Subprime settlement

Belmain Finance Limited v Peter James Bentley High Court (Chancery Division) Cardiff.

In a widely reported settlement (see here, here and here for example) this case has come to an end. Belmain Finance had lent £40,000 to Mr Bentley, secured against his home. Mr Bentley, due to having to care for his father and then the recession, was unable to meet the £550 per month payments and fell into arrears. (Mr bentley had already had to go part-time to care for his father at the time of taking the loan). Belmain brought possession proceedings.

Mr Bentley argued that the agreement was unfair under the Consumer Credit Act 1974, s.140A, apparently on grounds that there were shortcomings in the decision making procedure on granting the loan, including the under writing, affordability checks and valuation processes.

It appears that at the doors of the Court, Belmain made a settlement in the following terms:

– to re-write the secured loan account, cutting the repayments to £150 a month

– not to levy any further interest, any charges or legal costs “whatsoever.”

– possession claim was dismissed and Belmain cannot enforce repayment of the loan by this method for 5 years.

– After 5 years, enforcement by possession only if there are at least 12 months’ arrears on the new level of payments.

The Order in these terms was made by the High Court, approving the settlement.

For a subprime lender, that is a painful settlement. Blemain, putting a brave, not to say courageous, face on it said:

Mr Bentley fell behind with his loan payments. However, the matter was resolved before it went to court and we agreed to give him further time to repay what he owed. For the avoidance of doubt there has been no court decision on this case as a satisfactory arrangement was agreed.

This may be technically true, but from the perspective of a litigator, this is a last minute settlement made in utter dread of a precedent judgment.

Any further information welcome.

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Housing law - All, Mortgage possession and tagged .

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