HBOS reluctant to help Sams borrowers

by Gill Montia

Story link: HBOS reluctant to help Sams borrowers

HBOS, the group that comprises Halifax and Bank of Scotland, is still resisting any kind of action to compensate elderly borrowers who took our shared appreciation mortgages (Sams) during 1997 and 1998.

Sams were sold as interest free loans that were repaid using any future increase in the value of the borrowers’ homes. The typical proportion agreed was three-quarters of the value of the increase.

Those taking out the loans believed them to be a safe way of releasing equity, as the loan would be repaid either on the death of the borrower, or if the property were to be sold.

However, the steep rise in property prices over the past ten years has left many struggling to live in properties that are too big and too expensive to run.

In the case of some borrowers, infirmity has meant that they are living in totally unsuitable accommodation.

If they choose to sell the property the proportion of the equity to be returned to HBOS would leave them unable to purchase another home.

HBOS and Barclays are the only banks to have sold Sams, lending an estimated £700 million in shared appreciation mortgages.

In June, Barclays launched a rescue package for those suffering hardship as a result of releasing equity via a Sam.

Around 50 borrowers have so far applied for the rescue scheme, which allows the Sam to be converted into an interest-free loan, enabling borrowers to move to more suitable homes if needed.

Despite pressure from groups representing Sam borrowers, HBOS is has so far refused to help those experiencing hardship and is advising only that customers in difficulties should contact the bank.