Couple forced to pay monthly mortgage twice after law firm collapse
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Iolo Cheung
BBC Wales
BBC
Gabriella Smith was told by her solicitors that the remortgaging process on her house had been "completed" - only to be hit with payment requests from two providers
A couple who ended up paying their monthly mortgage twice, after the law firm they used to remortgage went bust, have described the stress as "horrendous".
In January, solicitors told Gabriella and Kurtiss Smith the mortgage on their home in Barry, Vale of Glamorgan had been successfully moved from Halifax to Nationwide – only to be hit by payment requests from both, following the sudden closure of PM Property Law.
Since then they have had to borrow money from family and friends to cover the £2,000 monthly payment for two different providers.
But, just a day after BBC Wales News contacted the banks for a response, Halifax said they had "put this right" and "refunded the additional payments".
Gabriella and Kurtiss are among hundreds of customers who were affected by the sudden closure of PM Law Group - the parent company of the solicitors they used for their remortgage.
The company is now under investigation by South Yorkshire Police and the Solicitors Regulation Authority (SRA), who are looking into "suspected sophisticated fraud".
The couple bought their first house together five years ago, overlooking the popular beachside resort at Barry Island.
They recently remortgaged - which is when a mortgage on a property is moved from one lender to another, and is often done when a fixed-rate deal ends.
On 23 January they were sent a 'Final Completion Statement' by PM Property Law, who they had instructed to carry out the remortgage, stating that the transfer of funds between Nationwide Building Society and Halifax bank had been "completed".
But on 5 February the couple were shocked to receive a message from their old provider, Halifax, saying they had missed a mortgage payment.
After contacting both banks, they were informed by Nationwide that PM Property Law had closed before completing the remortgaging deal.
Funds that should have been transferred from one party to the other had allegedly not been passed on by solicitors, meaning both banks had still had an open mortgage account for the Smiths.
Gabriella says they were threatened with repossession of their home if they missed mortgage payments
"I just instantly thought 'where is that money and what's happened to it?'" recalls Gabriella, 30.
"You put your trust in solicitors to deal with things like this. We just felt instantly betrayed, and thought 'why have they done this?'"
It transpired that PM Property Law's parent group, PM Law Group,
had shut abruptly at the beginning of February
, leaving hundreds of clients. like the Smiths, in the lurch.
The SRA said it was investigating a "sophisticated suspected fraud", involving "the improper removal and misuse" of almost £40m in client funds.
It is working through "hundreds of further claims", with over £16m having been paid out so far from a compensation fund and money previously held by PM Law.
Another £5.5m is expected to be paid out – though claims will now be prioritised "based on the risk of harm by those making them".
Gabriella Smith
Gabriella says she and husband, Kurtiss, have been trying to keep things as "normal" as possible for daughter Rosie-Hâf, despite their financial worries
With the Smiths' case unresolved for almost three months, the couple had to continue to make monthly mortgage payments to both banks to avoid the risk of repossession.
Gabriella said they had borrowed £6,000 from friends and family to help cover both those costs, as well as fees for a new solicitor. The couple have been told by the SRA that they will not be refunded for the additional legal fees.
"It's been horrendous, so stressful," she said. "It's had a big strain on us."
However, on Wednesday - a day after BBC Wales News had contacted both mortgage providers for a response to the Smiths' case - Halifax confirmed that a resolution had been found.
"We are very sorry that we did not resolve this sooner," said a spokesperson.
"We have a process to support customers affected by the collapse of PM Law and should have included Gabriella and Kurtiss' mortgage in it.
"We've now put this right, closed their mortgage account, and refunded the additional payments they made.
"We'll also give them a payment reflecting the distress and inconvenience caused," the spokesperson said.
Nationwide Building Society said they had also encountered issues with customers of PM Law and were "sorry" to hear of the Smiths' predicament.
"We later became aware of the closure of PM Law and, like many lenders at the time, were awaiting an update from the Solicitors Regulation Authority," said a spokesperson.
"This was relayed to the customers on 5 February."
Simon Thake/BBC
PM Law, whose headquarters were in Sheffield, closed abruptly at the beginning of February - an "unusual" development for a law firm, says one consumer expert
For Gabriella, the update from Halifax has come as a "huge relief" - though she says she will remain on tenterhooks until she receives official confirmation.
"I am waiting to have that personally in writing, adding "I feel as though everything has to be on paper for me."
"But fingers crossed now, it's a step in the right direction - and Halifax have said that they no longer require monthly mortgage payments from us."
Although she and Kurtiss were "counting our lucky stars" that their family had been able to support them financially, they now owe them around £4,000 for extra solicitiors' fees: "We still need to sort that out".
"But before I went to the media, no-one was taking me seriously. I just felt as if i was speaking to a different person every time I picked up the phone.
Sudden closure 'unusual'
The SRA say they are "continuing to do all we can" to reunite other clients with their money.
"Many of the former clients [of PM Law] faced significant upheaval at a stressful time, so we have been determined to provide as much support as possible," said Paul Hastings, the SRA's Director of Client Protection.
Helen Knapman, from consumer website MoneySavingExpert, said the closure of the law firm "had a really wide-ranging effect".
"PM Law wasn't just one firm, it was made up of multiple different companies, and it was trading under dozens of different names," she said.
She said "tens of thousands of customers" were affected by the closure, and advised them to contact the SRA and look out any missing paperwork.
"See if you can find anything that can help your case to progress with a new solicitor."
"Typically, when a law firm is going to close, it has to notify the SRA in advance," she explained. "What's really unusual here is that there was no forward notice. PM Law notified the SRA that it was closing on that very day.
"This is why it's created this unfortunate situation. It's been a very long and drawn-out process for people involved, unfortunately."
South Yorkshire Police confirmed it had received a referral for reported fraud in relation to PM Law, which is "currently under review… to determine next steps".
A spokesperson for the Serious Fraud Office said they could "neither confirm nor deny any investigation into this matter".
BBC News have approached PM Law for comment.
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