 2014)

Looking for a little advice on what to do next.

We are roughly 3k in arrears with our financial institution on a mortgage of 280k.  We were on interest only for about 18 months(after we missed part of the mortgage payments, due to outgoings) but have been paying the full amount for the last 12 months and are able to manage ok following a big reduction in outgoings.

Every month we get the same letter stating how much we owe in arrears etc.

Anyway last october I sent in a new SFS and a cover letter setting out a proposal how we could clear the arrears.
Basically we suggested to them that we go interest only (on paper) but continue to pay the full mortgage amount so the arrears would be cleared in 6 months and that would be the end of it.

Today (3 months later) and after 10 phone calls, we get a letter stating that they want us to recapitalise the 3k.  That the mortgage is affordable (I already knew this!) I clearly stated in the letter that I didn't want to do this as you are only allowed to do this once in the term of your mortgage.  Another reason for this is that in case my OH is out of work long term (he is self employed) and we needed to recapitalise in the future.  We don't see this happening but would like to have it as an option if we had no other choice.

I am going to appeal the desicion and ask that the appeals office looks at my proposal as a better option for us.

My question is has anyone ever done anything like this before and if so what was the outcome?

Thanks for any comments


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## 44brendan (16 Jan 2014)

" You are only allowed to do this once". Not sure where that information came from. may be part of the original terms & conditions of the loan. From the perspective of a banker, I would want the arrears to be capitalised. ideally I would not be too happy with a client who objects as he/they anticipate further arrears arising. That may arise through no fault of your own but will require to be resolved. If a further capitalisation is required sometime in the future that may well need to be done, despite the insistance that it is not in line with the agreement. Remember the agreement has already been broken by the initial arrears. Best option is to go ahead and agree to the arreras capitalisation as your alternative solution is effectively the same thing but practically for the Bank would be extremely difficult to implement!


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## Brendan Burgess (16 Jan 2014)

I think you are being unreasonable. 

The lender has offered to capitalise your arrears. Go for it.  

Your arrears will be gone and the clock will start ticking towards the 5 years needed to clean your credit record. 



> I didn't want to do this as you are only allowed to do this once in the term of your mortgage.



I don't know where it says this.  But you are in arrears now, so use it now to clear the arrears.  If you get into arrears in the future and if you get back on track, it is very likely that they will capitalise them again.

If they capitalise your arrears now, and you abuse the system and fall into arrears after another month or two, they will probably not capitalise them.


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## Gerry Canning (16 Jan 2014)

If i read you properly, 

You want interest only for a few months. In those few months you will pay capital and interest. By having interest only for another few months it means that you will then be completely up to date..
Sounds like a no brainer..

I note you made 10 phone calls to sort this. That tells me you have been dealing with a functionary not a decision maker.
Suggest write back(do not phone) .Re-ask them to accept your solving proposal.If the response stays negative , rewrite and ask to have a meeting with Senior Person.
If still no , go via appeals process. 

Given the other hassles Banks have on mortgages they shpuld be relieved to have this done.

I saw a similar case done on an ad hoc basis.


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## Gerry Canning (16 Jan 2014)

Just thinking.

I can agree with both Brendans and customers views.
Problem I have , is that I see resolution in a few months in either recapitalising or having interest only and I just cannot see why such shuffling is necessary ?


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## doubledeb (16 Jan 2014)

Thank you all for your replies.

I agree with you brendan burgess insofar as the ICB will be notified that the arears are paid and as you said im on my way to a clean credit record.
The problem with this is that they said that if we ran into trouble again we would not be able to re-capitalise for a second time in the future.

I also agree with you Gerry Canning that the paying the full amount and taking advantage of the fact that we are on a tracker and are paying small interest we would have the arrears cleared in under 6 months.  this to me seems like the most logical resolution.

We have had a lot of hassle with our mortgage provider in the past, basically they wouldn't put us on I.O at the start as we were paying unsecured debt.  They recommended that we stop paying these debts and prioritise our mort which we did and my OH was brought to court by another lender.  They denied they told us to do this and when we asked for the "recorded call" they couldn't find it.

I just want them out of our hair and let us get on with our lives.

When I asked about appeal the "independent appeals office" just so happens to be in the same building as them.  So its highly unlikely any appeal will go in our favour

The general consensus seems to be to accept the proposal so and have the amount recapitalised?

Thanks again for all comments


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## Brendan Burgess (16 Jan 2014)

> We have had a lot of hassle with our mortgage provider in the past,  basically they wouldn't put us on I.O at the start as we were paying  unsecured debt.


Perfectly reasonable and fair  behaviour by them. Why should a lender be expected to lend you money at 1% so that you can pay off unsecured debt. 

You have a cheap tracker mortgage


They have given you 18 months of interest only on a cheap tracker!
They have agreed to capitalise your arrears
You have got a great deal from them. I don't think that this is fair at all




> We have had a lot of hassle with our mortgage provider in the past,


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## doubledeb (16 Jan 2014)

Fair enough but when you make a phone call every week for 10 weeks and you get no answers from anyone in the call centre to me thats hassle in itself. and denying they told us to do certain things when they clearly did thats also hassle because you have no way of backing up your statement to other lenders.

Maybe I am bias to all of this.  Thats why I asked advice to get an objective opinion on the matter.

Thanks Brendan, will look carefully at the T's and C's of the recapitalisation offer before I sign anything!

If I did go with the recapitalisation, what would be the benifits to the bank? obviously the benifits to us are that the arrears would be cleared.

I would assume the 3k would be spread out over the remaining term of the mortgage?


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## 44brendan (16 Jan 2014)

No benefits to the bank. It just regularies an irregular loan. Stops reports being issued and arrears letters being generated!


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## doubledeb (16 Jan 2014)

Well I would certainly welcome less letters!

Looks like thats the way to go so although to be fair I thought my proposal was good too.


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## Bronte (17 Jan 2014)

doubledeb said:


> Fair enough but when you make a phone call every week for 10 weeks and you get no answers from anyone in the call centre to me thats hassle in itself. and denying they told us to do certain things when they clearly did thats also hassle because you have no way of backing up your statement to other lenders.


 
They're all at it so don't think that the other lender doesn't know full well what you are instructed to do, but focusing on this will not help you.  

I agree that you should allow the recapitalisation.  Don't worry if your contract says this can only be done once, this seems to be your main worry.  You take it one step at a time. You can be sure that if necessary the bank re recapitalise in the future if necessary.


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## Gerry Canning (17 Jan 2014)

Good to see resolution;

Comment; 
Again I pick up hassle and distrust created by Bank not properly engaging and tking time to explain their issues , hence  not resolving matters quicker, .
Too many times I have heard Bank tells customers to (not) pay another unsecured lender , without recording that advice. 
In this case I feel all lenders could have been (sorted) with a bit of real customer service by Mortgage Provider.
We can say Customers (fault) in not readily accepting capitalisation but in fairness they are not the experts, indeed their (homespun) resolution was probably the most cost effective.


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