Grandparents house repossessed - any legal minds around please?

[onemorecakeplease]

I'm not even sure that's the right title really

Mid 90s my aunt persuaded my gps to remortgage their house and used the money to pay off an outstanding business loan. Her business was struggling and before the first mortgage payment was due, the business was made bankrupt.

Gps bank knew what the funds were being used for and that neither of them had an income beyond pension.
They were lent £130k in 1993.

The bank allowed my gps to stay in the house until they died and froze the interest I believe.

No payments were ever made to the mortgage by my aunt or gps as nobody could afford to.

I've recently found out about this and am just so surprised the bank would lend money to pay the debts of a clearly failing business (was hundreds of thousands in debt)
And that they would lend the money to my gps who would have not been able to pay it back.

Have I cause to complain and ask the bank to explain where it's duty of care to its customers went that day? And if so, how do I go about it after all this time

I have statements and account numbers etc so that's a good start I suppose.

Thanks for reading - I'll try to answer any qs I can.

GPS were never involved in the business other than this loan.

Of course the bank leant the money there was no risk they probably own the house which is now worth 3x what it did when this transaction took place.

Blatant placemark for the updates.

I've no idea about this stuff but it is really interesting. Although how you haven't throttled the Aunt..

Oh yes, Mrs Wobble may have nailed it! If the aunt's failing business was previously indebted to the same bank then their behaviour suddenly looks very shady indeed and your DGM might have had a case (with the socking great caveats that a) she had independent legal advice which she ignored and b) it doesn't seem that there's any new information cropping up over the last 20 years, so the claim is probably time-barred).

The bank should have rejected the paperwork because the witness was not "independent" your aunt was the beneficiary.

Did the bank conduct due diligence on the business - if they did and loaned the money they have done so knowing it wasn't enough to get the business out of trouble. They therefore did so knowing the mortgage couldn't be serviced.
If they didn't they have been negligent.

If your gm didn't understand what was being done the bank have been negligent.

I think a letter to the bank couldn't hurt it very much depends on how much the property is worth now.

It sounds after what you said there op that there is a charge on the house. That'll be recorded in the land registry on the deeds. It costs a very few quid to get a copy so that should be your first stop

Why don't you look at the paperwork you said your gran has filed away.

Unless your gran signed over the house 100% then what terms they signed up for would be on their original agreement. Which the bank would need to produce.
Thisisme123 whilst I agree banks should keep paperwork in practice if you are going back 25 years , before computers. The likelihood is that your paperwork would be bundled into a box along with other peoples documents and taken elsewhere to be stored with a million other boxes. If you are really lucky then everything will have been filed correctly and the boxes filed in chronological and alphabetical order otherwise who knows where it ended up.

You have to realise you are talking about a time before computers so an electronic paper trail did not exist.

Without the original agreement who is to say that the bank didn't lend the money on a 0% mortgage interest rate and all the ops dgm has to pay back is the £130000. Who is to say what term was the money lent on. I.e if it was a 25year term will dgm have to pay it back next year.

I would say that either the dgm signed over 1-100% of the house on an equity release type scheme or there is a mortgage on the house in which case without the paperwork to state on what terms the mortgage was made on (interest rate to be charged/number of years etc) then the ops gm might just have to repay the original £130k

You have to realise you are talking about a time before computers so an electronic paper trail did not exist

I started a job 25 years ago next month in quite a backwards/behind the times public sector office. They had computers, so it's not impossible that banks, generally being a bit more up to date, with more money to spend, had them too.

I don't live near grandma so I will arrange to have the documents sent up to me recorded delivery and have a proper look through.

Last time though I couldn't see anything about it being converted to an equity release, just the original mortgage agreement with payments due monthly over 25 years.

It's possible that I missed it or aunt has it elsewhere.

Thanks again for all the replies so helpful

Oh this wasn't nearly enough to save the business I reckon it needed five times that just to get out of the red.

It was a desperate scramble to save the business and prop it up and very badly done.

As they were pensioners at the time of the arrangement, I think it is highly likely that this was treated as equity release.

There is no way a bank would permit a mortgage to be defaulted on for 30 or so years

As you say the original building society no longer exists, you'll need to find out what happened to it. Another will have taken on the assets/debts and will be the ones you/she will have to deal with.

If it has been treated as equity release, then if you sell you can expect the proceeds to split in the proportion of owenership at the time it was set up. So if it was the whole value of the house, then that is what the provider will receive now. But equity release is not usually 100%, ditto remortgage.

Have you found the valuation of the house at the time of the transaction/s?

We would like gma to sell the house, pay off the debt and buy a smaller place.

Who is we?

I'm interested to know why you are pursuing this situation when your grandmother has 7 children

You have to realise you are talking about a time before computers so an electronic paper trail did not exist

It was the 90's not the bloody 40's. Of course banks had computers

Mid 90s - Time before computers?

My 60 year old father had a home computer in 1986!

Is there no chance that the Aunt has settled the debt or has saved money up/has assets to pay it off? Finances can change enormously in 25 years.

It does seem fishy - I'm sure it was unusual to give mortgages which could run longer than expected life span. I don't think pensioners were considered for mortgages then. Even if you had money in the bank what's to stop you giving that away and if spouse dies income halves. Life expectancy was less too. 77 years according to google.

In fact 76 in 1993.

There might have been computers but paperwork still had to be filed. Original forms have to be found and if a computer was used then they didn't add in where they filed everything.

I would like to know off those that think all banks in the early 90s kept pristine records how come when ever a question was asked not one bank that I come across could produce original paperwork. Over the years I have come across 3 banks who have told me the paperwork doesn't exist. One said they destroyed all the paperwork. Another actually lost the deeds to our house.

In them 90's we had basic computer systems, no scanning of documents, etc

We changed computer systems many times, always inputting retrospective documents

Things get missed, put in wrong, terms changed

It's possible the documents are missing

Why shouldn't the grad daughter help her gran? Maybe Gran trusts her to look into it?

If it's something gran wants to know about, it may be playing on her mind and she wants it sorted out.

If you are getting statements with no interest added and the original mortgage lender is gone then the bank might not have the original paperwork in which case they know they cant charge interest because they font know what terms your gps signed up for so just the original value of the loan is outstanding

Once this all becomes a bit clearer, if the bank start demanding immediate repayment or huge interest payments (bearing in mind that if an interest rate of 6% was payable, the interest on an interest only loan would be nearly £200k) you should probably go through their official complaints procedure as you need to exhaust this and get a letter of deadlock before going to the financial ombudsman.

The key phrase about what you want to happen is 'treating customers fairly' because it is obviously unfair to expect an elderly widow with no assets other than her home to come up with a large sum of money very quickly or sell her property without any suitable to move to.

Not unfair at all! They borrowed a large sum against their home have never repaid a penny and it looks like they agreed to pay back on grandfather's death... i would check this part as its more likely to be when both parties pass.. other than that its a simple loan/repay situation and a pretty good deal for your grandparents. The shame is they wasted the money on a family business that failed.

Your aunt is a piece of work.
If I was the bank I would be repossessing - particularly if your grandmother kicks up a stink now.
No payments made is awful.

No payments made is suspicious- it's the banks error. When do banks ever say ' just start paying again when you can afford it'

An interseting one. As a bank customer we don't want the bankes not recovering money due to the bank as we other customers who do pay our debts unlike the grandparents and aunt here who seem to think debts can just be cast off without payment!!!! have to fund the losses. Does the grandmother think it right the bank should not be paid back? What kind of morality is that?

Also she had her own solicitor and she chose not to follow their advice so then she's stuck with it.

So do your £3 land registry search today to get what is on the land registry. Then granny to get all the documents the bank has on the loan (and of course they usually keep papers from a long time ago even when they were on paper - in fact paper documents can sometimes be found as easily as on line) and then take it from there.

It would be very unlikely that no interest is due unless the bank did a compromise years ago with the couple realising it had made some kind of mistake. Look at all the letters and annual statements from the lender that granny can find.

Also what does the aunt have? Does she have a car or new house? If so we shoudl be going after her too rather than making we bank customers who pay our banks stump up for this loss.

Why would the bank take her daughter's car, maybe if they share a house-- I mean I don't expect to have my car taken cos a family member hasn't paid their mortgage. Daft.

Also the PPI sales scandal is still in full flow - the bank might be averse to the bad publicity that this might throw up eg DM headline 'demand for outstanding payments from frail 90 year old blah blah'