An equity release mortgage, should they obtain the borrowers agreement before settlement

timetosortthings

I'm trying to help someone understand how funds are settled when an equity release mortgage is involved. Here's the scenario: The 20-year interest-only mortgage term has ended, and the original lender requested repayment of the debt. The borrower chose to settle the debt and stay in the property through an equity release mortgage. They successfully applied for the equity release mortgage, but disputed the settlement figure provided by the original lender, stating that it included higher costs and charges. They refused to sign the declaration and authority to proceed form until they received assurance from the equity release representative that nothing would be settled until they signed the form.

Despite this, the original mortgage lender received the settlement funds without the signed form from the borrower. When asked, the borrower's solicitor stated that the equity release lender's solicitors completed the settlement without the signed declaration and authority to proceed form, as they have the prerogative to do so.

Our questions are:

1. What is the purpose and legal standing of the 'declaration and authority to proceed' form? It seems like it has no purpose for the borrower if the equity release lender's solicitor has the prerogative to settle without it.

2. Since this involved an equity release mortgage, who is responsible for physically paying the settlement money to the original mortgage lender?

   a. The equity release lender

   b. The equity release lender's solicitor

   c. The borrower's solicitor

3. Since this involved an equity release mortgage, does it void or reduce the borrower's involvement? Everything happened behind the scenes quickly and without communication with the borrower concerning the settlement of the original lender's debt.

user1977

Has the borrower asked their own solicitor these questions? If so, what are the answers?

Has it been determined whether their dispute about the redemption amount has any merit? If not then the completion procedure seems fairly academic (and I don't think it precludes them from disputing the charges anyway).

Hoenir

timetosortthings said:

 without communication with the borrower concerning the settlement of the original lender's debt.

Why didn't you tell your solicitor not to complete and to return the funds to the equity company. If the balance was in dispute. 

timetosortthings

user1977 said:

Has the borrower asked their own solicitor these questions? If so, what are the answers?

Has it been determined whether their dispute about the redemption amount has any merit? If not then the completion procedure seems fairly academic (and I don't think it precludes them from disputing the charges anyway).

The initial questions asked were as a result of the borrower's solicitor admitting to making administrative mistakes, i.e. overlooking the fact a dispute regarding charges had been verbally advised in a face-to-face meeting with their representative and as a result of that meeting the borrower was withholding signing the declaration and authority to proceed form because of the dispute with charges.

Furthermore, the solicitor explained they assumed this equity release case was to be treated like many of the cases they deal with, as urgent and standard. 

The borrower is lacking confidence in the solicitor's involvement and whether their interests were best served

(also, see note below - does it seem to be passing the buck)

Hoenir said:

timetosortthings said:

 without communication with the borrower concerning the settlement of the original lender's debt.

Why didn't you tell your solicitor not to complete and to return the funds to the equity company. If the balance was in dispute. 

The borrower's solicitor representative gave assurance that settlement wouldn't happen until the borrower had signed the declaration and authority to proceed form.

But settlement happened regardless; upon which the shocked borrower contacted their solicitor who said although they had made minor administrative mistakes by not recording there was a charges dispute, it was ultimately the lender solicitors' prerogative to complete the settlement without the signed declaration and authority to proceed - which they've chosen to do.