Mortgage companies accused of causing PI problems
Mortgage lenders are hiring “no win, no fee” solicitors to take negligence claims against property surveyors over repossessed homes that have lost value, the Times reports
A number of solicitors approached banks with the idea and now so-called “confetti letters” are being sent to surveyors asking if the original valuation was accurate. The letter notifies the surveyor that they are under investigation.
The Royal Institution of Chartered Surveyors (RICS) accused solicitors of threatening surveyors without any evidence of malpractice. RICS said this put surveyors’ businesses in jeopardy because they must report all investigations to their professional indemnity (PI) insurers.
A rise in PI premiums could force firms out of business, RICS said.
Not a mainstream practice
David Dalby, the director of residential for RICS, said: “The letters state that the lender has suffered a loss in selling the property but do not indicate whether this is attributable simply to a decline in the market, or whether they have evidence that suggests the original valuation was excessive.”
The Council of Mortgage Lenders (CML) said: “This is not a mainstream practice among lenders. Most will not accept the services of ‘no win, no fee’ solicitors, and will work with the valuers because they understand the implications for their insurance.”
