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case studies about mortgage underfunding



I was just paying the amount my lender told me to pay - the underfunding isn't my fault ...

Some people tell us that they just followed the repayment information given to them by their lender. They may say it's unfair that they have to pay because their lender made a mistake.

  • We’ll need to establish whether the lender is responsible for the customer paying the wrong amount. This might involve looking at the original mortgage offer, or any statements or other paperwork the lender sent.
  • We sometimes find that people knew their lender had made a mistake - but didn’t question it and carried on paying the wrong amount. In these cases, we’re likely to say it’s fair for the borrower to pay the outstanding amount.
  • If we find that a lender made a mistake - and their customer didn’t know they were paying the wrong amount - we’re likely to tell them to pay some or all of the money their customer now owes.
  • We sometimes decide that someone could’ve taken steps to sort the problem out sooner - for example, if someone noticed they weren’t paying the right amount, but didn’t let their lender know straight away. In these cases, we might tell the lender to meet the underfunding up to the point their customer realised something had gone wrong.

case study 1

Mr W took out a mortgage on a repayment basis. When his lender accidentally switched him to an interest-only mortgage, Mr W contacted the lender - but they said he was paying the right amount for his repayment mortgage.

Two years later, the lender began sending Mr W annual statements showing he had an interest-only mortgage. Mr W didn’t question this until he found the balance was too high approaching the end of his mortgage term, five years later.

The lender accepted they’d made the original mistake, and met the underfunding for the first two years. But the statements were clear - and Mr W hadn’t questioned why his mortgage was interest-only. So we didn’t tell the lender to pay any more.

case study 2

Mrs L asked to reduce her mortgage term by two years. When the term was altered, she began to pay the new, higher monthly repayments. But a year later, the lender wrote to say she hadn’t been paying enough - and she’d have to repay the outstanding amount over the next six months.

We could see Mrs L had received a quote for the increased repayments, and couldn’t reasonably have known it was wrong. She’d been paying the amount quoted - so we said the lender had made the mistake, and should meet the underfunding.



I made a mistake, but my mortgage company won't help me put things right ...

Some people tell us they’ve realised they’ve made a mistake with their repayments - which means they haven’t been paying enough towards their mortgage. The mistake might have happened when the payments were first set up, or - if the repayment amount changed - at the point they changed.

  • We sometimes hear from people who’ve accidentally set up a standing order for less than the agreed monthly payment. If the mortgage company hasn't made an error, it's unlikely we'd ask them to cover the money that hasn’t been paid.
  • But even if the mistake is on the borrower’s part, we’ll check the lender acted sympathetically when the problem came to light. For example, we’ll check they’ve worked constructively with their customer to set up a reasonable repayment plan to pay what they still owe.
  • Some people tell us the underfunding has caused them additional problems - like falling into arrears on their mortgage. There’s more information on how we can help with these kinds of problems in our approach to arrears and charges.


my mortgage broker made a mistake - now I'm being told I haven't paid enough on my mortgage ...

Some people tell us a problem arose because of information they got from their mortgage broker. In some cases, people aren’t sure who’s responsible for putting things right.

  • Some people tell us their broker didn’t understand what they needed out of a mortgage - and as a result, the repayments aren’t what they thought they would be. We'll look into the advice the mortgage broker gave - and decide whether it was appropriate in their customer’s individual circumstances.
  • We sometimes find that a broker made a mistake on their customer’s application. While we think it’s fair to expect someone to read their mortgage documents carefully - including the amount they need to repay - it’s likely they were relying on their broker as the expert. So we’ll look into whether the broker checked everything too - and could have picked up on any problems at the time.
  • If we decide a broker is responsible for underfunding on a mortgage, they won’t be able to restructure the mortgage account. So we’ll usually tell them to make a cash payment to their customer - which can be used to reduce the mortgage balance.

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