A mortgage prisoner couple with The Co-operative Bank have finally been given six months' respite under a specialist arrangement, although they are still expected to move into rental accommodation.
FTAdviser previously highlighted the case of the Ls, who had originally been with GMAC, then Mas5, then The Co-Operative Bank following a slew of market failures and merger and acquisition activity during the 2008 Credit Crisis.
As reported, the Ls were left appealing to foodbanks and applying for social housing, fearful of yet another interest rate being applied on their mortgage following the base rate rise to 4.5 per cent in May.
According to Mrs L, although they finally paid off their arrears in April 2023, they had been stymied in their attempts to switch to a different mortgage product internally that would have carried a lower interest rate.
This was despite her husband having serious mental ill health, therefore being a vulnerable customer.
Earlier this year, a request for an internal switch had been declined by a Britannia underwriter - but no reason was provided. Then, while the Ls and FTAdviser were following this up, Mrs L showed a letter that came in June, finally explaining why the switch was not permitted.
The letter said: "This process allows MAS5 customers to apply for a new mortgage under our Britannia brand. In doing this, we relax more of the conditions that we would normally expect to be met by a customer applying for a mortgage."
For example, The Co-Operative Bank would normally expect a customer to have been fully up to date with their mortgage over the past 12 months and not missed any payments.
Under the internal re-mortgage process, if it is appropriate, it may consider relaxing this condition.
The letter said: "We did this when we looked at your application because we could see that the amount of the missing payments had reduced over a time.
"We also considered other changes that we could make to our normal conditions. This included extending the term of your mortgage."
This would have given the Ls a longer amount of time to repay the outstanding balance on the mortgage when it is due.
The letter added: "Unfortunately, even after relaxing these conditions, and taking account of the various sources of income you receive, we found that you would still not be able to meet the repayments that are due each month.
"We would not be acting as a responsible lender if we arranged a new mortgage knowing it was not affordable for you."
Practical steps
That letter also contained a series of steps to help the Ls get back on track and improving their credit score, with a view to a sale later in the year.
