Barclays, HBOS face £850m law suit

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  • I am a S.A.M holder and went in with my eyes open and being given the nod by a solicitor .But no way was it envisaged that the house prices would rise at such a rate.

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    This was NOT an investment product, but a MORTGAGE. It was a service, provided for a fee. If there was a gain for the pensioner there was a remote chance the house price rise might be lower than an interest repayment. But the upside potential for this was extremely small.

    By contrast, the banks would have known that the upside potential on theior side was almost without limit - at the expense of the elderly customer.

    These were elderly pensioners with no access to borrowing by other means because their incomes were so low - some borrowing for health treatment.

    Whilst they could clearly understand the bank would be repaid from the equity, the devil is not in the nature of the arrangements but in the detail of the gearing.

    A pensioner may well not have foreseen the circumstances in which that this gearing would suck most the value out of the house, leaving them a minority share. A bank most certainly would.

    A responsible retail bank should have introduced caps into the terms to safeguard its customers.

    The fee is massively out of proportion to the service provided. The banks have not earned this level of remuneraton. Their case may be based on having obtained a signature - but so was Shylock's.

    Are retail banks to behave as service providers or con men?

    In which of these manners were they behaving when they sold these mortgages?

    The generation to which these products were sold respected bank managers the same way they did vicars and doctors.

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  • THE DREADED SAMS (Shared Appreciation Mortgages)
    Twelve years ago I arranged a SAM, a BOSSAM No 6
    Recently I decided to look into 'getting out' of the BOSSAM.
    Having made a few enquiries about current equity release schemes and lifetime mortgages i have now, thru very helpful agencies, satisfactorily refinanced myself, redeemed the BOSSAM and obtained some further living capital.
    At this time because of the recent fall in house prices (valuations) and interest rates the whole excersise has beem achieved with better results than may have been expected.
    These SAMS have come in for considerable 'stick' over recent years not in the least due to SAFE whipping up much fervant opposition to the schemes.
    I must say that I agree to some extent with the view that when people went into these schemes they should have had their eyes open and if it wasn't for them should have spotted any socalled pitfalls and stayed out. For me, although the eventual borrowing rate turned out higher than expected, the whole process has come to a satisfactory conclusion.
    With regards to SAFE and in my own case they were particularly unhelpful and unresposive. They are more interested in obtaining contributions (very small ones in my case thank goodness) to their tacky organisation than investigating the extraction possibilities from the schemes.
    The recent request for BOSSAM holders (approx. 7000?) to lob in £5000 each to enter a questionable lengthy litigation astounded and appalled me.
    The only ones who will see a return from this will be the legals with vast fees and the probability of no successful outcome for the SAM holders
    Additionally it will be years before any government will do even the minimum to assist those holders.
    BOSSAM holders should now come out of SAFE and look at the alternatives and not put any more £5000's in or bung any more cash to SAFE. Their latest bullitin now admits that they are heavily out of pocket by going down the legal route.

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  • These mortgages were sold to elderly people who grew up trusting bank managers as they did vicars and doctors (and probably lawyers). The implications of these terms over time was unclear not because of the sharing - which is easily understood - but of the pernicious gearing assigned to the sharing which requires careful scenario projections. It is clear from the case studies that intelligent people trusted reputable banks to have constructed a fair product only to discover the relationship was otherwise. The banks were prepared to offer products that severely disadvantaged purchasers with usurous rates. If they could get the signature, that's all their consciences required. Shakespearean parellels come to mind.

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  • I am a victim of the SAM ( Bank of Scotland) aged 83 years who was persuaded by the Bank Manager to use the SAM loan arrangement to meet a Personal Guarantee to the extent of £ 25,000 which the Bank were extremely anxious to reduce, despite the fact that the value of our detached villa was six times that amount at least ! The manager concerned advised me personally to use this medium as it was an attractive proposition, but the tragedy of it all was that no " pamphlet or leaflet" explaining the detail of the actual scheme was given to me at the time . I have evidence of a letter written to the Bank of Scotland at a later stage in regarad to the house property ( in line with my undertaking to keep the Bank informed of any proposed changes in the situation) whereby I clearly confirm to the bank that I would honour my understanding that the bank would benefit from " their share of 25% of the appreciation of the price" ( not it will be noted 75% of the apprectiation !) and yet the bank did not write to me to question the validity of these two figures and I was obviously at that point unaware of the possibility that the figure might be as high as 75% of the appreciation !

    I truly believe that I was mis-sold this Loan Scheme all the more so because at the time of the documentary work I had placed on the valuation of the house a " modest valuation" since the loan concerned was only £ 25,000 by comparison . I believe the Banks have been guilty of "Usuary"since the actual potential rate of interest charged is at the moment 600% over the last 17 years !

    I am willing to negotiate a "fair" return of interest and continue to give the bank its " comfort-cover " on the same property which has been maintained in an excellent state of repeair at all times.

    What would any reasonable reader's comment be to such a situation ?

    Bruce Burns HS1 2PY

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