EBS charging interest on arrears despite the CCMA

TrackerThieves

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This just reminded me of an EBS issue that may be more widespread. Not sure if it was highlighted by others before but EBS charged me interest on arrears, as far as I remember the ccma 2013 states interest should only be applied to customers who are classified as non coperating. It wasn't a huge amount maybe about €200.

Another EBS issue that I discovered in my case and am guessing may have been more widespread. When I recapitalized arrears, which were equivilent of approx 4 months mortgage payments. The amount they lodged was for more than was needed and signed for, approx 1 month extra.

Be interesting to hear if others have any experience of either of these
 

Brendan Burgess

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EBS charged me interest on arrears, as far as I remember the ccma 2013 states interest should only be applied to customers who are classified as non coperating.
Hi TT

My guess is that you don't really understand the calculations or else you don't understand the code.

The calculations

Let's say I have a mortgage of €100,000 with a repayment of €1,000
I make my repayment and they charge me interest after that on the balance of €99,000 .

If I don't make the repayment, my balance remains at €100,000 and my arrears are €1,000.
But they are right to charge me interest on the balance of €100,000.

The code

11. Lenders are restricted from imposing charges and/or surcharge interest on arrears
arising on a mortgage account in arrears to which this Code applies, unless the
borrower is not co-operating.



This was inserted, at my suggestion, to prevent the practice of banks such as Irish Nationwide charging penalty interest on arrears.

So not only would you be charged interest on the main balance, they used to charge 5% per quarter on the arrears balance.

But if I am wrong...
If you do understand both and you have been charged penalty interest on arrears on top of the normal interest, I would take it up immediately with the Central Bank.

While I doubt that they are, they do impose legal charges on people in court proceedings without the permission of the court, which is wrong.

Brendan
 

Brendan Burgess

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38,704
When I recapitalized arrears, which were equivilent of approx 4 months mortgage payments. The amount they lodged was for more than was needed and signed for, approx 1 month extra.
Hi TT

I'm sorry but I do not understand what you mean.

Can you spell it out in detail step by step what they did wrong.

Brendan
 

TrackerThieves

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Hi TT

My guess is that you don't really understand the calculations or else you don't understand the code.

The calculations

Let's say I have a mortgage of €100,000 with a repayment of €1,000
I make my repayment and they charge me interest after that on the balance of €99,000 .

If I don't make the repayment, my balance remains at €100,000 and my arrears are €1,000.
But they are right to charge me interest on the balance of €100,000.

The code

11. Lenders are restricted from imposing charges and/or surcharge interest on arrears
arising on a mortgage account in arrears to which this Code applies, unless the
borrower is not co-operating.



This was inserted, at my suggestion, to prevent the practice of banks such as Irish Nationwide charging penalty interest on arrears.

So not only would you be charged interest on the main balance, they used to charge 5% per quarter on the arrears balance.

But if I am wrong...
If you do understand both and you have been charged penalty interest on arrears on top of the normal interest, I would take it up immediately with the Central Bank.

While I doubt that they are, they do impose legal charges on people in court proceedings without the permission of the court, which is wrong.

Brendan
This was from the period 2013-2015. There were a number of missed partial payments and we would regularly receive an update in relation to arrears, it would state the following worded exactly as follows:
Date account went into arrears
Amount of arrears
Number and total amount of full/ partial missed payments
Additional interest arising from the above arrears to be applied next month
Accumulated additional interest applied to your account arising from mortgage arrears
applicable interest rate (this ranged from 3.7%- 4.5%)
 

Brendan Burgess

Founder
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38,704
Hi TT

Was the additional interest rate the same rate as the general mortgage rate?

I think that message is just telling you that by not paying your mortgage on time, you are incurring extra interest.



Brendan
 

TrackerThieves

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122
not sure about the interest rates would need to check

11. Lenders are restricted from imposing charges and/or surcharge interest on arrears
arising on a mortgage account in arrears to which this Code applies, unless the
borrower is not co-operating.


I had assumed this meant additional interest could not be charged as long as borrowers were co-operating, have I taken this up wrong?
 

Brendan Burgess

Founder
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38,704
Hi TT

They might have done it wrong, but I would be surprised.

They have probably expressed it badly but people generally don't understand interest and arrears.

Brendan
 

TrackerThieves

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Messages
122
Hi TT

I'm sorry but I do not understand what you mean.

Can you spell it out in detail step by step what they did wrong.

Brendan
We attempted to clear arrears by entering into 3 alternate arrangements in which we made full monthly payments + an extra amount agreed over period ranging from 6-12 months. We then engaged with a 3rd party who arranged a 6 month I.O.period who were to be in negotiations for a long term deal. 3rd party went into liquidation 3 weeks before the end of 6 months I.O. period. We were turned down for a further short term I.O. period and after appealing this a number of times they tried to force us to accept new terms on the mortgage adding 8 years. It was later agreed if we made 6 month full mortgage payments they would recapitalize arrears. Capitalization documents were sent to us on the 27-04-2016. We signed this document and returned it. This document is on record as being received on the 19-05-2016. Arrears were recapitalized but the amount lodged was for 1k more than needed and signed for. The signed document from 19-05-2016 has not been provided but they did provide a different internal EBS document that was signed by 2 EBS staff members on the 20th and 23rd of 05-2016. There was a line in this document that stated in bold "IF ACCOUNT IS ON POSITIVE EQUITY - DO NOT PROCEED(SPEAK TO TEAM LEAD)
 

TrackerThieves

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this internal document also states " Capitalize arrears now includes escrow 4 debits ie. unpaid dd's in the current month". Not sure what this was meant to mean but seems like they included the current month as arrears when they shouldn't have as this was due to be paid by end of that month. They then changed this themselves basically giving us 1 month more than we needed and had signed for.
 

Brendan Burgess

Founder
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38,704
Maybe someone else understands this. But I have no idea what is going on.

The key to understanding this is that arrears is a purely memorandum figure of no significance in calculating the interest due.

Let's say I have a mortgage of €100k with 20 years to go.

And you have a mortgage balance of €100k with 20 years to go. But your balance should be €80,000 as you have missed €20,000 in repayments.

By capitalising the arrears they are just drawing a line through a figure of no significance. You still owe €100k with 20 years to do.

If they had not capitalised the arrears.
They would be demanding that you pay €20k now and the repayment would be calculated based on €80k instead of €100k.

Brendan
 
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