Halifax's sealing fee under investigation: Ombudsman to look at cost of removing mortgage deeds, writes Vivien Goldsmith

BUILDING Society Ombudsman Brian Murphy is investigating the way in which Halifax building society charges homeowners when they are paying off their mortgages.

Halifax introduced a pounds 40 charge for taking mortgage deeds out of their care 10 years ago. Those who took out their loans before the introduction of the charge pay no fees. Those whose mortgage runs its full term are also exempted from the charge.

But others have to pay if they repay early or need the deeds for some other reason, such as checking title. Individuals pay pounds 40, but if a borrower uses a solicitor there is an extra pounds 15 charge.

Halifax normally expects individuals to collect the documents from a branch, while it will send the deeds when solicitors are involved.

It is this extra pounds 15 charge for those using a lawyer that is under investigation by the Ombudsman.

Halifax allows borrowers at the end of their mortgage term to leave pounds 1 unpaid and the society will keep the deeds under lock and key for a charge of pounds 10 a year. This can be useful if a further advance is needed. The pounds 10 charge is waived if buildings or contents insurance is taken out through Halifax.

Mortgage deeds used to be literally stamped to show that the debt has been discharged. This is no longer done, but the term 'sealing fee' remains.

Mr Murphy said that when borrowers complained about sealing fees, the society was generally allowed to charge a reasonable amount - say pounds 35 to pounds 40 - for the work involved in dealing with the legalities. This is usually covered by a clause in the mortgage deed that refers to the society recovering its proper expenses.

Mr Murphy said that sealing fees were only introduced about five years ago - at about the time that their profit margins were being squeezed. 'We have to make sure that they are fair and reasonable and they are not ripping people off.'

Julian Gardner, of Newmarket, Suffolk, has just come to the end of his mortgage with Abbey National. He is furious that he was asked to pay either pounds 50 to redeem the mortgage or pounds 50 for the deeds to be kept in an Abbey National safe under the Deedsafe scheme.

He believes he should have been notified of the charge at the outset, or any costs borne by Abbey National as part of its normal operating expenses. 'Abbey National's approach would seem to leave no option to paying pounds 50 in either case. I object in principle but pounds 10 might be more reasonable for returning our property.'

The Banking Ombudsman refused to generalise and said that each complaint was treated on its own merits.

Lloyds Bank does not charge a sealing fee. It will not allow borrowers to leave a nominal amount outstanding, and charges pounds 20 a year for keeping deeds.

Bradford & Bingley's sealing fee is pounds 45. When pounds 1 is left in the account, the deeds are held without a fee.

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