Robbing barstewards

Yes it might have been explained to her and yes it might be technically right, but morally, its bloody outrageous, surely a so called reputable bank should have red flagged that years ago!


Nottinghamshire widow faces £165k repayment on £16k loan from 1990s

• Published
  1 day ago

Image caption,
Steve Hutchinson and his mother Beryl said they feel powerless
By Julian Paszkiewicz & Dan Martin
BBC News



An 89-year-old widow faces having to repay £165,000 on a bank loan of £16,250 taken out by her late husband in the 1990s.

Beryl Hutchinson said she only became aware of the deal her husband Barry agreed with Barclays shortly before he died last year.

The loan was interest-free at the time but secured against any future rise in the value of couple's bungalow.

The bank now stands to take 75% of the property's appreciation if it is sold.

Mrs Hutchinson, from Eastwood, Nottinghamshire, and her son Steve now fear she could lose the home which they were considering selling to help pay for care if she needs it in the future.

She said she believed her husband, a former miner, did not fully understand the implications of the deal, called a shared appreciation mortgage, when he signed it.

Barclays declined to comment on her situation, but insisted the terms of shared appreciation mortgages were fully explained to all customers before they were agreed.

IMAGE SOURCE,STEVE HUTCHINSON



Mrs Hutchinson told BBC's You and Yours her husband had not discussed the loan, taken to pay for a new car and home improvements, with her at the time and thought only the original £16,250 would finally need to be paid back.

She said: "I was horrified to think a bank could take 75%. We could end up with no house."

Mr Hutchinson, 85, told his son about the loan as his health deteriorated before his death.

Steve said: "My dad wasn't unintelligent, but he asked me to look into it before he died. He thought he just had to pay the loan with a bit of interest.

"He was an ex miner, and doing odd jobs. At the time he had no regular income, other than pensions, so he thought he wouldn't get a proper loan.

"My mum signed all the paperwork as my dad asked her to. She didn't think about it.

"He signed it thinking he didn't have to repay the capital until such a time when you sell and they calculate the interest based on a formula using the house's value."

'Mum is frail'
Steve added: "I tried talking to Barclays about this this but they're really unhelpful.

"I got a hypothetical valuation based on what we think the house worth right now and the amount owed to Barclays is £165,000.

"But if the house sells for £250,000, Barclays would take £150,000 and we'd have to repay the original loan."

He said he investigated legal action to challenge Barclays but was told it could cost up to £25,000.

"We haven't got that kind of money," he said.

"We just feel powerless. I don't know what we will do. Mum is frail and has a flu.

"I'm worried that if she has to go in a care home, we won't be able to pay for it because of this loan."

He said he hoped to join a collective legal action with other people affected by shared appreciation mortgages after Barclays previously settled a group litigation, involving 60 customers, out of court.

'Fully explained'
Only Barclays and Bank of Scotland ever offered such deals.

They are no longer sold but the FT estimated around 15,000 were agreed between 1996 and 1998.

A Barclays spokesperson said: "Before a shared appreciation mortgage was completed and the funds were released, customers were required to seek independent legal advice and confirmation was obtained from the customers' solicitors that the terms of the legal charge and mortgage conditions had been fully explained to them.

"This was done to ensure customers fully understood the nature of their borrowing. The product literature also encouraged anyone interested in a shared appreciation mortgage to discuss their intended borrowing with their family."

 

Not a fan of banks in general but in this case I think the blame lays solely with the deceased husband. If he didn't understand it then he should have used a financial adviser, as recommended by the institution.

I feel for the widow but it isn't the bank's fault.

 

I think the only challenge could be whether these were fair, but 'treating customers fairly' etc may not have existed then like it does now. And I presume that if they were deemed unfair, this would already have been ruled.

I feel incredibly sorry for her, who wouldn't, but if they insisted that ILA was sought and he still went ahead - and then never told his wife, then I agree it's entirely his fault.

The article talking about her being frail and having flu, I'm sorry but whilst again I feel sorry for her, it doesn't mean that rules/laws don't apply and is irrelevant to the case.

What I'd like to see happen however is Barclays come to a compromise - work out a fair rate over 25 years (various ways to do this) and accept a lower amount. However, they'd need to do the same with everyone who had one of them if they did this, and some would have already been redeemed.

Moral of the story: Seek advice from a broker! (Me!)

 

A Barclays spokesperson said: "Before a shared appreciation mortgage was completed and the funds were released, customers were required to seek independent legal advice and confirmation was obtained from the customers' solicitors that the terms of the legal charge and mortgage conditions had been fully explained to them.

Reading that, if correct, suggests that they did and either ignored it or hoped it wouldn't be a problem for them.

 

Yep, I mean I was still at school when this was taken out(!), but with certain types of mortgage agreements now you have to get ILA, for example adding a guarantor on. Lender won't even proceed until you've had the advice (well, the guarantor). May not have been so watertight then.

 

Think the son is more upset about losing his inheritance than anything. If Barclays do take £165,000 she's still got £85,000 to pay for her care, which is a damn sight more than a lot of people.

 

I’m not doubting it was done properly, my thoughts is the bank should have had a system that reminded borrowers on a regular basis as the liability grew, even to the extent of contacting them personally as it escalated.
The thing is ( I used to work in financial services years ago) you can explain things until you are blue in the face and sometimes clients just don’t get it but and are often too embarrassed to admit it, then there are the ones who metaphorically stick their fingers in their ears and think it will just all go away.
And then there are the institutions who just wan their money.

 

Whilst I have empathy with the lady, her husband clearly entered into an agreement which was not in his best interests.

But what really angers me is the fact that these banks make millions out of deals like these with ordinary people after

WE BAILED THEM OUT AT MASSIVE COST AFTER THE CRASH (WHICH THEY CAUSED) IN 2008

 

If they took out the arrangement when interest rates were higher, it would likely have stayed with that higher interest rate for the duration. 8% wouldn't have been unreasonable in the early 90s.

 

I'd like to think that reminders etc would have gone out, but as it's not a mortgage type that's existed for so long, and even then for a short period, I can't be sure.

 

Be lovely if 20 of the Forest squad lads chipped in a couple of days wage to sort it out for them.

 

I’m not sure what he would have done differently if they did contact him? (Which they probably did, I’d imagine, with an annual statement). He wouldn’t have sold his house earlier to pay back a debt that only needed to be paid back upon sale of the house. It still wouldn’t be a problem now (other than chipping away at son’s inheritance) if they weren’t thinking of selling to potentially pay for the wife’s care. I think even with regular reminders he would have done the same thing, it’s the decision he made at the time that he didn’t understand (or at least chose to ignore the possibility that his wife might life to almost 90 and need a care home as it’s hard to imagine getting that old).

 

For a start he could maybe have moved to a better deal way before it got out of hand.
I just think there should be a system that refers the account to something like a debt counselling service way before something like that kind of deficit builds up, annual reminders are all well and good but people have to understand them and acknowledge the fact to themselves rather than hiding from it delusional or otherwise.
The problem is as I said earlier, some people just don't see or understand where they are actually at, I've seen it many times.
There's a reason only a couple of institutions offered these kind of deals and its outcomes like this.

 

Once signed up and the housing market exploded surely he would be trapped in unless he made a significant payment to be released as the Bank would want their % to change?

 

Just reading an article on it and it appears 0% interest deals are the worst as it can mean upto 500% increase!
Also appears the scheme is an equity release as opposed to ‘normal’ mortgage.

https://www.samconveyancing.co.uk/n...xt=Can you get out of,lender, sometimes to 0%.

 

Barclays issued these mortgages only in 1998.

The percentage of increase in value owed to them was set to three times the percentage of the amount borrowed. As they are owed 75%, the original loan was 25%, meaning it would have been valued at £65k in 1998.

So to be worth £220k 25 years later is probably about right. So they would be owed the original loan plus 75% of the increase in value of the property.

Yes it might not sound right - but it was a requirement that they got independent legal advice before taking it out. I’d suggest he probably knew exactly what he was doing at the time and just wanted a new car and a bathroom/kitchen or whatever and ignored the drawbacks.

It’s very similar to the equity release loans that exist today; other than that they retained legal ownership of the property.

I think the OP is well wide of the mark with the robbing barstewards conclusion. Had the property not increased in value at all, as unlikely as that is, it would have been effectively an interest free loan.

They’re clearly trying to play on the dad being a miner and odd-jobber, implying he wasn’t the most academic, to let people draw their conclusions about the lending (and for that conclusion to favour them).

The trouble is, it was properly explained, there will be an abundance of signed paperwork to that effect, including a signed letter from a solicitor attesting their client understood the borrowing being taken and the terms of repayment.

The fella took the money and knew he didn’t have to pay anything unless they sold up, until death. The fact he mentioned it to his son when he was approaching death suggests he perhaps knew very well there there were going to be issues.

I feel for the lady if she had no idea about it but on this occasion, as someone who has made his living for most of the past 13 years out of the historic mistakes made by banks, I don’t think there can be any liability put on the bank here unless a court concludes the banks (only Barclays and Bank of Scotland sold them) were selling a product they knew was not suitable and meeting the needs of their clients. Given the banks would not know the level of appreciation, or even the length of the term the loan as it was open ended - they had no way of knowing the final cost. I don’t see any mis-sale complaint being upheld unless there is a gap in paperwork or an issue within it that was overlooked.

And they aren’t likely going to voluntarily just reduce their share arbitrarily. Barclays are pretty skint currently. I know first hand that they can’t afford to keep on their fixed term / contractor work force, despite having a pretty big need for them. The book on these loans will be declared as an appreciating asset on their accounts somewhere.

 

Not something I know much about but --

As a married couple wouldn't both husband and wife have been joint owners of the house even if it's only the husband's name on the Deeds ???
If that's right then shouldn't the wife have been contacted by the bank and had to sign something regarding the initial loan ?
Was the bank remiss in not involving/informing the wife ?

 

Agree. The Dad clearly knew about it - hence why he mentioned it to his son.

It’s unfortunate, but it doesn’t leave them penniless. And they have benefitted from the new car and home improvements for the last 30years too.

Also, I don’t like how they play on the ex-miner part of it either. Miner’s aren’t thick. And most had more common sense than others, living within their means……