Mortgage deal stuns judge

http://www.independent.ie/national-news/mortgage-deal-stuns-judge-1508088.html

A HIGH Court judge has asked a major bank lender how a terminally ill cancer victim was able to secure a €200,000 mortgage without obtaining mortgage protection policy which would have paid the debt when she died.
The failure of Bank of Scotland (Ireland) to obtain a mortgage protection policy when they issued a mortgage to a mother of four -- who was suffering from cancer for seven years prior to her death -- was outlined yesterday as lawyers for the woman's young sons battled to save their family home.
Apart from the woman's family home, there is now only €6,000 left in her estate to tend for her sons, the youngest of whom is just 15.

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Very strange how this happened. An oversight or not I wonder?

A bit emotive perhaps?

If the woman wanted the mortgage, was open about her illness, perhaps long term prognosis quite good, accepted that she could not get life cover, knew the risks, BoS were willing to lend...............

Then is it not just a case that now the family cannot afford to pay the mortgage? I know that sounds hard but I just do wonder where reality kicks in.

mf

I wouldn't say it's an oversight.

See sections 2 (b) and (c).

http://www.irishstatutebook.ie/1995/en/act/pub/0024/sec0126.html

If the bank had refused to give the mortgage due to no mortgage protection, they would have been going against the consumer credit act.

Looking at it objectively, the woman should have signed a waiver and the repercussions of this should have been made clear to her. If this didn't happen then the bank are in trouble.

In the UK, mortgage protection is not a pre requisite for any mortgage.

Did the judge seriously expect that a Life Insurance company would insure the life of a terminally ill cancer patient.

Maybe your right that its a little over the top. But in that situation you'd think it would have cost the woman less to rent. Almost all the sons would be able to work and pay a rent. Why take a mortgage out that you won't be able to pay off early or maintain until the end of its term, or that can't be transferred to the sons.

demoivre said:

Did the judge seriously expect that a Life Insurance company would insure the life of a terminally ill cancer patient.

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I think its more of a case, why would the bank advise a mortgage as the best course for this situation, considering it would cost more than renting and the difference paid into the mortgage including interest would not be any benefit to the customer but benefit the bank, when the house was ultimately recovered by the bank. Unless theres more information we're missing here.

If you are uninsurable a bank can still give you a mortgage. Most people would be declined for life insurance if they had cancer so that is probably what happend here. Most home mortgages have a condition that life insurance must be taken out as a condition for getting a loan but that condition can be waived by the bank depending on the circumstances. What I do not understand is why the family did not apply to the health board for the mortgage payments I believe that in certain circumstances they would pay the interest part of the mortgage. What I find troublesome is that the mortgage debt is equal to the original mortgage and in these terrible circumstances maybe the bank could have settled for the 100K but banking is business and that's the way they will look at it.

Did the bank take advantage of the situation to make a profit.

Bronte said:

What I do not understand is why the family did not apply to the health board for the mortgage payments I believe that in certain circumstances they would pay the interest part of the mortgage.

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Mortgage Interest Supplement is means-tested. It's not stated in the newspaper report what the woman's income was - it's possible that she applied but did not qualify.

Mortgage Interest Supplement is not payable if the mortgage was taken out at a time when the person could not afford it - so, for example, if a person was in receipt of a SW payment and took out a mortgage which they clearly could not meet from their income at the time, no supplement is payable.

If I read it correctly they got 125k from an insurance policy, wouldn't think cover the mortgage payments for a good few years ?

jhegarty said:

If I read it correctly they got 125k from an insurance policy, wouldn't think cover the mortgage payments for a good few years ?

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The bank seems to be refusing payments from the son. Thats what I find odd about it. Perhaps theres a legal bar to it. But still you'd think something could be done.

The court heard yesterday that the woman's eldest son, who is the executor of her estate, had offered the lender €100,000 -- the proceeds of an €125,000 insurance policy.
Payments
He had also acknowledged the mortgage debt and offered to put monies into an account in case payments were not made.
But the lender initially refused to accept any payments as the sons of the dead woman could not be classified as the borrower for the purpose of her outstanding mortgage debt.
The borrower is the person who took out the mortgage or their personal representative, lawyers for Bank of Scotland (Ireland) said yesterday.

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