Borrowers to Sue UK Lenders Over Unfair Mortgages

The High Court has issued a Group Litigation Order to a group of 326 borrowers, which allows them to collectively sue 2 UK banks – Barclays and Bank of Scotland – over unfair mortgages.
These two banks used to give out mortgages known as SAMs – Shared Appreciation Mortgages – which allowed borrowers to take out mortgages with a 0% or an extremely low fixed rate. For that, homeowners had to pay a certain fee (usually, of around 75% of the increase in the property value) upon mortgage repayment.
These mortgages first became available in late 1990’s (launched in 1997, withdrawn in 1998), which fact suggests that first borrowers suffered significantly from the sharp rises in house prices seen in 2007. Most of the borrowers had to repay almost 4.5 times the sum they borrowed, which equals an interest rate of 35-40%.
Now borrowers are planning to sue the banks; 126 claims have already been filed to RWP solicitors, who are supporting the case, with 200 more claims being processed.
According to Ms. Hilary Messer, representative of RWP solicitors, the previous claims against Barclays and Bank of Scotland were made individually, and the banks managed to gain full repayments on SAMs despite the fact that the complaints came in enormous numbers. She added that this time the group of borrowers, backed-up by the solicitors, will try to either have SAMs cancelled or to get a reduction in the percentage that is payable to the banks.
The figures suggest that as many as 12,000 SAMs were sold in 1 year, and that 7,000 are still not fully paid back.
It is worth noting that banks hope to win the case. Bank of Scotland spokeswoman, claimed that there is no reason for cancelling the mortgages or getting a reduction in percentage as the terms of SAMs were clearly indicated in the mortgage contract. Barclays also expects to defend itself “vigorously in the courts.”