Letters to the editor

Questions over Abbey affordability, Goldsmith may

be right but clients every right to pursue claims

Discuss industry topics, respond to letters, or start new discussions

QUESTIONS OVER AFFORDABILITY MADE ME LOSE OUT ON FEES

Sir,

Abbey apparently have a secret affordability calculator that they use in underwriting large loans which in no way tallies with the affordability calculator it uses on its website. I am annoyed as I have just lost a £930,000 mortgage and the subsequent tax planning that would have gone with it.

Now you may think that it’s not your

problem but I believe it’s important that other intermediaries should be aware of how misleading Abbey’s affordability calculator can be and the inherent danger it therein represents. Personally I think they simply didn’t want to lend the money to one person and would rather have generated more arrangement fees over smaller mortgages and this was a convenient excuse. However, it’s the answer it has given us and if it is true, it is a huge issue for anyone out there attempting to place mortgage business with them. Here’s a brief summary of what happened. We used the affordability calculator before submitting our case to Abbey and we kept the printouts. It passed at £930,000. My client for this case was earning £150Kpa plus a £37,500 bonus. There was also a £10,000 additional bonuses and another £24,000 from a guaranteed 20 year investment. We were asked for a letter confirming the investment income and this was provided by the investment house via ourselves. According to the figures on the affordability calculator, with a very low score the client would get £876K, around £60K short of the £930K required. But I’ve been told by an underwriter that my client didn’t get a low score – and subsequently told that the case was falling way short on affordability (not just £60k) and that Abbey use a different calculation to the one on the website when the case arrives in underwriting. So Abbey were not prepared to do the case but they will not tell me how much they had calculated the client could borrow as it was policy not to explain this. Is it just me or is this a sham of an underwriting process?

Letter of the month

Goldsmith was right to feel vindicated

Sir,

Eddie Goldsmith is right to feel vindicated over his firm’s stance against ‘Get Rich Quick’ schemes (Mortgage Introducer April 2010), typified by the now discredited Cartel Client Review. We sympathise both with the clients who have lost their money and those who, in good faith, recommended them to this scam.

As Mr Williams observed “…it’s not only clients who suffer but also the reputation of those

brokers who made the original introductions”. But this fails to recognise the few remaining companies who have continued to pursue the legitimate claims of borrowers. Most of the readers of this magazine are business people and everyone knows that, if in the normal activities of your business you issue faulty contracts, you would probably expect them to be challenged.

Why should the banks be different? This is what a senior barrister had to say about what Mr Williams describes as “spurious”

claims – “I included the provision in question (section 127(3)) entirely on my own initiative. It seemed right to me that if the creditor company couldn’t be bothered to ensure that all the prescribed particulars were accurately included in the credit agreement it deserved to find it unenforceable”.

That quote comes from one Francis Bennion, the draughtsman of the Consumer Credit Act 1974.

I fully believe in my opinion that clients have every right to pursue their legitimate claims against lenders who have demonstrated such ineptitude in drawing up credit agreements and who add to borrowers’ difficulties by their use of inappropriate, and in some cases illegal, harassment.

Robert Clayton Gateway Companies By email

I think it’s downright atrocious. The lending world is tough enough at the moment without lenders deliberately misleading intermediaries. I don’t think this should happen and I implore you to give this some column inches so that other intermediaries will be aware of this.

Pete Leslie Partner St James’s Place Wealth Management London

In response to Mr Leslie’s letter a spokesman for Abbey replied: “As stated on our website, affordability calculators offer a guide, not a

guarantee,of the amount we will lend to a customer and should be used for illustrative purposes only.

“The actual amount of the loan available is subject to a full credit score, affordability assessment and Abbey’s lending policy. “While we keep the calculator on our site closely aligned to our lending policy, there may be a slight disparity as we perform a more detailed assessment of an application.”

Letters to the editor are welcome and may be edited for publication. Write to the address on page 3 or email nia@thepublishinggroup.co.uk

mortgage introducer MAY 2010 17 Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48