Assistance offered to “Sam” mortgage victims

Permalink: Assistance offered to “Sam” mortgage victims
by Kay Murchie

Barclays have, at long last, decided to provide help to the thousands of elderly homeowners who experienced financial difficulty after taking on a share appreciation mortgage (Sam).

These much-criticised loans were offered by the Bank of Scotland (now HBoS) and Barclays in the late 1990’s. The Sam borrowers have accumulated such large debts that if they sold their homes and repaid the loan, they could not afford to buy a new property. The elderly homeowners were allowed to borrow money (interest free) against their properties. Despite no interest being charged, the agreement was that the banks would keep 75% of any increase of the property’s value. This would have to be repaid, with the original loan, when it was sold or the homeowner died.

The majority of properties have more than doubled in value since these loans were taken. This has resulted in the homeowner’s debts trebling and the banks owning a growing share of the total property.

After much protest by Financial Mail and Safe (Struggle Against Financial Exploitation), Barclays decided to launch the Sam Hardship Scheme. This will allow the homeowner to move property, should they wish to, and have the choice to borrow the funds needed to pay off their Sam debt (this amount would be free of repayments and interest). This loan will allow them to repay the Sam, sell their home and use the funds to buy a more suitable home. However, this debt will be attached to their new property and will still have to be settled.