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Tuesday 15th of June 2010
January 25, 2009    

SAMS mortgage holders up stakes in compensation battle

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by Gill Montia
SAMS mortgage holders up stakes in compensation battle

A group of 222 homeowners trapped in shared appreciation mortgages (SAMS) have begun a new stage in their fight for compensation by sending out a letter before legal action to Barclays and HBOS (now part of Lloyds Banking Group).

SAMS are a form of equity release sold by Barclays and HBOS during the late 1990s, when around 15,000 people are estimated to have taken out the loans.

They are secured against the future equity growth of a property and are only repaid if the property is sold or the borrower dies.

The majority of the loans were made on a zero interest basis, with banks typically receiving up to 75% of the appreciation in value of the property as well as repayment of the original loan, in return for having lent up to 25% of the property value.

Property inflation over the past decade has meant that the return is far above a reasonable interest rate for the loan.

In addition, SAMS holders have been largely prevented from downsizing in old age because under the terms of the mortgage, they haven’t sufficient equity to buy a smaller property.

Changes made last year in the Consumer Credit Act 1974 improved the chances of SAMS holders obtaining compensation.

UK Courts now have more freedom to rule on whether the relationship between a creditor and a debtor is “unfair” to the debtor, plus wider powers to vary the terms of the loan agreement.

Also in favour of the SAMS Action Group is the reputation of their legal representative, one Hilary Messer of Reading-based solicitors, RWP.

According to the group’s website, Ms Messer is known to her clients as “The Rottweiler” in recognition of her fearlessness in taking on large institutions in pursuit of redress for her clients.

She is perhaps best known for having represented the victims of the Paddington rail crash.

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