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Decision opens way to sue CMC

Hundreds of City Mortgage Corporation borrowers are preparing to sue after a court ruled broker Capital Credit took secret commission from the lender.


Haverford West County Court ruled CMC paid the Truro-based mortgage broker a £12,125 secret payment as part of a first refusal agreement binding the broker to recommend all clients take out a CMC mortgage.


But the court held borrower Valerie Ferrier-Smith successfully proved the broker had loyalty to the lender rather than to her. As agents CCL failed in its duty to be loyal to its clients and the court ordered it to pay costs and awarded her the £12,125.


Deputy circuit judge Michael Evans ruled the agreement, in which the lender paid the broker 4 per cent of the loan at the end of the first month and 4 per cent of the loan one year later, bound the broker to be loyal to CMC only.


Lawyers believe the judge&#39s ruling has paved the way for other borrowers to target the lender which made the commission payments rather than concentrating on the broker.


US-owned sub prime lender Ocwen, which bought CMC after the paymetns covered in the case were made, has more than 50,000 CMC loans on its books.


Lawyers for the National Association of Mortgage Victims believe the future cases could prove successful against lenders.


NAMV says it has already been contacted by almost 1,000 borrowers, with CMC mortgages bought through Capital Credit, seeking compensation.


Ocwen director of servicing Michael Moss says: &#34This case has nothing to do with Ocwen and we have played no role in it whatsoever.&#34


NAMV coordinator Carol Riley says: &#34The ruling now opens the floodgates for thousands of borrowers to apply for compensation.&#34


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