Is a loan arrangement fee still due?

[runner]

Friend had a loan arranged for self build 2 yrs ago and then the financial crisis hit the market after he had drawn down a nominal amount for initial site clearance etc. The project was delayed coming up to this stage and he sought a time extension. This was refused without reason or elaboration. Build project had to stop and he refunded the full amount drawn down with interest. However, there was an 'arrangement fee' of a substantial amout as part of the contract. He is refusing to pay this as he feels the Bank defaulted in principle on the deal. They are insistent that it is due.
What do you financial experts out there in AAM think about this?
Is he likely to have to pay up?

 

[runner]

BUMP
Any views out there on this?

 

[dereko1969]

Who refused the time extension? I can't recall when I was building a house that there were any time limits on when various stages had to be drawn down.
If it wasn't the Bank who refused the time extension I don't see how your friend can get out of this, what does their solicitor say? It seems like a non-standard element to include in a mortgage. Probably need a few more details in order to comment further.

 

[runner]

Thanks.
It was a loan arrangement with a 2 year payback period and with a drawdown period of 1 year I believe, not a mortgage as such. Was one of the foreign banks, not certain which one, but you may guess. There was overshoot and this concurred with the 'financial crisis' emergence. The bank refused a drawdown extension without discussion or reason. The drawdown amout was repaid with interest as project could not proceed without funds. Bank still seeking the 'arrangement fee'. His solicitor says it could go either way if persued. Would like a few opinions on this in the meantime.