Sign of the times: Northern Rock offloaded the loans to investment bank JP Morgan Chase in 2008, but managed the 24,000 mortgages until March 2011
Thousands of equity release borrowers with Northern Rock have found themselves cut off from further credit after their mortgages were sold on.
Northern Rock offloaded the loans to investment bank JP Morgan Chase in 2008, but managed the 24,000 mortgages until the titles transferred to JP Morgan last March.
The loans are now held in a specialist subsidiary, Papilio UK Equity Release Mortgages.
Some retired homeowners had been capitalising on terms in the loans that allowed them to borrow extra sums. Janet and Robert Owen signed up to a loan in 2003, drawing £60,000 against the value of their house in Swanage, Dorset. They took a further advance in 2008 and were planning another withdrawal next year.
Robert has letters from Northern Rock in 2010 – after the JP Morgan sale took place – confirming extra borrowing was still permitted.
But he was told this month by Papilio that it ‘does not offer lending facilities’.
Robert, 73, who built a business recycling waste oil collected from garages, says the couple’s plan had always been to run down the equity in their home.
‘We have no children and plan to leave this world as we came into it – with nothing,’ he says.
But now the only option is for the couple to try to remortgage. This would saddle them with legal and administration fees and see the interest rate on their loan more than double.
Robert feels that the interests of borrowers have been ignored. ‘We are looking for the original promises to be honoured,’ he says.
JP Morgan says that the terms and conditions on the mortgages have not changed, but that any extra borrowing was always at the discretion of the lender.
The bank is also waiving any early redemption fees if borrowers do wish to try to remortgage elsewhere.
Financial Mail would like to hear from other borrowers whose loans have been transferred to Papilio. Write to Stephen Womack, Mail on Sunday, Room 301, 2 Derry Street, London W8 5TS or email email@example.com.