Has my sister been badly advised by Barclays and her solicitor?

Monkey_Joe

My sister and her husband have recently completed on a shared ownership flat. Her mortgage offer was from Woolwich and one of the conditions mentioned on the offer was that they both needed to pay off their £22k worth of debt 30 days after completion. Its been a week but there is no way they can do this.

In fact when they first received the offer they were shocked since no where in the application process, made within their local Barclays branch, did they promise they would pay off their debts before or after completion. They queried the condition with both their barclays mortgage advisor and solicitor since there was no way in hell they could pay off their debts within 30 days of completion. Both mortgage advisor and solicitor told them there was nothing to worry about and that Woolwich will never look into it and that it only became a problem if you don't meet your repayments.

In summary, both the Barclays advisor and solicitor (a good family friend who did it for free) claimed it was just a standard condition they include these days to protect themselves during scenarios where people fail to meet payments and stops them from telling the judge that the lenders were irresponsible by lending to them in the first place. By including this condition, the lenders can tell the judge that they were aware of the clients debts and asked them to pay it off within 30 days and that the client agreed to this condition by signing and returning the mortgage offer. Based on this advise my sister went ahead with the completion.

Has my sister been badly advised and what happens if Woolwhich contact them in 30 days time and they discover that non of the unsecured debt has been paid off?

I find it odd that Woolwhich will include such a condition as a "standard" even if the customer did not agree to it from the start. Surely, if they are concerned by the level of debt they should make it a condition that needs to be done before completion rather then 30 days after completion.

VIGILANT22

[QUOTE Monkey_Joe I find it odd that Woolwhich will include such a condition as a "standard" even if the customer did not agree to it from the start. Surely, if they are concerned by the level of debt they should make it a condition that needs to be done before completion rather then 30 days after completion.[/QUOTE]

If you feel it is such a concern, maybe you should refrain from posting as you do...

POST 18/Quote: If you meet your payments you have nothing to worry about and can spend your inheritance on what you want.

http://forums.moneysavingexpert.com/showthread.html?t=2316273&highlight=

Monkey_Joe

I have given an explanation in the original thread that you reference above.

there is a significant time difference between both posts. What I wrote in the original post is what I believed to be true but after reading other threads on the same topic I doubted my original belief and hence made this thread to get some feedback.

should have made it more clear, my bad...

dunstonh

I find it odd that Woolwhich will include such a condition as a "standard" even if the customer did not agree to it from the start. Surely, if they are concerned by the level of debt they should make it a condition that needs to be done before completion rather then 30 days after completion.

Its not an uncommon clause for underwriters to add on debt clearance cases. It tends to be after application as part of the acceptance. Barclays and the solicitor have understated the importance as there is a chance they will check. However, in may cases they do not.

TrickyDicky

So your sister wants to try and remove herself from liability if she didnt follow the rules of the mortgage that was for her, not the mortgage advisor or solicitor.

As I see it, your sister accepted the terms by signing the acceptance form. If they check and withdraw the mortgage, it will be your sister's fault, no one elses.

Cannon_Fodder

They don't have to proceed with the mortgage, if they don't like the terms.

SouthCoast

Shared ownership.............
Debts of £22k....................
...................................:eek:


"Set up to fail"

TylerD

The responsibility still lies with the debtor to understand the T&C's though as far as I understand.

Monkey_Joe

dunstonh wrote: »

Its not an uncommon clause for underwriters to add on debt clearance cases. It tends to be after application as part of the acceptance. Barclays and the solicitor have understated the importance as there is a chance they will check. However, in may cases they do not.

Thanks for your advise Dunstonh.

As I said, my sister and her husband confronted the Barclays mortgage advisor when she saw the condition. Should have also mentioned that she asked him if they could remove it and he said that they won't since it was a standard condition they include with all offers and it only becomes an issue if she don't meet payments. This prompted her to ask her solicitor and he said the same thing. She still had doubt, so she went back and got the Barclays advisor to confirm it again but this time she taped him on her mobile. She also has e-mails where he tells her not to worry about it. Therefore, based on the repeated assurances of both a Barclays rep and her solicitor she went ahead with completion. If many of you still think what she did was stupid then fair enough.

Ditch_Crawler

Barclays obviously included the 22k debt repayments in their affordability calculation, so if they calculated that the debt was unsustainable in addition to the mortgage, they should never have made the advance (ie they should have insisted that the debts be repaid first). If they made the advance in the knowledge that the total debt was unsustainable, then they are indeed guilty of irresponsible lending, and the 30-day condition would be as likely to count against them as for them if they tried to use it to defend themselves.

Maybe they just want to be able to try to claim priority over the unsecured loan (if that's what it is) in the event of a non-payment situation.

Or maybe the mortgage advance included sufficient funds to pay off the 22k in a debt consolidation deal - if that is the case, then the condition is entirely reasonable and should be honoured.

Ditch

dunstonh

Should have also mentioned that she asked him if they could remove it and he said that they won't since it was a standard condition they include with all offers and it only becomes an issue if she don't meet payments.

Its fairly standard on debt clearance cases but its not on a purchase or remortgage that doesnt involve debt clearance unless the underwriters are only willing to agree on that basis. However, the Barclays clerk is correct in that they are unlikely to remove it.

The bank clerk I can forgive somewhat. They are generally low skilled, low knowledge employees looking for the path of least resistance (or least work). The solicitor cannot be forgiven as they are meant to act within the law. Not when it suits them to. They should have warned her that a check may be made to see debt has been cleared. Fair enough to say they may not check but foolish to say its not an issue (although in reality it probably isnt).

Therefore, based on the repeated assurances of both a Barclays rep and her solicitor she went ahead with completion. If many of you still think what she did was stupid then fair enough.

What is the worry about? If she doesnt default her payments and is clearing the debt, even if it takes 2 months, then its not an issue.

She still had doubt, so she went back and got the Barclays advisor to confirm it again but this time she taped him on her mobile.

What about the solicitor as its not the Barclays clerk that matters. The solicitor is the one that matters when it comes to the contract.