Loan from 1985, bank had forgotten, no statements, accruing 78p interest per day

gbgeer43

Hi everyone

This question's not actually for me but I will write in the 1st person for clarity.

My ex-husband and I took out a secured loan in 1985(ish) against our property in addition to our mortgage. We got divorced and part of the divorce settlement was that he was to pay it off.

The loan was with Natwest for about £12k.
I've been recently trying to re-mortgage to release some equity to get some improvements done but the mortgage company discovered the Natwest charge was still on the house.
So I looked into it, confirmed it with the land registry and sent Natwest a letter querying this.
2 months later they came back with some information saying that the total owing is £9k and that it is accruing daily interest at 78p per day.
I sent a follow-up letter asking for a statement. The last payment was made by my ex in 1995 and the total was down to £3k.
But since 1995 it's been accruing interest at 78p per day, without me knowing about it.
So there's been about £6k of interest added over the course of the last 17 years.
Natwest have not sent me any letters or statements about this for at least 20 years. I guess it's to their financial benefit to keep it quiet and let the interest build up.

Judging by the delay in responding to my first letter they've had to dig around in some archives and had forgotted about it entirely. I'm concerned that they have just plucked some figures out of the air!

So my ex never bothered paying it off, not surprised about that really. Legally he was obliged to pay it off but that's a separate battle for another day.

I've heard about the statute barred legislation, which would almost certainly apply in this case. However as it's a secured loan with a charge against my property I don't think it would really work as I want to clear the charge fairly quickly. I believe "statute barred" just prevents them chasing for the money (which they haven't done for 15-20 years anyway), it wouldn't remove the charge on my house.

Now I've discovered this charge is still "live" on my property, I would prefer to get it removed and the matter dealt with as soon as possible to avoid further interest accumulating.

Here are my questions...
Do I have any grounds for complaint against Natwest for not sending me any documentation or statements informing me that this loan is still outstanding?

Is there a mechanism whereby I could offer to pay a reduced amount right now, a certain percentage, that they would agree to?
eg: pay £4k or £5k of the £9k owing. Therefore waiving a large lump (but not all) of the interest?

Or are such things non-negotiable when dealing with banks?

Cheers, gbg

BlushingRose

Original thread here on the Loans board. I suggested a cross post here for perhaps even more help.
https://forums.moneysavingexpert.com/discussion/3825445

gbgeer43

Hi everyone

Sorry to bump this up again.
But what do people think my chances are of Natwest agreeing to me settling a lower amount based on the info above?

Have I got no chance?

Cheers, gbg

princess*daisy

Hi,

I don't know anything about this but have a look at the following site - http://www.debtadvisersdirect.com/Features/825/Limitation-Act-1980.htm

According to this, secured loans become statute barred after 12 years. Have a read of the "real life mortgage story" towards the bottom of the page - after x number of years, the property legally became the householder's.

Probably best to seek legal advice though.

HTH

DUTR

gbgeer43 wrote: »

Hi everyone

This question's not actually for me but I will write in the 1st person for clarity.

My ex-husband and I took out a secured loan in 1985(ish) against our property in addition to our mortgage. We got divorced and part of the divorce settlement was that he was to pay it off.

The loan was with Natwest for about £12k.
I've been recently trying to re-mortgage to release some equity to get some improvements done but the mortgage company discovered the Natwest charge was still on the house.
So I looked into it, confirmed it with the land registry and sent Natwest a letter querying this.
2 months later they came back with some information saying that the total owing is £9k and that it is accruing daily interest at 78p per day.
I sent a follow-up letter asking for a statement. The last payment was made by my ex in 1995 and the total was down to £3k.
But since 1995 it's been accruing interest at 78p per day, without me knowing about it.
So there's been about £6k of interest added over the course of the last 17 years.
Natwest have not sent me any letters or statements about this for at least 20 years. I guess it's to their financial benefit to keep it quiet and let the interest build up.

Judging by the delay in responding to my first letter they've had to dig around in some archives and had forgotted about it entirely. I'm concerned that they have just plucked some figures out of the air!

So my ex never bothered paying it off, not surprised about that really. Legally he was obliged to pay it off but that's a separate battle for another day.

I've heard about the statute barred legislation, which would almost certainly apply in this case. However as it's a secured loan with a charge against my property I don't think it would really work as I want to clear the charge fairly quickly. I believe "statute barred" just prevents them chasing for the money (which they haven't done for 15-20 years anyway), it wouldn't remove the charge on my house.

Now I've discovered this charge is still "live" on my property, I would prefer to get it removed and the matter dealt with as soon as possible to avoid further interest accumulating.

Here are my questions...
Do I have any grounds for complaint against Natwest for not sending me any documentation or statements informing me that this loan is still outstanding?

Is there a mechanism whereby I could offer to pay a reduced amount right now, a certain percentage, that they would agree to?
eg: pay £4k or £5k of the £9k owing. Therefore waiving a large lump (but not all) of the interest?

Or are such things non-negotiable when dealing with banks?

Cheers, gbg

I'm no lawyer, the charge order is on the property and if the loan is not in your name then the lender does not have to send you a statement, the charge order may remain on the property until the order is settled.

gbgeer43

The copy statements I requested have my ex husband's and my names on them. Though I have a court order stating that my ex was to pay this back.

I thought that the statute barred thing just prevents them from being able to chase for the money. It doesn't magically remove the charge from the property. I guess I would I basically have to take Natwest to court to get the charge removed - and that sounds like it would take a long time.

Is there no way that they would accept a settlement of x percentage of the liability to close the matter quickly (and let me proceed with my remortgage)?

Cheers, gbg

DUTR

gbgeer43 wrote: »

The copy statements I requested have my ex husband's and my names on them. Though I have a court order stating that my ex was to pay this back.

I thought that the statute barred thing just prevents them from being able to chase for the money. It doesn't magically remove the charge from the property. I guess I would I basically have to take Natwest to court to get the charge removed - and that sounds like it would take a long time.

Is there no way that they would accept a settlement of x percentage of the liability to close the matter quickly (and let me proceed with my remortgage)?

Cheers, gbg

Only the lender would be able to answer, I'm sure each case has individual merits, so one size may not fit all, contact the lender to discuss further
Good Luck.

newbutold

I would be looking to them to at the very least removed all the interest accrued since your hubby last made payment and see if they will accept the actual amount owing at time of last payment.

However it may be worth a visit to a solicitors to a ascertain the legal position, paying for one appointment if it could potentially save you thousands is surely worth it.

gbgeer43

Yes I agree, it's definitely worth seeking legal advice. I have asked the solicitor who is handling the re-mortgage and transfer of equity to have a cursory look to see if we have any options with the limitation act.

If not then I will attempt to see if they would accept a smaller amount, give them a bit of the interest, fair enough, but leaving off a large chunk. I will try to appeal to the bank's softer side, if that exists

Obviously I'd much rather use that money for my son's university fees or deposit on a flat than give it to a bank but if we have to pay it then so be it.
I just wanted to get a bit of quick info as to whether it's something worth looking at... so thanks for your advice!
I will let you know how this goes as it could help others in the future.

Cheers, gbg

gbgeer43

Hi everyone

Just thought I'd post a quick update on this. In the end I did seek legal advice and they basically said send a letter to NatWest (using modified version of one of the templates here) stating that "I consider the debt to be out of limitation and no longer enforceable", then just wait and see. Then get proper legal involvement if they contest the matter.

Natwest replied a week later saying that they would remove the 2nd charge from the property as soon as possible. 3 weeks later, the charge had been removed from the Land Registry Title.

So it ended well in my case. I thought it was pretty outrageous really to be charging daily interest for so many years without any contact from them at all.

Maybe this experience will be useful someone else out there!

Cheers, gbg

BlushingRose

gbgeer43 wrote: »

Hi everyone

Just thought I'd post a quick update on this. In the end I did seek legal advice and they basically said send a letter to NatWest (using modified version of one of the templates here) stating that "I consider the debt to be out of limitation and no longer enforceable", then just wait and see. Then get proper legal involvement if they contest the matter.

Natwest replied a week later saying that they would remove the 2nd charge from the property as soon as possible. 3 weeks later, the charge had been removed from the Land Registry Title.

So it ended well in my case. I thought it was pretty outrageous really to be charging daily interest for so many years without any contact from them at all.

Maybe this experience will be useful someone else out there!

Cheers, gbg

Oh, that's excellent news x