Borrowers feel backlash of tighter post-MMR rules

Chris Nicholson, managing director of Somerset-based Bath Mortgage Search, said one of his clients had been left with a remortgage shortfall after his mortgage valuation came in 10 per cent lower than he was anticipating, and Woolwich, the lender, refused to allow an appeal.

Mr Nicholson said he was “incensed” that having seen his client pay £380 for a mortgage valuation by e.surv, the lender’s policy “will not even entertain an appeal”.

He said: “The valuation was lower than other properties on the same street, lower than local estate agents value it and lower than three comparable properties in the area.

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“But because it’s not more than 25 per cent lower, Woolwich refuses to let me appeal. My client is £25,000 short of what he expected to raise. He paid the valuation and feels he’s been robbed.”

A spokesman for Woolwich said: “We rely on the advice of our professional valuation provider. They are the qualified experts in this field. The case does not meet the policy [terms] for a review.”

Richard Sexton, e.surv’s business development director, said: “This is the opinion of a trained and qualified valuer. He has no vested interest in valuing the property one way or another. Unfortunately, sometimes impartial advice means loans don’t go through at the level borrowers were expecting.”

Also, this week Halifax sent a third round of letters to interest-only mortgage borrowers asking for written details of their repayment strategies.

The letter states: “It is very important that you contact us now to discuss your repayment options. Provide us with details of your plans for repayment.”

Steve Smith, mortgage consultant at London-based Springtide Capital, said: “I am disappointed with the tone of the letter, although I can’t fault the message behind it. It could be read as intrusive and the issue is what Halifax’s response is when borrowers say they have no repayment plan.”

Marc Page, mortgage director at Halifax, said: “We do not think the tone is aggressive and we have taken customer feedback on this. This is a serious issue and we want to find a careful balance to encourage people to deal with potential shortfalls as early as possible.”

This week, FCA chief executive Martin Wheatley accused lenders of being too rigid in their application of new affordability testing for borrowers eligible for transitional rules under MMR.

■ Meanwhile, a Halifax spokesman confirmed the lender had abandoned all shared equity and shared ownership mortgages for homemovers, which include applications through the Help to Buy equity loan scheme, though only for advisers.