The bank spun off from State-owned Northern Rock to manage its old mortgages has ruthlessly forced a couple into a retirement of hardship.
Financial Mail recently featured the plight of Philip and Angela Allberry. The couple, from Evesham, Worcestershire, were mis-sold a Northern Rock mortgage in 2006.
Their adviser, since struck off by the regulator, told them to use the mortgage to release cash from their home to invest in an equity bond – with the aim of not only covering mortgage interest payments but supplementing their pension.
Complaint: Philip Allberry’s treatment by NRAM was ‘appalling’
But this horrendous advice, given to a dozen other trusting clients, left the Allberrys with even bigger debts as the equity bond plummeted in value and the income failed to materialise, leaving them to have to fund mortgage interest payments from their pension income.
Philip, 68, a retired university lecturer, and Angela, 64, have since tried desperately to get their finances back on track. But despite this and negative publicity in Financial Mail, Northern Rock Asset Management has always refused point blank to help.
NRAM was formed to take £50billion of sub-prime mortgage debt off Northern Rock and is described as the ‘bad bank’. It reported a pre-tax profit of £350million for the first half of 2010, though it still owes the Government about £22billion.
After months of struggling to meet mortgage repayments from pension income, Philip and Angela were referred to chartered financial planner Rob Gill by Citizens Advice last August. Gill, at Clement Rabjohns in Evesham, works on such cases without payment.
It was Gill’s view that given the Allberrys’ high-profile misselling case, NRAM should have written off the mortgage. Philip and Angela received the maximum £50,000 compensation the Financial Services Compensation Scheme allowed at the time, but it did not cover the total £154,000 debt.
Gill says: ‘Even after putting their £50,000 compensation and most of their life savings towards the debt, the Allberrys still had a £54,000 outstanding mortgage with Northern Rock.
‘Given the scandalous mis-sale of an unaffordable loan, the sympathetic and sensible approach would be for the lender to write off this debt. But NRAM wants every penny back. This seems heartless and cruel.’
With nowhere else to turn Gill arranged a lifetime mortgage on the Allberrys’ home through insurer Aviva. This route is best for the Allberrys, who have a small income, as the interest is rolled up and only payable out of the proceeds of the house sale on the death of the last partner or its sale before then.
But the total amount Aviva was willing to lend based on the couple’s age and the property value still left them with a £6,800 mortgage shortfall.
Gill again appealed to NRAM to switch this debt to an unsecured loan. Again it refused. NRAM would still get all of its money back through this arrangement, but crucially it would have allowed Philip and Angela finally to draw a line under their financial problems.
Mortgage lenders have the first charge on a property when issuing a home loan. This is their ’security’ should the borrower default. NRAM would have had to relinquish this to Aviva and, after a long delay, said it would not do so. A spokesman says: ‘We have no obligation to agree to an unsecured loan.’
Gill has recently managed to obtain an unsecured loan elsewhere for Philip and Angela that covers the shortfall and enables them to redeem their mortgage – severing their ties with NRAM once and for all.
‘NRAM’s obfuscation and delay since last summer has exacerbated an already difficult situation for the Allberrys,’ he says. ‘Their treatment of this couple has been appalling.’
The Allberrys are now pursuing a complaint against NRAM through the Financial Ombudsman Service.
Source : Dailymail