A friend asked for advice re the following situation, which I suspect has happened to others out there in the current banking climate, and should be of interes to others.
They had arranged a substantial loan last year with one of the banks here that do commercial type personal loans, to build a new house on their own site which they owned fully and which has full planning permission. The site was used as collateral to cover loan. The bank charged a substantial 'arrangement fee' and this was included in the contract, which stated that it was not refundable in the event of the loan not being drawn down.
Through various delays, the job was late starting and only a nominal amount was drawn down before the 'expiary date' last autumn. They applied for a time extension, and this co-incided with the collapse of the banking business generally. The bank involved (like all others) were no longer lending money (they hadnt got any), and they declined to extend the drawdown date, and hence the loan approval lapsed.
They will pay back the actual monies drawn down with interest no problem.
The bank is looking for the arrangemet fee as well, even though its patently clear that the bank were not in a position to supply the money.
Should they tell the bank to get stuffed re the arrangement fee, even though its in the contract and where would they stand legally if the bank persues for it?
Has anyone experience of this type of situation, and what is the bank likely to do, and would the bank be likely to persue it legally, and whats the likely outcome?
My view is that they should dig their heels in on this, but there may be more informed views out there!
They had arranged a substantial loan last year with one of the banks here that do commercial type personal loans, to build a new house on their own site which they owned fully and which has full planning permission. The site was used as collateral to cover loan. The bank charged a substantial 'arrangement fee' and this was included in the contract, which stated that it was not refundable in the event of the loan not being drawn down.
Through various delays, the job was late starting and only a nominal amount was drawn down before the 'expiary date' last autumn. They applied for a time extension, and this co-incided with the collapse of the banking business generally. The bank involved (like all others) were no longer lending money (they hadnt got any), and they declined to extend the drawdown date, and hence the loan approval lapsed.
They will pay back the actual monies drawn down with interest no problem.
The bank is looking for the arrangemet fee as well, even though its patently clear that the bank were not in a position to supply the money.
Should they tell the bank to get stuffed re the arrangement fee, even though its in the contract and where would they stand legally if the bank persues for it?
Has anyone experience of this type of situation, and what is the bank likely to do, and would the bank be likely to persue it legally, and whats the likely outcome?
My view is that they should dig their heels in on this, but there may be more informed views out there!