# BOI renege on Mortgage approval after drawdown.



## Starbuck (4 Jul 2009)

My brother-in-law bought a site two years ago with a BOI mortgage. He got approval for the site, plus the extra money needed to build a new home for his family.
At the time BOI suggested they'd set up a single mortgage for the full amount, he would draw down the amount needed to buy the site initially, then he could draw down the rest as building progressed.

He went ahead on strength of this and bought the site.

It took almost a year to get planning permission.
When he went back to BOI last year to arrange drawdown of the build costs they told him they wouldn't give him any more of the money.
He hadn't lost his job. He hadn't taken a paycut. Basically nothing at his end had changed.

He was left with a mortgage on a site that he couldn't develop. 
At the time I told him to get a lawyer on it.
Instead he went ahead and sold his current family home to raise money to build. He was able to do that, but it took a year, and he had to take a pretty poor offer on his nice house. Now the whole family are in rented accomodation, and will be there for a year at least.

I think BOI has acted illegally in what they did, but my bro-in-law refuses to believe it. He's afraid they'll up his interest rate if he rocks the boat.

Any thoughts on this?
What would you do in his situation?
I'm telling him to sue them!


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## mf1 (4 Jul 2009)

"I'm telling him to sue them! "

Are you willing to fund his case? And pay all the costs if he loses? Which he may very well do? 

He did not take action at the time ( although I am not at all sure what action he could have taken) and took alternative steps. How can the Bank be held responsible for the collapse in the market? 

mf


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## minkydog (4 Jul 2009)

mf1 said:


> How can the Bank be held responsible for the collapse in the market?
> 
> mf


 
Youre having a laugh and joking with us all aint you mf1. Its because of the greed and complete mis-management of the banks that we are all in this mess.


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## Brendan Burgess (4 Jul 2009)

Should he not be grateful to the bank? They effectively forced him to sell a property and prices have since fallen. He must be far better off in rented accommodation than having a mortgage. 

I think he should compensate the bank.

Brendan


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## mf1 (4 Jul 2009)

minkydog said:


> Youre having a laugh and joking with us all aint you mf1. Its because of the greed and complete mis-management of the banks that we are all in this mess.



In the context of the OP's post, I'm afraid I don't understand your post. There is a Letting off Steam thread if you would like to post there. 

mf


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## Starbuck (4 Jul 2009)

I think you're missing the point a bit.
The money to build was part of a mortgage that he's already drawn on. The loan offer stated the full amount he could draw down. 
By drawing it down he entered a contract with the bank - which they later reneged on.

What the property market has done since has nothing to do with it. He wouldn't have bought the site if he knew the bank was going to pull the rug out. His house was fine, and he'd have happily carried on living there - whatever the market was doing. It was his home, not an investment property for making a fast buck on.

As to me helping pay for his case - no need, he has plenty of cash now. And if he won, the bank would be paying his costs, not me.
I think he should definitely sue.

By the way Brendan....where did you get the idea he had a mortgage on his home? I certainly didn't say he had. You must be imagining that.
Fact is, he had no mortgage then, and he has now! He's also paying rent! Thanks to the bank leaving him in the lurch.


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## BJRsols (6 Jul 2009)

Starbuck said:


> The money to build was part of a mortgage that he's already drawn on. The loan offer stated the full amount he could draw down.
> By drawing it down he entered a contract with the bank - which they later reneged on.


 
This is the point exactly. Banks now a days are using their 3 months (or whatever it is) lapse clause to get out of giving the mortgage. For the bank to lend you must sign the loan acceptance and drawdown the money prior to the offer lapsing. If stage payments are agreed and form part of the special conditions then this offer becomes binding on first draw down and the bank are obliged to payout the rest. 

The bank probably took the view that it was more of a risk giving you the money than a law suit occuring!

Dely is your only downfall here I think, but not fatal.


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## Raskolnikov (6 Jul 2009)

Starbuck said:


> I think BOI has acted illegally in what they did


Does your brother have a contract that explicitly states that Bank of Ireland are required to make funds available to him, in order to complete his house?

Like Brendan said though, it looks like your brother sold his house at exactly the right time, considering the market declines.


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## Starbuck (7 Jul 2009)

BJRsols said:


> This is the point exactly. Banks now a days are using their 3 months (or whatever it is) lapse clause to get out of giving the mortgage. For the bank to lend you must sign the loan acceptance and drawdown the money prior to the offer lapsing. If stage payments are agreed and form part of the special conditions then this offer becomes binding on first draw down and the bank are obliged to payout the rest.
> 
> The bank probably took the view that it was more of a risk giving you the money than a law suit occuring!
> 
> Dely is your only downfall here I think, but not fatal.


There was no delay on initial drawdown BJR. He took nearly 200K out of the approved 600K. Any delay in asking for the rest was down to Planning Approval. The bank started digging their heels in only after he got Planning Approval.



> Does your brother have a contract that explicitly states that Bank of Ireland are required to make funds available to him, in order to complete his house?


Let me put it this way - he had approval for 600K to buy the site and build. The site cost was 200K....what else was the other 400K for?
It states in the approval letter that the 400K was to build 'a new family home'. So your answer is Yes.



> Like Brendan said though, it looks like your brother sold his house at exactly the right time, considering the market declines.


This is PropertyPin nonsense.
Do you not see the guy is far worse off! He had a mortgage free home for his family. He now has no home to call his own, a mortgage on a derelict site falling in value by the day, and a monthly rent on top of it all! Come on!!


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## PaulHoughton (7 Jul 2009)

The one self-build, staged payments mortgage agreement from BoI that I have seen specified the conditions for draw down of each stage of the mortgage. This is a legal contract that usually his lawyer would have checked. 

Once the first payment is drawn down, the mortgage is activated and the laspe period no longer applies.

I would imagine that it is possible to force BoI to lend the remainder of the mortgage so long as all the conditions are complied with. You would need to speak to a lawyer. 

Whether the bank can be sued for damages for delaying payment is another question.


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## BJRsols (7 Jul 2009)

Starbuck said:


> There was no delay on initial drawdown BJR. He took nearly 200K out of the approved 600K. Any delay in asking for the rest was down to Planning Approval. The bank started digging their heels in only after he got Planning Approval.


 

Sorry, I meant delay from realising they were pulling the loan to legal action, if any. Important, but not fatal


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## Tattoo You (7 Jul 2009)

Something amiss here. BOi hardly accepted a mortgage on land prior to satisfying themselves that there was planning permission on it in the first place. Could they have used the home or other asset as security, advanced 200k and said to him "come back when the pp is sorted and we'll give you the 400k plus move the 200k onto the site 'cos you're good for 600k and the completed value may have been 1.2kk


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## Starbuck (13 Jul 2009)

Tattoo - the site had an existing house on it. It is for demolition. The mortgage document states that as accepted. So too the additional monies for the new build.

Anyhow, he's now persuaded the bank is in the wrong and his solicitor will handle it from here.


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## baldyman27 (13 Jul 2009)

I'm struggling to understand what you're angry about here.

Your brother, as it stands, has a site with planning permission.

He sold his house before prices plummetted as far as they have and as a result has 'loads of cash now', which presumably he will use to build the house.

So, instead of having a mortgage of 600k and a house that has more than likely lost a lot of value even if it could be sold, he has a mortgage of 200k and money in hand that he can use to build the house.

I think he's been incredibly lucky.


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## Tattoo You (13 Jul 2009)

Starbuck - glad to hear that your brother is now looking into it. The fact that BOI made the offer and if the offer letter was signed by your brother and returned to the lender AND that there is no stipulation anywhere that the offer will expire then I believe legal intervention may be exactly what is required to reverse the lenders current stance on the matter. An issue to watch out for is that the completed value may be lower that what the max Loan To Value (LTV) agreed at the outset is. This may become apparent when a final valuation is carried out and a) prevent the release of the final stage (retention) and if this is not an issue that b) the assumed final Loan To Value was used in someway to agree the current interest rate. The lender may then decide to charge a different rate ie one that will not cost them so much.

Don't mind anyone else's opinion that he was forced to sell his home or that in hindsight he was lucky etc. That is no argument. He was not forced to sell his home. That is not the issue. The issue is that he would rather "do something else" with his money than have to use it to fund the development of his new home.


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## smiley (13 Jul 2009)

They screwed him.There is no other way of putting it. They put him in a hugely difficult position.

Id say if he tried getting out of that loan agreement before the 'credit crisis' there would have been some trouble for him!


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## millennium (19 Jul 2009)

hi all,
starbuck i'm in a similair situation to your brother in law,got pre approval early this year for mortgage to purchase site and build family home (from the other big irish bank),agreed to buy site from farmer subject to planning,have small mortgage on existing home and was hoping to keep this house as investment,anyway planning was granted to build recently, went into bank last week to iron out details of new mortgage and was informed application was rejected,landowner waiting for his money,builders all lined up,weeks and weeks of organizing...boom not approved!now we both are working with combined income approx 100k,have circa 150-200k equity in existing family home,good credit history...apparently they stressed checked us on our ability to repay current mortgage and new mortgage on interest only for 12 months and we failed?
they suggested we maybe take out mortgage on value of site and try and sell existing property(admitting its a bad time to sell!)and wait and see what happens,next week i'm going in to tell em to stuff it,and only for  we're on great tracker i'd change provider for existing mortgage,do you think the other banks will also refuse if we inquire?surely some banks are lending?


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## Swallows (19 Jul 2009)

Hi, The point here  I think is that the bank agreed to lend him the money to buy a site and then build a house? He went ahead on the basis of that. The fact that he then had to sell his home to get out of a fix is neither here nor there if he got a good price or not. The bank should pay compensation for his loss of (a) his home (2) the loss of funds to build on the site. This is simply outrageous to get treated in this manner and the bank should be held liable.


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## OkeyDokey (20 Jul 2009)

Brendan said:


> Should he not be grateful to the bank? They effectively forced him to sell a property and prices have since fallen. He must be far better off in rented accommodation than having a mortgage.
> 
> I think he should compensate the bank.
> 
> Brendan


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