Reckless Lending - earning in Stg, borrowing in euro

Brief Overview

We applied for a mortgage at the end of 2006, we gave the bank all of our details which stipulated that all of the money we earned was in pounds sterling. The bank converted our earnings at that time to euro's and gave us a mortgage to which we agreed and signed the contract. Since 2006 our family has increased in size and we need to move but obviously the market has collapsed.

Now we are not financial experts and relied on the bank to carry out all necessary due diligence and risk analysis etc. I requested from the bank all of the information regarding our mortgage etc. I received what I believe is most of the data except for the risk analysis. I emailed the bank and was advised by them that they did not consider the currency exchange as part of their risk analysis to which I was surprised as our earnings and therefore payment capability is all in sterling. I responded to the bank for clarification on what they did their risk analysis on if they did not consider our salaries, I have got no reply and have yet to actually receive the risk analysis itself even after several requests.

My question to those out there that would know better than me - can the bank be held responsible for reckless lending?

Also, I know it's a two way street, we agreed and signed the contract etc, we have met all payments and are not in any arrears but we do need to move.

Any information provided would be welcome.

Thanks

The simple answer is no. The bank will pay a price for reckless lending but that has nothing to do with you fulfilling the obligations under a legal contract that you willingly entered into.

This seems bizarre to me.

You bought a house. You have been able to make all the repayments to date. From your other posts, you have been considering buying a new house anyway.

Where is the reckless lending? It may have been a bit reckless of you to buy a small house if you were planning to have a big family.

You don't "need" to move. You "want" to move. That is completely different.

Check out the other threads on what to do in this situation. Let out your existing house and rent another one.

Don't blame the banks for problems of your own making.

even if the bank has not carried out due diligence or at least it seems as though they haven't?

Hi Brendan,

The reckless lending stems from the bank not advising accordingly and not following all the appropriate codes of conduct on what products and advice they give to their clients.

The risk analysis should have been undertaken by yourselves as borrowers. I see no point in blaming the Bank for reckless lending in this case. This looks like a case of reckless borrowing.

Your own admission is that you are up to date with your borrowing, so where is the problem ?? I'm no lover of Banks so if you are looking for a free hand out, it ain't going to happen in this case IMO.

Legally there is no such thing as "reckless lending"! See many other similar posts on this forum, where money was lent by banks to customers with limited capacity to pay same. This was obviously not the case in your example as you have fully serviced the mortgage you received. You applied for a loan facility to buy a property. In borrowing this money you took a risk as did all borrowers. The fact that you are now dissatisfied with the purchase and want to upgrade the property is incidental to the original agreement and there is no case to be made that the Bank were somewhat complicit in forcing you into a loan/purchase that you now see as a mistake.

There's something in the air this week in relation to 'reckless lending'. What is going on, are things coming to a head and realisation is dawning that the banks now mean business.

Mexican said:

. I emailed the bank and was advised by them that they did not consider the currency exchange as part of their risk analysis to which I was surprised as our earnings and therefore payment capability is all in sterling.

Any information provided would be welcome.

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You are clutching at straws here.

The current exchange was up to you to weight up. Either the house and it's borrowings made sense then or it didn't.

If things had gone the other way, property price rises and exchange rate in your favour, would you be on here?

Instead of wasting your own time, how about posting proper facts and figures and let people on here try and figure out actual real solutions to your predicament. You have a Euro loan on a property in the UK or NI and your earn in sterling. What year did you purchase, and by how much is the currency exchange going against you? Did it go with you for any of that time period? Is it now only an issue because the value has fallen or not increased, you must have paid off a chunk of it?

What did you mean on another thread that the banks think you live in your parents place?

Bronte said:

There's something in the air this week in relation to 'reckless lending'. What is going on, are things coming to a head and realisation is dawning that the banks now mean business.

Click to expand...

I was wondering whether I was just getting crotchety or unsympathetic. I have replied to a few threads this week telling people to take responsibility for their own issues and stop blaming the banks.

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Mexican said:

can the bank be held responsible for reckless lending?

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In this case, I do not think so. The bank evaluated your earnings at the time of the mortgage application and you could afford the mortgage. Sure you may be earning less in euro now than say 6 years ago, but lots - if not most - people are earning a bit less than 6 years ago. Its not the banks fault your earnings in euro are slightly less than they were.

This one is particularly ridiculous.