Coming to the end of a endownment mortgage (about 12K short) What to do?

[iveagh]

coming to the end of a endownment mortgage that going to be about 12K short to clear the loan can anything be done about the over selling of same

 

[ClubMan]

Re: endownment mortgage

On what basis do you think that you were a victim of misselling?

What are you planning to do about the mortgage now given the shortfall? Rather than increasing the endowment payments you might want to see if it's possible to take out a partial annuity mortgage so that you can guarantee that the shortfall will be paid off while holding onto the endowment to cover the rest or selling the endowment on to reduce the outstanding balance. Be careful of increasing the endowment payments or encashing the policy early in case this is not the most beneficial course of action.

 

[iveagh]

Re: endownment mortgage

was led to believe when taking out the loan that our overall return would be 49K leaving a tax free surplus of 10K,

 

[ClubMan]

Re: endownment mortgage

Was this ever put in writing? It might be hard to prove this if it was just mentioned verbally to you. What do the terms & conditions of the agreement that you signed say about the possibility of there being a shortfall? I'd imagine that they say that this is a possibility and that performance of the endowment policy would not be guaranteed ("the value of shares may fall as well as rise" etc.). Unless you have firm evidence that this was missold to you then I reckon you will just have to (a) chalk it up to experience and (b) start putting in place a plan to deal with the mortgage from here on in.

 

[emnc]

Re: endownment mortgage

Iveagh, I had a similiar complaint with a BOI endowment. Took my case to IFSRA. It is worth registering your complaint with them. They then put me onto the Ombudsman for credit Institutions, I enclosed much documentation and statements of future values, they said there was no case, I appealed it and was again rejected.

The big boys win out in the end. So much for the similiar cases in the UK where thousands have been paid out in comp.

 

[demoivre]

Re: endownment mortgage

"The big boys win out in the end. So much for the similiar cases in the UK where thousands have been paid out in comp."

Does it not say on these policies that future returns cannot be guaranteed etc. etc. ? To my mind the sellers of these types of investment products always cover their arses by including such a clause.

 

[Dubtub]

Re: endownment mortgage

"The big boys win out in the end. So much for the similiar cases in the UK where thousands have been paid out in comp."

Does it not say on these policies that future returns cannot be guaranteed etc. etc. ? To my mind the sellers of these types of investment products always cover their arses by including such a clause.

 

[Dubtub]

Re: endownment mortgage

The selling of endowment mortgages in the early 90's was a clear misjudgement by the selling agencies. The investment performance did not meet their expectations yet the mortgage holder has to pay up for their shortfall. - this is a disgrace and yet another example of how the state backs up the mismanagement of the establishment. I was aware that the mortgage might have a variable performance but was never informed that I would foot the bill for the lending agencies misjudgement.

 

[Dubtub]

Re: endownment mortgage

"The big boys win out in the end. So much for the similiar cases in the UK where thousands have been paid out in comp."

Does it not say on these policies that future returns cannot be guaranteed etc. etc. ? To my mind the sellers of these types of investment products always cover their arses by including such a clause.

 

[dam099]

Re: endownment mortgage

The selling of endowment mortgages in the early 90's was a clear misjudgement by the selling agencies. The investment performance did not meet their expectations yet the mortgage holder has to pay up for their shortfall. - this is a disgrace and yet another example of how the state backs up the mismanagement of the establishment. I was aware that the mortgage might have a variable performance but was never informed that I would foot the bill for the lending agencies misjudgement.

If you were aware that it might have a variable performance who did you expect would foot the bill for the shortfall, surely its common sense that if you know the returns are variable you must be prepared to pay the shortfall?

 

[Dubtub]

In reply to damo99, you seem to misunderstand. I did accept that the returns on an endowment mortgage might be variable, but never variable in a negative direction. Who in their right mind would agree to a mortgage (the most expensive investment in a person's life) on the basis that one would be taking a risk on having to pay more and more if the investment did not at least meet the value of the mortgage. Any variability indicated to me was that the benefit would always be plus but could be a large or small payout at the end. - again I emphasise that it was never mentioned to me and to many other people in my position that the mortgage holder would have to pay for the underperformance of the investment. There was never any element of risk mentioned when these mortgages were being sold and all of the lending agencies know that. Needless to say, they are now hiding behind the "performance may vary" excuse - an excuse that was not accepted in the UK. In the UK, the view taken was that the lending agencies took the risk in in predicting benefits which their fund managers failed to realise. The UK consumers were protected against the each way bet which the Irish agencies seem to getting away with.

 

[dam099]

Unless marketed as a capital guaranteed product any investment with a variable return has both upside and downside potential but I agree its unfortunate that the sales agents glossed over these. As you mention it was in the small print however and absent false representations about capital guarantees there is an element of responsibility on consumers to read the terms and conditions.

Of course the sensible option back then might have been for the financial institutions to have offered capital guaranteed endowment policies but these by their nature would have had reduced upside potential.

Its also the case that some of the selling of endowment policies was tax driven (as the premiums were tax deductible) and the investment side may not have been considered as carefully as it should in the headlong rush to get tax benefits (which were subsequently withdrawn anyway).

 

[oysterman]

some of the selling of endowment policies was tax driven (as the premiums were tax deductible) and the investment side may not have been considered as carefully as it should in the headlong rush to get tax benefits (which were subsequently withdrawn anyway).

Excellent point. People were tripping over each other piling into these products for

1) the tax benefits
2) reckless exuberance (aka greed) about future investment returns.

Now that things haven't worked out they want to be compensated. That means they want their "losses" to be shared out among the entire community, including those who looked at those products twenty years ago and rejected them.

Tough.

Except in the most extreme cases (and I'm thinking here of provably stupid people who were literally forced into buying), the argument for compensation is very weak.

Oh, and I have an endowment from nearly 20 years ago in the UK which would probably have been found to have been missold if I'd taken it to the UK authorities. I didn't. I would have been ashamed to do so. After all, I wouldn't have shared the payout with those who hadn't bought endowments if my punt had paid off.

 

[Dubtub]

I have just seen Oysterman's offering and would like to comment on and correct some of his erroneous contentions.

(1) Tax Benefits: All types of house mortgages attracted tax relief back then. Tax relief was not specific to endowment mortgages.
(2) Reckless exuberance aka greed. If there was any display of exuberance or greed it was displayed by the mortgage salesmen who were tripping over themselves misseling these mortgages in a greedy pursuit of their commissions.

He mentions seeking compensation because things did not turn out (an outcome that was solely within the remit of the fund managers). I am not looking for compensation, I just object to paying more and more for someone else's misjudgement. He then implies that the "losses" incurred would be shared among the general community. What is he talking about? The "losses" are being paid - on the double, by the self same people who were duped by the overconfidence of the lending agencies in the first place.
Oysterman then goes on with the rather insulting remark that only stupid people allowed themselves to be forced into these mortgages. I remember well that these mortgages were aggressively pushed and confidently declared as the only sensible thing to do when seeking a mortgage. Young couples put their trust into the so-called expertise of the experts. There was no palette of options presented and the endowment mortgage was flavour of the month across all the agencies. Does it not strike Oysterman as rather ironic that thousands of "stupid people" in the UK were given their money back -not compensated - by the UK Regulator who took the sensible and provable view that these mortgages failed purely due to the agency's commercial shortcomings.

As well as having a hazy knowledge of the topic, Oysterman has an even less talent as a comedian. He makes the laughable comment that he has a UK mortgage but would be ashamed to seek justice the same as everyone else. How noble and altruistic of him? It's a pity that his sense of shame is not shared by the banks and others in the financial fraternity who are shamelessly turning the screw on innocent mortgage holders by insisting on their pound of flesh for the failure of their own financial projections. The contention that all this was a risk - openly entered into by the mortgage holder - is rubbish. This fiction was also nailed by the UK Regulator when he pointed out that the terms of many mortgages were often years beyond the retirement age of the customer. He went further to say that it was the sole responsibility of the lending agency to prudently judge the mortgage holder's ability to pay. This proved that the agencies were confident that there would be piles of money built up to cover the residual cost of the mortgage after the customers retirement.
Finally, Oysterman brings in the concept of the "punt paying off". Perhaps he could consider my racing analogy. Imagine a bookie who offers 100/1 on a horse only to find it romps home ahead of the favourites. The bookie then asks all the winning punters to pay him back all his losses (over a few years mind you) because he should have given shorter odds. Then one can imagine Oysterman ( so ashamed of his winnings) running to the bookie to pay him back. Yeah, right!

 

[dam099]

I have just seen Oysterman's offering and would like to comment on and correct some of his erroneous contentions.

(1) Tax Benefits: All types of house mortgages attracted tax relief back then. Tax relief was not specific to endowment mortgages.

All mortgages enjoyed tax relief on the interest but I am pretty sure endowment mortgages had an additional tax saving over annuity mortgages as the life assurance premiums you were paying for your endownment policy were also tax deductible whereas capital repayments on an annuity mortgage would not have been.