Northern Rock Together Mortgage in breach of "duty of care"?

olly300

Conqueror wrote: »

Thank you for your contribution feisty1. This is probably the main stumbling block for many others who wouldn't mind selling and taking part of the unsecured loan with them as a minimal loss if the interest rate would not increase by 8%. I wonder if it couldn't be argued that this clause, combined with the fact that the mortgage itself is interest only and puts you immediately in negative equity, constitute a breach of duty of care. In my particular circumstance, I am fortunate enough that the payment is affordable as I refused to borrow above my means even though I was offered much more. However, because the loan was given to me in November 2007 -that is after the Northern Rock debacle was publicly announced, I was wondering whether or not I could use the "duty of care" factor to renegotiate the terms of agreement under the pretense that the loan was given at a time when the company knew it was going bankrupt and did not make an effort to warn of the risk of still doing business with them given their current situation.

Companies don't know they are going bankrupt.

Companies do know they are having difficulties raising finance.

There is a difference.

I suggest if you are going to argue as a lay person about the terms of a contract, you use the correct language otherwise your argument and case will be dismissed without a second look.

opinions4u

While I in no way endorse sneaky or underhand tactics from financial services providers, I am totally fed up with everything being blamed on product providers when market conditions turn one way or another.

Whatever happened to individuals taking responsibility for their own financial welfare and decision making?

We are now in a position where people could actually start believing that they should borrow stupid amounts of money becuase some regulator / ombudsman / campaign will dig them out of a hole in the future if things go tits up for them.

Message to everybody: Think before you borrow - be responsbile for your own decisions.

Conqueror_2

dunstonh wrote: »

The problem with any potential argument to get the debt written off is that for the bulk of the period that NR Together was available, people became financially better off. This is covered in the article. The lender has a duty of care to ensure that the lending is affordable based on the information provided to them. However, that doesnt make 125% of equity unaffordable. Its the monthly payment that matters. Interest only loans could be an interesting point to argue.

Thank you for taking the time to respond dunstonh. Quoting from you above, you would then deem that I would have ground to revendicate a fairer term of agreement if 1/ I was offered 125%, therefore the bank knew I was in negative equity, 2/ I was offered the 125 when the company knew its balance sheet was in a dire state, and was by then fully aware of the overall financial mess it was in, 3/ I was offered said amount in November 2007, thus making no profit at all and the bank might have known the market would tip at that point, 4/ it was interest only .
Does that sound to you like there has been a lack of "duty of care" in the legal sense in this context?

Conqueror_2

opinions4u wrote: »

While I in no way endorse sneaky or underhand tactics from financial services providers, I am totally fed up with everything being blamed on product providers when market conditions turn one way or another.

Whatever happened to individuals taking responsibility for their own financial welfare and decision making?

We are now in a position where people could actually start believing that they should borrow stupid amounts of money becuase some regulator / ombudsman / campaign will dig them out of a hole in the future if things go tits up for them.

Message to everybody: Think before you borrow - be responsbile for your own decisions.

Thank you for your Opinion, Opinions4u. Indeed, I would agree with you here and it would be the reason why I refused to borrow the exhorbitant amount offered, and agreed to settle for an amount well within range for interest payment in the meantime. However, though I would like to reiterate that I agree the borrower accepted the terms of agreement under no duress, in the legal aspect the burden of "duty of care" lies with the lender. This is more a debate regarding the extent of "duty of care" in individual circumstances.

feisty1

Conqueror: I can only repeat what olly300 has written "Companies don't know they are going bankrupt" You say the loan was given to you, no... you applied for that loan. At the end of the day nobody forced these loans on people..they had a choice........take it or leave it...... now people like yrself ......are trying to find reasons to relieve u of yr commitments is a disgrace to say the least.......Yr duty is to honour the agreement you signed saying this was affordable to you

Conqueror_2

olly300 wrote: »

Companies don't know they are going bankrupt.

Companies do know they are having difficulties raising finance.

There is a difference.

I suggest if you are going to argue as a lay person about the terms of a contract, you use the correct language otherwise your argument and case will be dismissed without a second look.

Thank you for your corrective point olly300. Though I beg to differ as bids were open to purchase Northern Rock in November 2007 so it knew it would have gone bankrupt if no buyer would approach it.

feisty1

Conqueror: Quote:"This is more a debate regarding the extent of "duty of care" in individual circumstances.

Each individual gives a breakdown of their finances and it is worked out on affordabiity ...which they have signed.........so if someone is back tracking now does that mean they supplied mis information to borrow? If so, the tables could be turned, mortgage fraud comes to mind...........

Conqueror_2

feisty1 wrote: »

Conqueror: I can only repeat what olly300 has written "Companies don't know they are going bankrupt" You say the loan was given to you, no... you applied for that loan. At the end of the day nobody forced these loans on people..they had a choice........take it or leave it...... now people like yrself ......are trying to find reasons to relieve u of yr commitments is a disgrace to say the least.......Yr duty is to honour the agreement you signed saying this was affordable to you

You may have mistaken me on this one. This is simply a debate which originated from an article I stumbled upon this morning. The article advanced that Northern Rock may have been in breach of "duty care" and I am querying your opinion as to the validity of this statement. If it is proven that they are in breach of any terms of the contract, then I would have full right to revendicate as they would if I was in breach. If not, then we all walk away happy and I continue honouring my share of the agreement as usual.

dwsjarcmcd

Conqueror wrote: »

Thank you for your corrective point olly300. Though I beg to differ as bids were open to purchase Northern Rock in November 2007 so it knew it would have gone bankrupt if no buyer would approach it.

The slight problem I have with this statement is that if it was common knowledge that they were going bankrupt, that would mean that you also knew and yet still chose to apply for the mortgage.

olly300

Conqueror wrote: »

Thank you for your contribution feisty1. This is probably the main stumbling block for many others who wouldn't mind selling and taking part of the unsecured loan with them as a minimal loss if the interest rate would not increase by 8%. I wonder if it couldn't be argued that this clause, combined with the fact that the mortgage itself is interest only and puts you immediately in negative equity, constitute a breach of duty of care.

Why is it a breach of duty of care?

No one knew when the housing bubble would burst. In fact some people and some organisations didn't think we were in a housing bubble.

NR and other lenders who lent on Interest Only mortgages without forcing the borrower to take out a repayment vehicle could easily argue they did it in good faith as for the past 10 years house prices had been rising.

NR could also argue that they took a good risk lending you and others up to 125% the value of the property you wanted in a form of a mortgage and a loan, again because both their risk models and the 10 years of rising house prices showed that it was a good bet.

Conqueror wrote: »

In my particular circumstance, I am fortunate enough that the payment is affordable as I refused to borrow above my means even though I was offered much more. However, because the loan was given to me in November 2007 -that is after the Northern Rock debacle was publicly announced, I was wondering whether or not I could use the "duty of care" factor to renegotiate the terms of agreement under the pretense that the loan was given at a time when the company knew it was going bankrupt and did not make an effort to warn of the risk of still doing business with them given their current situation.

I repeat again NR didn't know they were going bankrupt.

They didn't realise like most people that that banks and finanical institutions would stop lending to each other over night.

They didn't know the media would report this in such as sensationlist way there would be a run on them and the government would have to bail them out.

Likewise Lehman Brothers didn't think that the US government wouldn't bail them out and would let them go bust.

Lots of companies take risks in obtaining capital through out the lifetime of the company.

Some companies make good risks and end up being worth millions others make bad risks and end up going bust.