LIBOR Scandal Claims for Property Investors

LIBOR Scandal Claims for Property Investors

11:45 AM, 2nd December 2013, About 10 years ago 25

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LIBOR Scandal Compensation for Property InvestorsAnyone who holds any form of mortgage or loan should examine their portfolio now to see if the interest payable to the lender/financier is linked in any way to a LIBOR rate of interest.

WHY?

A case in the Court of Appeal last month has given a chance to those holding such products to challenge their validity in court.

WHAT’S THE BACKGROUND?

LIBOR is the collective name for a series of interest rates that were published (until they were barred from doing so in April 2013) by the British Bankers Association. The rates were meant to describe the actual trading conditions that banks were experiencing in borrowing and lending funds to each other. The most common rate was the one the bank would expect to pay to borrow funds for 3 months from another bank. The banks would submit their rates daily, and the trimmed average would be published at 11.30 am.

Trillions of pounds-worth of products are dependent on one of the range of LIBOR rates to fix the interest rate paid by the borrower.

Following a multi-national investigation, principally covering the period 2005-2010, several UK banks, including Barclays and RBS Group (which includes Natwest) have been fined massive amounts by UK and US regulators for secretly manipulating the LIBOR rates to suit their aims; either to exaggerate their creditworthiness by reducing rates, or increase profits by increasing the rates. For example, there was a pattern of rate rises on the first business day of each month, being the day when many variable rate mortgages had their rates reset. There have been ‘departures’ at board level, most notably Bob Diamond, and sackings of those lower down the pecking order.

WHAT DOES IT MEAN TO ME?

If you have a product that is with one of the lenders who have been fined and is pegged or linked to LIBOR you may be able to rescind it. The Court of Appeal has given permission for a case to be brought against Barclays on the basis that had the borrower known that the bank was manipulating the LIBOR rate for its own ends, and which had an effect on the rate the borrower paid, the borrower could have thought differently about entering the contract. In the words of the judgment;

“If the day after the contracts had been made, the banks had told their counterparties that they had been manipulating LIBOR in the past and intended to do so in the future, but would be happy to pay any loss that their borrowers could prove, the borrower would (arguably) be sufficiently horrified so as to think he would be entitled to rescind the deal.  The law should strive to uphold the reasonable expectations of honest men and women”

WHAT IS THE UPSHOT?

First, a borrower would not have to prove that he actually suffered loss from the manipulations. It is enough that the product is from one of the relevant lenders, and that it was linked to LIBOR at some point in the relevant period (2005-2010). Second, if the contract is rescinded you would still have to restore the sums lent, but only to the extent of the current value of the property that they were used to buy. If you have property that is worth less than your borrowings you will only have to repay what the value now stands at. If your property is in negative equity you may be able to save considerable sums as a result of this wrongdoing by the banks.

If you have any questions which you don’t mind sharing in public forum please post them in the comments section below and I will respond as soon as possible.

If your enquiry is of a more confidential nature please feel free to contact me offline, my details can be obtained via my Property118 member profile and when doing so please mention this article. I am a barrister who specialises in mortgage and financial fraud and litigation, acting always for the customer.


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Comments

Mark Alexander - Founder of Property118

10:31 AM, 9th January 2014, About 10 years ago

Reply to the comment left by "Deanne Dugan" at "09/01/2014 - 09:49":

Hi Deanne

I have asked Mark Smith (Barrister-At-Law) to comment on this as it's very much his field of expertise. See his member profile here >>> http://www.property118.com/member/?id=1945
.

10:39 AM, 9th January 2014, About 10 years ago

Reply to the comment left by "Mark Alexander" at "09/01/2014 - 10:31":

Thank you Mark for your swift response.

Mark Smith Head of Chambers Cotswold Barristers

16:54 PM, 9th January 2014, About 10 years ago

Dear Deanne,

Thanks for the post.

This is from my post on 2/12

"You need to tick these boxes to get the case off the ground
1. LIBOR rate is used to fix what you pay back
2. Product is from a lender involved in manipulation
3.The property is now in neg equity (if a mortgage) or you can show other losses to you from the operation of the contract (not from the LIBOR being manipulated)"

Boxes 1 and 2 are ticked. PM me with regards to box 3, and i'll see what can be done.

18:44 PM, 9th January 2014, About 10 years ago

Reply to the comment left by "Mark Smith (Barrister-At-Law)" at "09/01/2014 - 16:54":

We are not in negative equity, because of the large deposit, but i think the proof that our libor increased quite a bit over the duration of our mortgage and has only decreased since the scam was discovered, i dont know if this counts.

Liz Clark

15:38 PM, 28th January 2014, About 10 years ago

I took out a Mortgage with NHL (Paragon) in November 1986
Letter fom NHL dated October 1987 advised that it was transferring its interest to the Chase Manhattan Bank but NHL was continuing to manage the mortgage on Chase's behalf. Documents in my possession refer to the rates being linked to LIBOR.
I redeemed he mortgage in December 2005 and wonder if it would be possible in these circumstances to make a claim

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