Sue mortgage lender for unrealistic loan approval?

R

rsta

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Just wondering if anyone has ever sued their mortgage lender?

My mortgage was granted about 4 years ago and even back then I was struggling to pay it with a full weeks wages.

Is it possible to sue a mortgage lender for approving a loan that I would never be able to manage?

Thanks
 
Why did you take out a mortgage that you were struggling to pay on a full weeks wages? Surely you have to take responsibility yourself for agreeing to borrow this amount if you found it a struggle to pay it back from the very beginning?
The bank didnt MAKE you borrow the money - you asked for it.
 
I don't think so. You where an adult, you knew what you where getting into... if you couldn't afford a mortgage with a full weeks wages then you should never have gotten one. What where you thinking??

Another celtic tiger cub trying to shirk their responsibilities.
 
Calm down please! I'm no celtic tiger cub! And I'm not trying to shirk my responsibilities at all.

Just simply wondering if anyone has sued their lender?

Its come up in conversations recently with a few friends of mine in similar situations. For example one of my neighbours was granted a mortgage of €240,000 in '07 while he was earning €28,000 per annum. He reckons he should not have been approved for that loan.
 
truthseeker said:
Why did you take out a mortgage that you were struggling to pay on a full weeks wages? Surely you have to take responsibility yourself for agreeing to borrow this amount if you found it a struggle to pay it back from the very beginning?
The bank didnt MAKE you borrow the money - you asked for it.
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Does the bank not have to take responsibility for being an irresponsible lender? The bank didn't have to lend the money. The mortgage is a two party contract so as I see it both parties are equally culpable where too much was lent and too much was borrowed. Actually I blame the banks more for devising 100% mortgages, 5 times salary mortgages, 40 year terms etc. I hope a day will come when bankers are held to account for their recklessness.
 
My mortgage loan amount approved and granted was 7 times my annual salary..!
 
My mortgage loan amount approved and granted was 7 times my annual salary
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In the reckless years banks changed the criteria by allowing you 40% of net income to be your monthly repayments. Low taxation meant this figure would easily surpass 4 times your salary. While banks were reckless they did not put a gun to peoples heads. Remember, the banking crisis came about because people can/wont pay what they owe back.
 
I hope a day will come when bankers are held to account for their recklessness.
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That day should have happened around September 2008. However the government stepped in with their guarantee.
The banks will now never be held to account for their recklessness.
 
elcato said:
In the reckless years banks changed the criteria by allowing you 40% of net income to be your monthly repayments. Low taxation meant this figure would easily surpass 4 times your salary. While banks were reckless they did not put a gun to peoples heads. Remember, the banking crisis came about because people can/wont pay what they owe back.
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And the reason some people can't pay back what they owe is because of the remedially stupid under writing criteria devised by the banks resulting in unaffordable loans been given out. The borrower should never have been giving the funds in the first place. There is equal culpability.
 
demoivre said:
The borrower should never have been giving the funds in the first place. There is equal culpability.
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Ok, so say a judge agrees that the contract should never have been entered into in the first place so the contract is null and void - what's the upshot of that? I don't think it would be 'sure don't bother paying it back' - much more likely to be 'contract declared void, put everyone back in their pre-contract positions, borrower to pay back money today' - will this help borrowers?
 
The bank will have made a nice gift to the borrower. Without a contract they could not collect.
 
I expect that you would have to show that they misled you in some way.

In my experience of mortgage applications, the misleading tends to come from the customer more than the lender.

Brendan
 
Brendan Burgess said:
I expect that you would have to show that they misled you in some way.

In my experience of mortgage applications, the misleading tends to come from the customer more than the lender.

Brendan
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Probably a valid point, especially if people were not 100% truthful as to their income. However it would be interesting if a borrower could prove they were advised to inflate their income by a broker, as to whether or not they would have a case against the broker.

In addition, a bank does have a legal duty of care. Interesting article on this here
[broken link removed]

There will probably be a test case on this at some stage over the next couple of years.
 
While the banks were wrong to lend the money recklessly the 'punishment' for such actions would usually be that the shareholders would fire the board, and the bank would go under.

Our government stepped in and prevented that... so now the banks have gotten away with it.

I think legal actions against the banks will fail, but perhaps not against brokers who advised customers to break the law (or bend the rules). If the banks were legally not allowed to lend 240K on an income of 28K then yes, perhaps an action might be successful, although not cheap.

(Stress testing on 240K mortgage on 28K income... if interest rates hit 6%, interest alone = 14,400 per year.. this is unpayable on 28K)

Our government is to blame for not allowing the banks to go under... even though people would still owe their mortgages to somebody...
 
demoivre said:
I hope a day will come when bankers are held to account for their recklessness.
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But who appears more reclkess? The bank that made sure it had a charge on what appeared to be a solid asset, valued by a third party or the guy who committed to pay it back on the assumption that the good times were here to stay... as they say it takes two to tango!

Jim
 
But who appears more reclkess? The bank that made sure it had a charge on what appeared to be a solid asset, valued by a third party or the guy who committed to pay it back on the assumption that the good times were here to stay... as they say it takes two to tango!
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The banks were reckless for helping to inflate the bubble. They should have considered that they were lending in a bubble environment.
 
rsta said:
Just wondering if anyone has ever sued their mortgage lender?

My mortgage was granted about 4 years ago and even back then I was struggling to pay it with a full weeks wages.

Is it possible to sue a mortgage lender for approving a loan that I would never be able to manage?

Thanks
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Sue them for what, I mean how much? are you talking about suing them for the exact amount of the mortgage or is there a figure in mind? . I personally think the idea of suing the bank because they gave you a loan is ridiculous. I was offered 200,000 above what we applied for but had the sense to say no and stick within our means i.e below the first time buyers threshold. Even now that's a struggle but not as bad as having the extra 200,000 to pay. Perhaps though the fact that the bank loaned more then they should have would be grounds to change your repayments etc to something more affordable.
 
I'm sure there's something that could be done, like reduce the interest and increase the term. So the bank makes no money on it, or loses, and the person is still responsible for their part of it.
 
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