Fees Cause Problems for Mortgage Company

Lenders have been warned by the Financial Services Authority that if the lenders don’t do away with their large exit fees, legal action will follow. The fee is charged when a borrower quits their mortgage deal and has been around for a little less than a year. A ruling has been delayed, however, due to major lenders not cooperating. Northern Rock and Alliance & Leicester are two large lenders who have decided to fight to keep the income boosting charge.

Lenders make about 56 million pounds each year with exit charges. The fight has prolonged a finding until at least July, perhaps pushing it back into the fall. The fee does not fall under illegal actions unless the watchdog can prove that the fee is unequal treatment of borrowers. The FSA hopes to get an injunction against lenders that do not drop the fee. A different agreement may have the fee dropped to a standardized amount, noted in a loan package when given to the borrower.