Sue mortgage lender for unrealistic loan approval?

what about the banks sending letters to customers saying they have been "pre-approved" for loans of 20k, ok its illegal for them to do it now but they will never be held accountable for this! I genuinely think people didn't have enough financial advice available at the time and now they are paying the price! Banks were bailed out for their mistakes, people unfortuantely will not be.
 
southside100 said:
I genuinely think people didn't have enough financial advice available at the time and now they are paying the price! Banks were bailed out for their mistakes, people unfortuantely will not be.
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But who would they sue for the fact they had no financial cop on, the dept of education, their parents? It is not the banks job to teach financial literacy to people.
 
Is a Justice correctly described as a 'Mr Justice'?, or is this like saying 'Mr Doctor'?

from link above, a few posts back.
 
SarahMc said:
But who would they sue for the fact they had no financial cop on, the dept of education, their parents? It is not the banks job to teach financial literacy to people.
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True but they may have a legal requirement to tell people to go out and get independent legal advice. The Financial Services Ombudsman report has plentty of examples where banks sold people financial products that were not suitable for their needs. Why should a mortgage be any different?
 
SarahMc said:
But who would they sue for the fact they had no financial cop on, the dept of education, their parents? It is not the banks job to teach financial literacy to people.
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So the reckless borrower should suffer the consequences of over borrowing but the reckless lender shouldn't suffer any sanction?
 
JoeBallantin said:
While the banks were wrong to lend the money recklessly the 'punishment' for such actions would usually be that the shareholders would fire the board, and the bank would go under.

Our government stepped in and prevented that... so now the banks have gotten away with it.

I think legal actions against the banks will fail, but perhaps not against brokers who advised customers to break the law (or bend the rules). If the banks were legally not allowed to lend 240K on an income of 28K then yes, perhaps an action might be successful, although not cheap.

(Stress testing on 240K mortgage on 28K income... if interest rates hit 6%, interest alone = 14,400 per year.. this is unpayable on 28K)
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Another calamity of lending practice during the boom years was the way stress testing was done. Some banks got away with lending larger than appropriate sums by offering fixed rates over 3 or 5 years which weren't subject to the same levels of stress testing as a standard variable rate mortgage. AFAIK some banks didn't stress test at all on 5 year fixed rate mortgages !
 
It is a similar argument to fast food chains being sued by obese customers.

The reckless customer suffers the consequences, but the chain selling fat laden food doesn't, because it comes down to Personal Responsibility.
 
SarahMc said:
It is a similar argument to fast food chains being sued by obese customers.

The reckless customer suffers the consequences, but the chain selling fat laden food doesn't, because it comes down to Personal Responsibility.
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It's not similar because you can't attribute the obese persons weight problem exclusively to the fast food outlet. Diet at home, exercise regime, genetics etc would all be relevant.
 
You can't attribute the borrower's financial difficulties exclusively to the bank. Wage cuts, perhaps a growing family, other borrowings since taking out the mortgage would all be relevant.
 
demoivre said:
So the reckless borrower should suffer the consequences of over borrowing but the reckless lender shouldn't suffer any sanction?
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Maybe not sanctions (and why sanctions for lenders but consequences for borrowers?), the reckless lenders ARE suffering the consequences - loan write-offs, wiped out share values, virtual nationalisations... What sanctions do you want to apply to lenders that won't cost their owners (effectively us as tax payers of the State) any more money?
 
umop3p!sdn said:
The banks were reckless for helping to inflate the bubble. They should have considered that they were lending in a bubble environment.
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Perhaps, but then the same would have to be said of the borrower! This would be almost an impossible to argue in court. You'd have to have something very specific to an individual case to have any chance. And I can't even think of what that might be.

Jim.
 
when someone took out their original mortgage they would have been stress tested to see if they could afford repayments with a 2% hike in interest rates. Now with banks making their Fixed Rates so unattractive, forcing people onto Variable Rates, which they can raise whenver they like, these rates will soon be well above the 2% stress tests amounts, so banks cannot say "people knew what they were getting into". As Mr Lenihan has said on many occasions "no-one could have predicted how bad this economic crash was going to be", so why help the banks and not the ordinary tax payer? So what if the banks share price has dropped, they will bounce back and recover as they always do, whereas mortgage holders are facing into 30 years of hardship, there is no light at the end of the tunnel for them
 
demoivre said:
So the reckless borrower should suffer the consequences of over borrowing but the reckless lender shouldn't suffer any sanction?
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The wreckless lender does suffer the consequences - the bank doesnt get paid if the borrower cant afford to pay.


If a borrower were to sue a bank, what would he be suing for? Usually you sue someone in a financial/contract matter because you have lost money. And the remedy is that you get awarded financial compensation for the loss of money. The OP was given TOO MUCH money, so he is financially better off than if the transaction had never taken place. The only logical outcome of a court case is that the OP should pay a lump sum plus interest bank to the bank!!!!
 
csirl said:
The wreckless lender does suffer the consequences - the bank doesnt get paid if the borrower cant afford to pay.
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Relatively few houses are repossessed. What often happens when a borrower runs in to difficulty is the bank will extend the term of the mortgage thus reducing the repayments. The bank will make more in interest over the longer term on the mortgage and is thus rewarded for its reckless lending! Only the borrower suffers in this situation for his reckless borrowing.
 
why shouldn't the taxpayer help towards debt write downs for people, there are lots of things that taxpayers money goes towards that only benefit a small cross section of the community, single mothers allowance is one example, why can't mortgage assistance be another one?
 
southside100 said:
why shouldn't the taxpayer help towards debt write downs for people, there are lots of things that taxpayers money goes towards that only benefit a small cross section of the community, single mothers allowance is one example, why can't mortgage assistance be another one?
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The taxpayer is already stretched to the limit - is paying for too much already. A lot of people are finding it difficult to pay their own mortgages. Adding a few % onto income tax to make them pay other peoples mortgage arrears is not fair on them and will push many more into arrears.
 
It's not just the cost to the taxpayer that makes it unfair - it's the potential benefit received. With something like your example of the single mothers allowance, it's means tested and everyone gets the same - for as long as the need exists.

In helping out with mortgage assistance, you are enabling one group to keep something they should not have bought in the first place and thus aren't really entitled to. Consider 2 people working side by side, earning the same amount - X bought a 3-bed house (because he could and because he was worth it etc) and Y bought a 1-bed apartment because that's all he felt he could afford. Both are now in negative equity and are taking home less money - X is struggling to make repayments; Y finds things tight but can manage. Why should Y have to pay more tax to enable X to stay in a better home? In 20/30 years time, X will have a bigger asset than Y, partially state-funded. It's not begrudgery - it's just fairness. I have no problem with people having better stuff than me - just don't expect me to contribute towards it.
 
rsta said:
Just wondering if anyone has ever sued their mortgage lender?

My mortgage was granted about 4 years ago and even back then I was struggling to pay it with a full weeks wages.

Is it possible to sue a mortgage lender for approving a loan that I would never be able to manage?

Thanks
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Probably one of the daftest things I have ever read on AAM. No one beat you over the head, offered you financial inducements etc so why should you be bailed out any more than any other joe public from that period of ridiculous throw-away-money era. Why should I as a tax-payer who did not leverage myself up to my eyeballs pay for your mistake. Just because there was lots of cash available for me to borrow did not mean I had to or did
 
Could I sue a publican for supplying me with enough alcohol to put me over the legal limit to drive.

Unless the bank mislead you into getting a mortgage I doubt it. Could a a bank sue for "unrealistic borrowing"
 
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