NEWS...
'Unfair' Claim from Customers
Two leading lenders issued with LBAs
Two of the UK's largest high street lenders - HBOS and Barclays - have been issued with letters before action (LBA) regarding a multimillion pound claim on behalf of over 8,000 debtors who are challenging their mortgage agreements.
The lenders received the LBAs on behalf of customers with shared application mortgages (SAMs), who believe that recent changes to the Consumer Credit Act will allow them to sue the banks over 'unfair' terms in their mortgage loan agreements.
Sold in 1997 and '98, the loans were made on a zero-interest or fixed-interest basis. In the zero-interest cases, when the homeowner comes to sell today, the bank typically collects up to 75% of the appreciation value of the home from the last 10 years - as well as repayment of the original loan in full - in exchange for having lent up to 25% of the value of the property 10 years ago. With fixed-interest loans, lenders collect the same amount for lending up to 75% of the property's previous value.
The letters claims thousands of homeowners are now trapped. Their homes will not release sufficient value when sold to allow them to buy a suitable replacement home.
In response, Barclays has introduced a SAM hardship scheme, but neither they nor HBOS will provide compensation or change the terms of the original mortgages.
Hilary Messer, head of litigation at RWP Solicitors, explained: "If the court determines that the relationship between the creditor and the debtor is 'unfair' to the debtor, it has wide powers to vary the terms of the loan agreement. Leading counsel has advised that there are strong grounds for contending that the relationship between the bank and the holder of the SAM was 'unfair' for the purposes of these new provisions.
"He has also advised that certain terms of loan agreements were in themselves 'unfair' and that the terms of the brochures issued by the banks were 'misleading' in a number of respects."
Mrs Messer said they were looking for the percentage of the appreciation payable to the bank to be reduced. An alternative would be the introduction of a cap of limitation on the amount payable as the bank's share of the appreciation.
Original article courtesy of CCR Magazine. For further information visit www.ccrmagazine.co.uk
