Shared Appreciation Mortgages Schemes (SAMs)
On 5 October 2009 the High Court granted a Group Litigation Order to UK home owners who are suing BOS and Barclays over “unfair” Shared Appreciation Mortgages (SAMs). This is an important victory for homeowners who will now sue the Banks on a group, rather than an individual, basis.
These schemes, which were only sold between 1997 and 1998 before being withdrawn from the market, enabled borrowers to take out loans secured against their homes, at a zero or a reduced fixed rate of interest.
The problem came on repayment of these loans as borrowers had to pay an additional charge which in most cases worked out at or close to 75% of the increase in the value of the property during the lifetime of the loan (the appreciation).
The steep rise in house prices in the ten years between 1997 and 2007 has meant that with zero interest SAMs the lender’s share of the appreciation is now an average of 4.4 times the amount borrowed, equivalent to an average interest rate of 35 - 40% per annum on a simple interest basis. With fixed interest SAMs, the average interest rate is even greater at 42 - 52% per annum on a simple interest basis.
For some house owners that borrowed £25,000 they now have to pay a total of £175,000 on redemption. If another owner borrowed £75,000 at a fixed rate of interest, they now have to pay a total of £225,000 on redemption as well as about £50,000 in interest payments over the term of the loan - in all a staggering £275,000 or thereabouts.
Many of these mortgages were taken up by older people, who now find themselves trapped in properties which are no longer suitable for them, as they cannot afford to sell up and buy a suitable smaller property.
It is estimated that a total of 12,000 SAMs were sold in the UK, of which around 7,000 may still be unredeemed.
Hilary Messer of RWP solicitors, who is the lead solicitors in these cases, spoke with DebtWizard and is desperately trying to locate other home owners that are part of this scheme because time limits could statute bar some claims.
If you have a shared appreciation mortgage and believe you have a potential claim then register on the group action website or call them on 0845 003 9355. If just one family is missed then the repercussions could be very costly.
Consumers need to act now to avoid late payment charges and damage to their credit files
With the postal strike gathering momentum and forecasting all out on 22nd October 2009, consumers need to act now many consumers are getting their credit and store card statements delayed. There is also a delay in sending payments such as cheques, which can lead to a late payment charge. Check below to see if you could be affected by any of the following;
% Credit Card Transfer Promotion – You must make that first payment on the balance transfer deal and I would suggest you set up a direct debit with the credit card company to pay at least the minimum amount in time to make your first payment.
If the lender delays it, and it’s in their interest to do so and it does not get paid then you will be charged the £12 fee for late payment as well as the balance transfer fee, for example - 3% on £6,000 - £180! You could also find that the special introductory offer has been withdrawn and your credit file marked down!
Your credit file - Any missed or late payment will probably end up on your credit file. This will then impact on any future credit applications such as mobile phone, credit or store card and even a re-mortgage. The majority of lenders generate late payment penalties on credit cards by computer so there is no human touch; therefore thousands are expected to be hit with additional charges and have their credit files marked down because of delayed post.
Utility payments - This is not just affecting borrowing; consumers making late payments could also find that they are technically behind with their utility bills, which will once more be detailed on their credit reports and could have an adverse affect when applying for further borrowing.
DebtWizard’s tips on what to do
Cheques - Stop sending cheques in the post unless it is not urgent and you do not have payment date to meet.
Credit card & store cards - If you have credit or store card payments to make then call the lender and ask how much you have to pay and by what date. If you can pay over the telephone use a debit card, or do this at a relevant bank or post office or on-line via the internet. If you have a nought per cent promotion then please read out comments above.
Set up a direct debit - If you pay by direct debit then it is up to the payee’s bank to call for the payment, but you will need to keep an eye on your own bank/building society account to ensure the smooth running of any direct debits.
Mistakes and errors are covered by the direct debit guarantee. This will ensure the payment is made and could work out cheaper in the long run as some lenders, in particular utility suppliers, offer discounts for direct debit payment.
Pay on-line over the internet - Again there are many financial institutions and utility companies that offer discounts for this way of paying; they also email statements to you thus avoiding additional cost and post delays.
Cash machines, ATMs - These can be useful as you can get copies of mini statements to ensure smooth running of your account.
Post office - Some payments can be made by cheque, postal order, debit card or cash over the counter; you will then get your payment slip date stamped to prove date of payment.
Important - Big important thing to do if you have sent a cheque in the post and decide to pay another way then CANCEL your cheque that is languishing in the post holdup; otherwise you will eventually pay twice.
Already made a late payment - If you feel your payment was delayed by the post then at least call the firm you were paying to see if they will waive the late penalty charge, some may be supportive.
Recently go done for speeding? - Around 58,000 motorists a week get caught and receive a Notice of Intended prosecution (NIP) with 14 days of the offence. If you receive this NIP after this date then keep the envelope and ideally get a witness, if possible the postman or neighbour, to confirm when the letter was delivered. You still have to acknowledge it otherwise the registered owner will receive a summons and cannot rely on the 14 day notice as a defence.
Best advice, don't speed in the first place.
