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Mortgage Protection Claims

Although there is no concrete 'proof', there very well may be some correlation between the mortgage market meltdown of 2008 and 2009 and the literal explosion of mis sold mortgage protection claims from the same period. Banks all over the world were reporting that there was a crisis in the mortgage sector of finance and that record numbers of homeowners were losing their homes to foreclosure. This hit the UK just as deeply as it did elsewhere around the world and at the same time consumers were reporting record instances of mis sold mortgage payment protection insurance policies having been mis sold.

Mis Sold PPI: Coincidence or By Intent?

The whole situation gives cause to wonder whether the mis selling of PPI created financial hardships for borrowers, sending them into foreclosure or if lenders were trying to recoup losses by mis selling a high ticket item when closing on mortgage loans. Or, could it be a combination of the two? (In either case, mortgage protection claims skyrocketed shortly thereafter!) Indeed, many consumers began reclaiming PPI at about the same time that the bottom fell out of the mortgage market which may just be a little too coincidental for comfort.

Did Their Underhanded Sales Tactics Backfire?

According to a recent edition of Panorama on BBC, undercover reporters investigating high street banks feel that incentivised sales of payment protection insurance was the fodder for the cash cow and that it simply got out of hand. Perhaps lenders, foreseeing the mortgage crisis that was largely due to poor investments, began to look for another way to bolster their coffers. However, if this was the case it surely backfired as there are now record numbers of mortgage protection claims for refunds pouring in. As a matter of fact, the British Bankers Association expects that the figures will be so high when all those claims to refund bank charges are tallied that it has reported UK banks as setting aside billions of pounds to handle all those claims. If lenders purposely sold that high ticket payment protection insurance on purpose then it surely did backfire based on the sheer numbers of mortgage protection claims that have come in over the past few years.

Correcting Mis Sold Mortgage Payment Protection

Since the problem has been identified, government and consumer advocate groups such as the Citizens Advice Bureau have been working closely together to correct the problem. It may be quite a while before all the outstanding mortgage protection claims have been satisfied, but there are real steps in the works to reduce the number of future claims. Recent legislation has been enacted wherein borrowers may no longer purchase payment protection insurance within 14 days of closing on a loan. This should systematically reduce mortgage protection claims that result from mis selling and misrepresentation by lenders. Of course there will always be insurance producers and lenders contacting consumers on a 'call back' after the prescribed time has elapsed, but this law will at least put a halt to all the occasions where PPI is added at closing unbeknownst to borrowers.

If you feel that you have been mis sold mortgage payment protection insurance then it is your right to file a claim for a refund. Belmont Thornton has a specialist team waiting to help you so give us a call on 0207 471 2000. This is a free consultation as we work on a no win, no fee* basis.


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