Sue mortgage lender for unrealistic loan approval?

Thanks everyone for all your replies. Tbh, I think if someone is in trouble with their mortgage repayments, the last thing they would need would be the added expense and stress of a lawsuit.

And to the people who jumped down my neck, my question was hypothetical and I am not intending to sue my mortgage lender. Which I had already said.. Ok, so just chill out.

Maybe we should sue the broker instead!
(And by the way I'm just kidding before anyone jumps down my neck again..)
 
To answer your question literally - you can always sue. The real question would be whether you would have any success if you did. The answer to that is probably "no" or perhaps if you were able to demonstrate that they co-erced or encouraged you against your better judgement to take a mortgage then a share of the responsibility might be found to lie with them. So the answer is probably "no".
 
a high percentage of mortgages would not have been approved up front, mortgage brokers and bank staff were putting huge pressure on underwriters to approve loans that maybe shouldn't have been approved at all, as they were trying to achieve targets set out for them by the bank and receiving huge bonuses in return for hitting those targets, so I don't agree that it is all one sided. One example would be if your Broker or Mortgage Representative encouraged you to say that you were renting out a room to increase your monthly income so you would be approved for a bigger loan, then you may have a case.
 
One example would be if your Broker or Mortgage Representative encouraged you to say that you were renting out a room to increase your monthly income so you would be approved for a bigger loan, then you may have a case.
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So you lied to the bank. I can see that going only one way.
 
In Spain recently a Judge ruled in favour of the lendee when bank sold house fofr half loan value and sought to get balance from lendee, Judge stated reason was wreckless lending by the bank and as such should take the loss themselves.... mabye if this was the norm instead of exception the whole lending mess and and property bubble may have been avoided.

When bankers are receiving payouts on money loaned out (and not yet paid back .......) then a culture of wreckless lending is promoted and to say only one party is at fauly (the lendee) is not just morally questionable but in plain terms feckin total stupidity IMO
 
And to the people who jumped down my neck, my question was hypothetical and I am not

I think it might be possible to sue a lender for reckless lending. It just never has been tested in a Court. A bank employee is financially literate and, for example, if he/she sells a financial product to a 'non-financially literate' person and had that person sign a contract for a mortgage that is say 10 times a person's salary, sure the bank could be liable. MPsox has a point (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?) Maybe people should get together and have this tested in Court. I'm sure the banks are hoping nobody does, while they get bail out after bail out after hiding the huge holes in their own balance sheets.
 
Unlike most other financial products mortgages are different in that the borrower has to use a solicitor and thereby gets independent legal advise on the mortgage.

Interestingly most of the people with mortgages on AAM who believe the lending was unfair just happen to be the people who overpaid for their properties and are now struggling with the payments. Whether that was stupidity, naivety or greed time will tell.

Even if a case were to go to a court who would actually win. Nobody. Because then along with the rest of us already paying for the bad decisions made by the banks we'd all as tax payers have to now pay the further bank losses. That would be the ultimate conclusion to such a case.

Whether one took part in the tiger or not everybody is paying for the party. Bankers, politicians, developers, lawyers and regulators were all wrong but so too were many borrowers. Some are more culpable than others. But no matter which way one puts the blame it makes not one bit of difference because at the end of the day the only people who will pay for it are the taxpayers.

Rsta, the OP on this thread has not answered the question: 'Why did she take out a mortgage that she struggled to pay for from day one'. Not attacking her by asking this, but it would be very interested if she could give an honest answer to her motives and thinking at the time she took out the mortgage and indeed to the conversations she had recently with her friends in the same situation. It's very easy for them all to blame the banks for giving them the money but until these same people acknowledge their own culpability in the mess we will never move on and grow up.
 
Unlike most other financial products mortgages are different in that the borrower has to use a solicitor and thereby gets independent legal advise on the mortgage.
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I've never bought or sold a property where the solicitor has advised me about the mortgage. S/He simply did the conveyancing.

A.
 
Bronte wonders whther the actions of those borrowers was "stupidity,naivety or greed."

I have argued in several threads that it was also because of heavy pressure from all sort of expert sources - bankers, mortgage advisors, the government.

Banks giving 100% mortgages based on values that they, as experts, should have had a better idea of than a young couple. No real checks on peoples incomes -or even if they did check they'd offer several times the level of income.

. I had twenty people in their twenties and thirties working for me ten years ago then. The pressure from banks, govenrment, media and peers to buy,buy,buy was intense. (There weren't many David McWilliams around and if there were they were mocked -"they should commit suicide" said Bertie.)
I suggest that the OP may have been one of those tens of thousands of people who
were given the wrong advice after a lot of pressure.


You can say that they should have known better than to listen to the banks, govnt etc -but society doesnt work like that. We're all influenced by norms of society - and the norm in 2001-2006 was "buy now whatever happens and here's loads of money".

So, calling those borrowers "stupid,greedy or naive" seems somewhat harsh.

Maybe "naive" only in the sense they were not experts -and that's who the borrowers turned to - the experts, the very people who are unpunished by their actions whilst still squeezing the people they misled.

Incidentally, I don't think that most borrowers feel they are blameless. I know many of my ex-staff who DO feel they were silly/guilty-they're kicking themselves.

Frankly, I don't think those borrowers should feel guilty.
I wouldn't blame someone who goes to a doctor, is prescribed the wrong medicine yet sees the doctor unpunished(indeed richly rewarded) and, even worse, the patient still has to swallow the wrong medicine.

The doctor, the medical expert, would be sued - why then not the financial expert ?
 
As ali says, the solicitor argument is a red herring. I talked to 4 lenders before settling on one when I bought my house, and there was no involvement by a solicitor; nor was I asked or advised to consult one, or an independent financial advisor. Ditto when I did the deal. The solicitor is only required for conveyancing.

While I think there was a certain element of naivete on the part of borrowers, the fact remains that lenders are experts and borrowers generally aren't, so they have a major responsibility. The way forward is to require independent advice, but that will lead to other problems, such as higher costs for borrowers, and corruption.

(I'm not in trouble with my mortgage, I bought recently and continue to pay my full monthly payment. Another right-wing red herring.)
 
To avoid repeating these mistakes, personal finance should be included in the school curriculum (long time since I was at school but it wasn't on it when I was there). The first time I bought a house, I asked many work colleagues what mortgage rate they were on, none of them knew. They could all tell me what the monthly repayments were, but not the term or the interest rate. They just knew it cost X amount per month, I earn Y amount, Y is greater than X: therefore I can afford it.

Speaking to a friend who was in the motor trade and he said the same was true for car finance. Very few people would ask the APR or term of the finance, just how much a week - yep, I can afford that. These would be the same people that would spend hours going from shop to shop to save a few pence on weekly shopping but give no thought to how much they could save on the bigger things.

As consumers, we're generally naive and lazy, is it any wonder we've been exploited by the banks (all legally though).
 
losttheplot said:
exploited by the banks (all legally though).
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by banks giving out money way too cheap, where they were not putting money aside for the rainy day (recession etc). I blame Bank of Scotland (and latterly NIB with its 0.50% LTV product) who came in and agressively lent at very low margins, and to scary multiples of salary in order to acquire market share at any price. The dumb local banks just followed suit to compete. All on the premise that property prices never go down - how wrong was that!

Now all this is considered to have been good for consumers, but only in the short term, because we are now all as taxpayers paying for it even if one does not have a mortgage.
 
"Enjoy borrowing responsibly"... we just weren't mature enough for all that cheap money, like children let loose in a sweet shop.
 
And to the people who jumped down my neck, my question was hypothetical and I am not intending to sue my mortgage lender.

This is exactly what the Irish Property Council is advocating at the moment, i.e. suing the banks, government, regulator for 'reckless lending'. A spokesman was on the lunchtime news on RTE 1 today - didn't get his name. They are actually looking for people to contact them with a view to taking a class action suit on behalf of a number of borrowers. Their arguement is that many borrowers are likely to be declared bankrupt for years while the banks, regulator and government ministers responsible for the debacle get off scott free. Could be an interesting case!
 
RAMS said:
And to the people who jumped down my neck, my question was hypothetical and I am not intending to sue my mortgage lender.

This is exactly what the Irish Property Council is advocating at the moment, i.e. suing the banks, government, regulator for 'reckless lending'. A spokesman was on the lunchtime news on RTE 1 today - didn't get his name. They are actually looking for people to contact them with a view to taking a class action suit on behalf of a number of borrowers. Their arguement is that many borrowers are likely to be declared bankrupt for years while the banks, regulator and government ministers responsible for the debacle get off scott free. Could be an interesting case!
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It's not really. It's a cheap publicity stunt. What do the Irish Property Council care about ordinary householders considering it was their members who built and sold the overpriced junk in the first place.
 
Didn't think you /could/ take a class action suit in Ireland.
 
Ultimately this argument that borrowers were at the mercy of the banks and advisors when it came to deciding that they could afford to purchase the mortgage they opted for is pointless. They are adults and their ignorance is their own to deal with, they cannot present naivete as an argument that justifies a payout by the bank. They weren't deceived by the bank. They were frequently complicit with the bank. The number of times I heard people's ruminations on how to get a mortgage for more than the bank was willing to lend them at the time was frightening. The number of people who massaged their presentation of their financial well-being in order to obtain the desired mortgage was disturbing.
How many people now looking to blame somebody else for a mortgage they took out expended time, effort and money on presenting a flattering picture of their financial health? I'd be inclined to say all of them.
How many of them still have not admitted to the unpalatable truth that they cheated themselves when they massaged their figures? Cynically, I'd be inclined to guess an unhealthy majority.
I do not mean to imply that all those in straitened circumstances did so. There is a considerable difference between finding yourself unemployed and finding yourself sitting with a severely depreciated asset on one hand and a large liability on the other that no longer is covered by the value YOU ascribed to the asset. The first person deserves compassion, the second deserves the lesson. Both may deserve some support.
As I already said, you can always sue if you wish but a couple of cogent points to consider.
1) Is the bank/broker the only party liable? Do you have any liability at all for your behaviour at the time?
2) If you are going to sue you should only sue where there is money available to pay out for you - so suing a bankrupt bank may simply be a fools errand.
 
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