When assessing the ability of borrowers to repay loans, lenders are required to take account of their personal circumstances, including any disabilities from which they suffer. The Court of Appeal underlined this point in criticising a mortgage company’s approach to dealing with a disabled borrower.
The case concerned a woman who, after suffering a bereavement, had endured severe depression that amounted to a disability. She had remortgaged her home for £96,000 in order to raise money for improvements to the property and to pay off existing loans. She swiftly fell into arrears and the lender launched possession proceedings. It rejected her proposal that the repayment mortgage should be converted into a more affordable interest-only mortgage.
In ruling on the lender’s claim, a judge found that it had at no point considered the woman’s disability and that its ex post facto explanations for her treatment amounted to poor conduct. In granting a possession order, however, she rejected arguments that the proceedings amounted to disability discrimination.
In dismissing the woman’s appeal against that ruling, the Court found that it had been neither impossible nor unreasonably difficult for her to obtain access to the repayment mortgage when compared with the access offered to other members of the public, and the lender’s policy of not permitting conversion of repayment mortgages into interest-only mortgages was applied to all borrowers.
The woman’s debt had been increasing inexorably, month on month, and there had, in the circumstances, been nothing unreasonable in the lender’s refusal to waive its ‘no conversions’ policy in her case. A repayment mortgage was, in any event, a fundamentally different animal from an interest-only mortgage in that the latter would have offered significantly reduced security to the lender.
In putting down a marker for the future, however, the Court expressed concern that the woman’s overall debt had risen to the staggering sum of about £300,000, two thirds of which represented costs and expenses. The lender had presented a disingenuous defence to the claim and its practices, policies and procedures, insofar as they existed, had been opaque from start to finish, making no provision for consideration of equalities legislation. In the circumstances, the Court urged that there should be an inquiry as to whether all the costs and expenses claimed by the lender had been reasonably incurred.
If you are in arrears with loan payments, the earlier you tackle the issue the better. We are experienced in negotiating with lenders and helping clients achieve acceptable outcomes before the situation spirals out of control.
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