MSE News: Homeowners to sue banks over 'unfair' mortgages

ILW

loup67 wrote: »

The majority who took out SAM's were elderly people who wanted to free up some equity in their properties,mainly because they were their only assets and they have a limited income.
I don't see how they could just rent or remortgage when the majority of them are pensioners!Who is going to give a pensioner on state benefits a mortgage when they clearly haven't got any income to repay it?When they were originally sold they were not made aware of what could happen,do you know anyone who would willingly agree to paying back 5 times the original loan after 12 years?I seriosly doubt it,let alone the fact that the investors got cold feet after a couple of years as they couldn't see how they were viable.
You seem to believe they were seen as a free mortgage,which is odd as anyone would have to be crazy to believe that they could make any money out of these,even short term!
The banks typically under value the property price at the time of the loan and then would lend 25% ,when it comes to redeem the loan they over value and that is the figure to be repayed,even if that isn't the price you receive from the buyer.Therefore people were having to pay back more than 75% of the increase,some were left with only £10,000 after paying off their loans!
Virtually every SAM owner is not in a very good financial position to fight this alone,and the banks know that,the group action is the only way they can do this.
I think there are some very genuine cases who I for one are very pleased will get their chance to fight this,good luck to all in this situation.

Think this earlier post sums it up nicely

"To squeal about it now is a bit like demading your money back from the bookies because your horse didn't win"

michaels

So presumably if house prices had not risen at all all the borrowers would be demanding to pay extra to the bank to compensate the bank for the reduced interest that they had been charged...thought not.

If the majority are elderly people who released equity via the deal what is the problem? They chose to forgo capital appreciation in return for a lower interest rate. May be everyone living in rented accommodation should also be compensated for the rise in house prices?

michaels

loup67 wrote: »

The banks typically under value the property price at the time of the loan and then would lend 25% ,when it comes to redeem the loan they over value and that is the figure to be repaid

The other arguments I don't agree with - however I would be happy for either of the valuations to be challenged and if found wrong for the banks to be held to the correct figure and asked to pay compensation for attempted sharp practice. However unless the borrowers were not informed of the equity share aspect then I don't see why they would have any case against the terms being applied. The banks may have hedged their exposure to the housing market and may only have made small profits and yet they will no doubt be asked to bail out gamblers who picked a losing bet.

michaels

Final post for now - I know Martin has a certain agenda but he seems to becoming more and more interested in finding contractual loopholes to allow people to renege on contracts that they fully understood and that the other party entered in to in good faith

If in general contracts become more difficult and costly (and potentially arbitary) to enforce the overall result is a loss in welfare for everyone as products are withdrawn and innovation removed - witness the stories of coffee only being available lukewarm to avoid the risk of scalding - yes everyone is safer but also no one can have a nice hot coffee anymore...

mystic_trev

loup67 wrote: »

Virtually every SAM owner is not in a very good financial position to fight this alone,and the banks know that,the group action is the only way they can do this.

Well they can't be that badly off I notice the Litigants in this case have had to stump up £5,000 each for upfront Legal fees.

mmillie

It's like someone saying "here's a free house, can you live in it for me, and when you sell it just give me a cut of the increase in value please?" Frankly a fantastic deal for consumers who might not otherwise have been able to afford anywhere to live.

Also, it's not actually a bad investment. Lets say the consumer puts in 75% of the value of a £100,000 house, and the bank puts in the other £25,000. The bank then charges no interest for 10 years, by which time the house is worth £260,000 (that's the average increase since 1997). You sell the house, and give 75% of the increase to the bank, keeping £140,000 for yourself. That means your £75k has doubled in value over the 12 years. That's an interest rate of 14% a year, and a free house to live in! Sweet deal.

Martin

Treadmill

I hope they get a pay out, the banks have plenty of money, its about time somebody got a break.

Treadmill

ILW wrote: »

Think this earlier post sums it up nicely

"To squeal about it now is a bit like demading your money back from the bookies because your horse didn't win"

There are occasions when you can get your horse money back when your horse didn't win, one of them would be if the race was declared void, another would be if your horse was second and the winner was disqualified after a stewards enquiry or objection, if we take the latter example you would get MORE than your money back.

That analogy doesn't bear up I'm afraid

Muhasib

Treadmill wrote: »

I hope they get a pay out, the banks have plenty of money, its about time somebody got a break.

Is this intended to be ironic - who do you think has a stake in Bank of Scotland exactly?

ninky_2

so if they win does that mean in some cases they will have got an entire mortgage interest free....that's blooming good going. plus they get to keep the equity increase equivalent to 30- 50percent apr!!

are they suing for 'compensation', and if so is this for the entire equity gain or the amount they could now have if on a 'regular' mortgage?

when will this lending madness end? capitalism really is eating itself.