Untaken mortgage direct debits: who is responsible

[Orga]

If I'm posting in the wrong forum maybe one of the mods can advise - apologies in advance.

My mortgage has been taken over by Pepper. They have admitted that they failed to call the direct debit on a number of occasions. They have said the fault was theirs.
They told me that they used a regular standing order over-payment that I make monthly to off-set the missed DDs. Only when they exhausted that did it trigger them to contact me. My queries are:

1. I had presumed that over-payments would be applied to the mortgage immediately on receipt and thus reduce the capital balance and interest. I have queried this on the phone and they have told me that what I understand is correct. But, how can the money then be used to offset a later untaken direct debit? Maybe a banker here can explain this system?

2. Off-setting is provided for in the mortgage contract in respect of accounts that I held with Danske, but I don't hold any separate accounts with Pepper, so how can they off-set as there is just one account?

3. Pepper now want me to make a lump sum payment of all the untaken DDs. What would be a suitable response to this given that the mortgage contract is predicated on a specific term length and the failure by Pepper to take the payments in accordance with the agreed schedule would mean that the term has been elongated unless I pay all in one go.

Thank you for your advice and opinions.

 

[RETIRED2017]

If I'm posting in the wrong forum maybe one of the mods can advise - apologies in advance.

My mortgage has been taken over by Pepper. They have admitted that they failed to call the direct debit on a number of occasions. They have said the fault was theirs.
They told me that they used a regular standing order over-payment that I make monthly to off-set the missed DDs. Only when they exhausted that did it trigger them to contact me. My queries are:

1. I had presumed that over-payments would be applied to the mortgage immediately on receipt and thus reduce the capital balance and interest. I have queried this on the phone and they have told me that what I understand is correct. But, how can the money then be used to offset a later untaken direct debit? Maybe a banker here can explain this system?

2. Off-setting is provided for in the mortgage contract in respect of accounts that I held with Danske, but I don't hold any separate accounts with Pepper, so how can they off-set as there is just one account?

3. Pepper now want me to make a lump sum payment of all the untaken DDs. What would be a suitable response to this given that the mortgage contract is predicated on a specific term length and the failure by Pepper to take the payments in accordance with the agreed schedule would mean that the term has been elongated unless I pay all in one go.

Thank you for your advice and opinions.

You owe them the money not taken ,I suspect everything will get reset once you send them the money not taken,

 

[Monbretia]

Because your account is expecting x amount of payment every month, you are overpaid on these theoretical future payments as you are making additional payments of y. The computer would be showing a credit balance in the expected repayments column as such because of these additional payments. Therefore when the dd was missed the computer did not recognise you as having a missed payment because there was surplus in the credit column.

This credit column has nothing to do with the capital/interest balance as such as it's just a running total of where you stand in relation to the total expected payments contracted on the mortgage for the year so yours was obviously in credit because of the overpayments so therefore computer not alerted that regular payments were missed. Once the credit ran out and that column went into minus then some system alerts them obviously that you are in theory in arrears.

Not saying this is exactly their system but I have experience of one that worked like this.

 

[RedOnion]

Hi Orga,

Firstly, I don't know Peppers systems, so this is generally how it works in other banks.
Also, bear in mind the general nature if the mortgages that Pepper are managing - they don't have a huge amount of customers overpaying!

Yes, your overpayment reduces your balance, and interest accrual. However if it didn't trigger a reschedule if you loan (monthly repayment or reduce term), then its held in the system as 'negative arrears'.
So if you had overpaid by 10k in the past, and your monthly payment was 1k, then it would take 10 months to use up the credit, and only on 11th month would you go into arrears and get flagged to Pepper.

Its possible that they're system adjusts the DD amount by any lodgements made by customer. E.g if monthly payment is 1000, and customer has transferred 599, then they'd only collect 500 but DD. If they've done that then that would explain how they missed your Dad's.

The term 'off-set' is in relation to payments, not other accounts (which your mortgage contract covers).

3. Pepper now want me to make a lump sum payment of all the untaken DDs

Why? Are you in arrears now?
They can only ask for a lump sum to cover the arrears.

 

[Brendan Burgess]

Hi Orga

Did you not notice that your normal mortgage payments were not being made?

Check your Credit Record to make sure that they have not marked you as being in arrears.

What is the current position. For example:

Overpayment made €10,000
Missed payments : 12 x €1,000
Net missed payments: €2,000

People make mistakes. It doesn't sound as if you were too badly affected by it. The simplest solution is just to pay the net missed payments.

You have not been overcharged interest as such.

You could argue that you have €12,000 in your current account earning nothing while being charged interest @x% on €12,000 underpaid on your mortgage. However, as I assume you have a cheap tracker, the actual interest would be very small. You could ask them to adjust your balance by this amount.

Brendan

 

[Orga]

A very sincere thanks Retired 2017, Monbretia, Red Onion and Brendan for your insight and advice.
With gratitude.