MORTGAGE GIANT FACES COURT OVER UNFAIR LOANS
Campaigners argue products were miss-sold, says David Prosser. A Support group set up by an ex-teacher is taking one of the worlds largest financial companies to court in a case that could save millions for thousands of mortgage borrowers. The National Association of Mortgage Victims (NAMV) will next month ask a court to set a date to hear test cases against US firm Ocwen and international giant GE Capital. Carol Riley, from Staffordshire, set up the NAMV in the late nineties after being threatened with repossession to combat punitive mortgage practices. She said the case against Ocwen was a breakthrough: “five years of campaigning and struggling have finally paid off.”
The NAMV has been campaigning against Ocwen because it feels the terms of its loans are unfair. Its mortgage interest rates can be doubled if borrowers are late with payments for whatever reason. High early redemption penalties are also payable. Ocwen’s loans are in the controversial sub-prime mortgage market, made to people whose credit records or financial circumstances prevent them borrowing from high street lenders. The company moved into the UK market five years ago by buying City Mortgage Company but it no longer lends in Britain and its loans are now administered by GE Capital. Earlier this month the NAMV presented in court papers it had received anonymously in the post. These suggested City Mortgage Company had paid mortgage brokers to recommend its loans and that borrowers had not been told about these commissions.
The NAMV’s solicitors argue that legal precedents covering such secret deals mean British customers of Ocwen and GE should have to repay only the capital owed on their mortgage, not interest. Simon Abbott, the lawyer representing the NAMV, said: “our argument is that borrowers did not know of or consent to the payment made to their brokers but in any case the terms and conditions of these loans are unfair.” Riley added: “because these loans were mis-sold people should be repaying only the capital they owe.” Bob Sturgess, communications manager at igroup the division of GE that looks after Ocwen’s loans confirmed his company was in talks with the courts and the NAMV’s lawyers. But he said: “because the matter is still before the courts it is not appropriate for us to comment. Talk about the result or any impact of these cases is pure speculation.” However the courts are taking an increasingly sympathetic view of people in disputes with sub-prime lenders. Two weeks ago, for example in a case unrelated to Ocwen or GE Halifax County Court suspended a repossession order against 78 year old Doris Armstrong from Keighley West Yorkshire whose inability to make repayments on a £3,000 loan led to the debt escalating to £38,000.
Sunday Express
13th May 2002
