Underpayment - Bank's fault - any chance of getting out of it?

P

Payless

Guest
Not for the first time, we have recently found out that the bank miscalculated our mortgage resulting in a huge underpayment.

They have offered us an interest free loan to pay over the term of the existing mortgage but we can't afford this.

In fact, as we've been underpaying our regular mortgage payments, our monthly repayments are about to leap by about 200 euro. We'll really struggle to meet this on its own.

This is the THIRD time the bank's incompetence has resulted in an underpayment. We, meanwhile have been model borrowers - never missing a payment and repaying the previous underpayments without fuss. Our circumstances have changed greatly - for the worse though.

I plan to complain to the bank and failing a satifactory resolution go to the ombudsman. I thinking of seeking legal advice too. Anybody heard of such debt being written off or otherwise avoided?
Thanks
 
How much do you have to pay as a result of the underpayment ? Given that you've already paid it once it can't be that long a period. If you're current payments are up 200 a month and you are getting the full term of the mortage to pay back the mortgage then the differance would surely be onlu about 5 or 10 euro a month. Are you saying you want to not have to apy the 200 extra now that you should have been paying all the time ?
I plan to complain to the bank and failing a satifactory resolution go to the ombudsman.
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The ombudsman would probably state that the bank is being more than fair in asking for the outstanding amount to be paid over the term of the mortgage and interest free to be honest.
 
Are you saying that the underpayment was 20k i.e 150 * 12 * 10 years ? Did you not notice that the figure was not right over the last while ? If you can't afford it at the moment then write to the bank and tell them you will pay it back over a longer term.
 
Actually I edited the email - its actually around 100 eu not 150. However, the problem arose when we changed rates a number of years ago (fixed to tracker) - so didn't notice the underpayment.

I don't have an extra 300 eu a month to give them (that is increase to the correct mortgage payment and the underpayment repayment). So we'll have to work out something....
 
They will ask you to fill in a form so they can see what you can afford. Unfortunately, it looks like you are in a bad psoition here. Judging by the figures you are well into the repayment schedule so you have ten years left on the mortgage. Then you are most likely not in negative equity so the bank has a strong enough position to put you under pressure if you fall into arrears. Would I be correct here ? You will need to go and see them and try to get the best deal. How about asking to defer payment of the back pay for 12 months. I think you will really need to pay the new amount to keep any legal issues arising.
 
Yes, deferral of the pay-back part might be an option. Thanks for the replies.
 
The position as presented by you appears to be somewhat unusual. Presumably you have checked that the Bank's current repayment calculation is correct. i.e Amount owing/current rate applicable/remaining term on the facility. If you want an independent assessment of the required repayments I can input into a model to assess this!
2nd issue, is that if this is the 3rd error on the part of the Bank you do have a right to some level of compensation. they will not write off the missed repayments ( but if your current financial position is partly caused by these historic errors you have a right to compensation). Write firstly to the Bank, outlining the exact specifics of the error and the resultant financial problems caused by these errors. Suggest that you are prepared to pay the debt, but that the missed loan repayments be covered by way of a loan extension rather than an increase in your repayments. In my view, this would be a fair result. Failing a satisfactory response from the Bank, appeal to the FSO.
 
Definitely complain and refer to FSO if you aren't satisfied. As far as you were concerned you were making full repayments - to resolve the complaint they need to adjust the loan to make it as if you had been making the correct full repayments - i.e. write off the historic shortfall in full.

And if the same error has happened on your account twice before, they will be all the more reluctant to allow the complaint get as far as the FSO.
 
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