JUDGEMENT DAY
BORROWERS who have been floored by massive interest payments at last have a chance to climb up off the canvas.
Up to 50,000 people were sent reeling by sky-high rates after taking out loans from City Mortgage Corporation (CMC), which specialised in lending to people with poor credit records. The News of the World has campaigned for years against the business methods used by CMC. Now a court showdown this month should help borrowers avoid the knockout blow of losing their homes and find a way to settle their debts. Lawyers for the borrowers and the lenders will put forward six agreed typical cases, and the Judge will set a timetable for them to be resolved. This should speed up the settlement of other cases. What’s important about judgement day on June 26 in Manchester is that for the first time issues such as secret commissions to brokers and the way loans were set up will be considered by a court. Confidentiality clauses have until now prevented these points being raised. Alan and Sue Jones are typical. Back in 1990 they borrowed £6,000 from J&J Securities, part of CMC, after being refused a loan by a high street lender.
Overdraft
Sue and Alan (not their real names) wanted the cash to pay off an overdraft and credit card debt. The loan was secured on their home in the Wirral, Merseyside but they were still charged interest at a huge 39.3 per cent APR. They got into financial difficulties when Alan, 38, lost his job, but over the last 12 years they have paid back more than £24,000. Now their lender has told them to Double their repayments to £400 a month to pay off a further £30,000 owing on the loan. “We just wanted to clear some debts and ended up with the threat of loosing our home,” said mum-of-three Sue, also 38. “We’ve paid so much-I don’t know how they get away with it.” After a series of company changes CMC borrowers have ended up with igroup, part of GE Capital the financial arm of global giant General Electric. Despite the name change igroup is based in the same Watford building that CMC used, and several of igroup’s management team were there five years ago. A GE Capital spokesman said: “Neither igroup nor GE Capital has any legal connection with CMC.” The firm was “happy to consider a settlement proposal” from Sue and Alan, who have halted payments until the hearing. “This has given us a real boost,” said Sue. “We are optimistic that the cases coming up will be resolved and that will help all the other cases like ours.”
News of The World
12th May 2002
