Newspaper article Evening Chronicle (Newcastle, England)

It's Impossible Not to Feel Great Pity; Victims of a Rent-Back-Your-Home Scandal Lose in Court of Appeal but Judge Admits That

Newspaper article Evening Chronicle (Newcastle, England)

It's Impossible Not to Feel Great Pity; Victims of a Rent-Back-Your-Home Scandal Lose in Court of Appeal but Judge Admits That

Article excerpt

Byline: RACHEL WEARMOUTH

SCORES of families at the centre of a homes sales scandal look set to lose out following a Court of Appeal ruling.

More than 100 people were caught up in the scam whereby they sold their homes then rented them back.

But unknown to them, the new owners are believed to have defaulted on mortgage payments leaving them at risk of being made homeless.

Those affected fought against being evicted and their battle ended at the Appeal Court where one of the country's leading judges expressed enormous sympathy with them.

But Lord Justice Etherton ruled in favour of the mortgage lenders meaning the families' only hope is taking their case to the Supreme Court.

Lord Justice Etherton, said: "It is impossible not to feel the greatest sympathy for the situation in which the appellant vendors find themselves.

"Having entered into a transaction, in complete good faith, which they reasonably thought would secure both their financial situation and the continuing occupation of their home, they potentially find themselves with no security in respect of either and, indeed, in a worse situation than if they had never entered into the transaction."

He said: "These appeals concern arrangements, often described as equity release schemes, by which the registered owners of registered land sell their homes to purchasers, who promise the vendors the right to remain in their homes after the sale.

"The financial terms of the transactions reflect such a promise, typically by the purchase price being less than the market value or the payment back to the purchaser of part of the purchase price.

"The attraction for the vendor is that the sale raises sufficient money to pay mortgage or other debt but the vendor can continue to occupy his or her home.

"If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee's right to possession has priority over, or is subject to, any entitlement of the vendor to continue in occupation where the right asserted by the vendor is prohibited by the mortgage."

The residents were caught up in the dealings of Gateshead-based firms North East Property Buyers and Newcastle Home Loans.

In an alleged scam those struggling for cash sold their homes and then rented them back from the firms.

The companies then defaulted on mortgages secured on the properties and residents were put at risk of being evicted following a High Court ruling in the businesses' favour in November 2010. Lord Justice Etherton, said the scandal could have been avoided with proper conveyancing and if contracts for sale had given full details of the deal between homeowners and NEPB.

A further 90 cases have been on hold until the ruling and the banks and building societies are now able to take action against tenants in many more. …

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