Posted: Mon Jun 18, 2007 5:29 pm
Help for people in mortgage trap
A rescue package has been announced for thousands of people suffering hardship because of a controversial loan they took out in the 90s.
Shared Appreciation Mortgages enabled customers to borrow around 25% of the value of their property.
But they had to agree to pay back 75% of the increase in the home's value if they sold, leaving many unable to move.
Now Barclays says it will replace 2,500 mortgages with a loan to be paid off later or upon the customer's death.
In 1998 when customers signed up to SAMs, the interest-free mortgage deal seemed attractive.
But the sharp rise in property prices since has led many to regret their decision.
Announcing the rescue package, Barclays' UK Retail Banking customer services director Catherine French, told BBC Radio 4's Money Box: "There are some customers who are in a position of hardship as a result of their SAM.
"What we want to do is help them to move to a more appropriate house for them."
The bank is offering anyone suffering hardship from a SAM an interest-free and payment-free loan allowing them to settle up all that is owing, to enable them to buy a more suitable, equal-sized property, or to downsize.
Only when that alternative property is sold or the customer dies must the loan be repaid to the bank.
And the loan debt will not grow with rising house prices in the way that it does now with a Shared Appreciation Mortgage.
'A way out'
Elaine Williams of SAFE (Struggle Against Financial Exploitation), which negotiated with Barclays on the mortgage holders' behalf, has welcomed the news.
She said: " It will enable people to move. They won't be trapped anymore because there's now a way out. "Where they're in a two-storey house and they need single-story, they can move. This enables people to get on with their lives."
SAM customers in hardship who do not want to move home will be offered a special "grant".
They can apply for a one-off sum for home improvements or adaptions to meet health needs.
In those cases, the SAM mortgage will keep running and will still grow with any further increase in house prices before it is eventually repaid to the bank - usually when the customer dies.
Barclays promises that the rescue package will always be available until the very last SAM is paid off.
But there are still around 8,000 people who hold SAMs from Bank of Scotland whose predicament remains unchanged.
Bank of Scotland has not indicated it will offer any similar rescue package to its SAM customers but told Money Box that it was now studying the Barclays announcement and that a meeting is already pencilled in to discuss the issue with campaigners and MPs.
Source: bbc.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk
A rescue package has been announced for thousands of people suffering hardship because of a controversial loan they took out in the 90s.
Shared Appreciation Mortgages enabled customers to borrow around 25% of the value of their property.
But they had to agree to pay back 75% of the increase in the home's value if they sold, leaving many unable to move.
Now Barclays says it will replace 2,500 mortgages with a loan to be paid off later or upon the customer's death.
In 1998 when customers signed up to SAMs, the interest-free mortgage deal seemed attractive.
But the sharp rise in property prices since has led many to regret their decision.
Announcing the rescue package, Barclays' UK Retail Banking customer services director Catherine French, told BBC Radio 4's Money Box: "There are some customers who are in a position of hardship as a result of their SAM.
"What we want to do is help them to move to a more appropriate house for them."
The bank is offering anyone suffering hardship from a SAM an interest-free and payment-free loan allowing them to settle up all that is owing, to enable them to buy a more suitable, equal-sized property, or to downsize.
Only when that alternative property is sold or the customer dies must the loan be repaid to the bank.
And the loan debt will not grow with rising house prices in the way that it does now with a Shared Appreciation Mortgage.
'A way out'
Elaine Williams of SAFE (Struggle Against Financial Exploitation), which negotiated with Barclays on the mortgage holders' behalf, has welcomed the news.
She said: " It will enable people to move. They won't be trapped anymore because there's now a way out. "Where they're in a two-storey house and they need single-story, they can move. This enables people to get on with their lives."
SAM customers in hardship who do not want to move home will be offered a special "grant".
They can apply for a one-off sum for home improvements or adaptions to meet health needs.
In those cases, the SAM mortgage will keep running and will still grow with any further increase in house prices before it is eventually repaid to the bank - usually when the customer dies.
Barclays promises that the rescue package will always be available until the very last SAM is paid off.
But there are still around 8,000 people who hold SAMs from Bank of Scotland whose predicament remains unchanged.
Bank of Scotland has not indicated it will offer any similar rescue package to its SAM customers but told Money Box that it was now studying the Barclays announcement and that a meeting is already pencilled in to discuss the issue with campaigners and MPs.
Source: bbc.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk