You’ve closed your mortgage account with your bank and suddenly you get a bill for Mortgage Exit Administration Fees (MEAFs). Nobody wants a bad credit report, so you pay the fee. Sometimes these fees can be quite large and banks are actually supposed to give a refund, but, like many businesses, if you don’t ask you won’t get your money back. Costs were especially high in 2007 when the Financial Services Authority (FSA) got involved. When banks were unable to validate the increased fees, the FSA decided that refunds must be made available.
Here’s what to do if you’ve had a big mortgage exit fee:
*First make sure the fees are MEAFs. There are fees associated with opening a mortgage account. These fees are not refundable. Also, if you pay off your mortgage through a special deal, there may be fees associated with early repayment. These fees are also not refundable.
*Check how long it has been since you paid the fees. If you paid the MEAFs less than six years ago you can request a refund. Even if you paid the fees more than six years ago, ask for a refund. Some banks will pay you anyway.
*Call you old mortgage lender. Getting repayment is often as easy as saying “the FSA said I overpaid.” Don’t worry if you don’t have your original documents. Mortgage lenders keep detailed records and will be able to repay based on the original contract.
*Request a refund in writing if you prefer to have a paper trail. You can easily find the customer service address for any lender by searching for them on the Internet. If you have the specifics of your contract, include the contracted MEAF amount and the amount actually paid. Then request a refund for the difference.
*Be sure to ask for interest on the refund. If you paid the fees many years ago, the interest can really add up.
*If you are ready for a potential fight, ask for the entire MEAF fee to be refunded (not just the difference). While not mandated by the FSA, most of the time, the actual cost of closing a mortgage is only 50 pounds. If you paid more than 50 pounds (regardless of what your contract states), ask the lender to justify the higher charges. Some of the charges may be justifiable. If not, ask for a full refund and go to small claims court if you deem it necessary.
What if you have a current mortgage?
*If your mortgage began in July 2007 or later your contract will specify any fees that you can expect. Simply check your contract for information. If you do not have a copy of your contract, your lender should be able to provide one for you.
*If there are large fees associated with closing your mortgage ask about minimum mortgage levels. If you need to close the particular mortgage and are financially able to significantly bring down the balance to 100 pounds or less without accruing fees, then do so. Essentially, you keep the account open and avoid fees and you pay minimal (or perhaps) no interest on the small amount left while the mortgage closes naturally.