Tuesday 21 November 2017

'Mum didn’t understand how much money was owed' - Woman forced to sell family home to clear controversial 'life loan'

In 2001 the 'life loan' was worth €50k, now 16 years on the bank is owed nearly €200k

Olivia Creegan is forced to sell the family home
Olivia Creegan is forced to sell the family home
Olivia Creegan, whose parents died owing a large sum of money on their house to Bank of Ireland though a Life Loan
Ellie Donnelly

Ellie Donnelly

Olivia Creegan, whose parents died owing a large sum of money on their house through a loan product, said she has decided now the best thing to do would be to sell the house and clear the loan.

Equity release schemes, such as Life Loans, were brought in by banks between 2001 and 2010, and they enabled older people to retain the use of a house while also getting a lump sum, using the value of the house as collateral.

While no repayments were made during the term of the equity release loan, what this meant was that compounded interest was then added to the capital throughout the term of the loan.

Those left with a parents' estate often then discovered that the asset or capital was actually considerably in debt.

In 2016, Michael McGrath, finance spokesman for Fianna Fáil, requested figures from the Central Bank of Ireland in respect of ‘life loans’ or equity release loans.

Deputy McGrath was told by the CBI that €300m was owed on these products by just over 3,000 customers.

Olivia Creegan, whose parents died owing a large sum of money on their house to Bank of Ireland though a Life Loan
Olivia Creegan, whose parents died owing a large sum of money on their house to Bank of Ireland though a Life Loan

Olivia has spent three years dealing with Bank of Ireland on behalf of her deceased parents.

The regulation on equity release schemes, she says, was not there to provide safely for consumers who partook in the scheme.

Olivia said that many people may not be aware of the liability that they were accumulating, she said that her mother certainly was not aware of just how much money was owed on the family home before she got dementia.

Olivia also highlights the fact that the law society from the beginning were very critical of the schemes, especially the Bank of Ireland Life Loan product.

Olivia's late mum Olive Creegan
Olivia's late mum Olive Creegan

The Law Society, she says, felt the conditions, and the information that the banks were expecting was an intrusion of privacy, including the naming beneficiaries and executors on wills.

"The schemes were putting elderly in a very vulnerable position," she says.

It was 2011 when Olivia and her family discovered that her parents had partaken in an equity release scheme with Bank of Ireland, and despite the bank stating that all adult children would be aware of a loan like this, Olivia states that in her case only one adult knew about it.

"To discover this was devastating, you like to think your parents are secure, that they own their own home, and then to find out otherwise – I was devastated by it all," Olivia says.

In the case of Olivia’s parents, she says that she and her family have concerns that her parents did not understand the terms and conditions of the loan.

In 2001 the loan was worth €50k, now 16 years on the bank is owed nearly €200k.

Olivia tried approaching Bank of Ireland, asking that they freeze the interest on the loan. She also attempted to make a settlement with the bank, both requests have been refused by Bank of Ireland.

Speaking to Independent.ie, Olivia says she has left no stone unturned in her efforts to save her childhood home, however she said that it is costing the family €30 per day to pay back the loan and that they have made the decision to sell the house.

She is however keen to highlight that both the Law Society and the Ombudsman have provided excellent advice.

At the time, the Law Society had called for the need for regulation of these products which did not happen.

The society has since said that they "recommend that the products be more tightly regulated, regrettably no consumer protection was put in place."

Meanwhile the Ombudsman was limited in what it could do to assist due to the time lapse that has occurred from the time the loan was taken out till Olivia approached them.

When asked about her decision to put her family’s struggle with Bank of Ireland into the public domain, Olivia says that she hopes that products, like the one used by her parents, are never allowed on the market place again and that other families will not have to go through what her family has been through over the past three years.

"In some cases the loan and interest has become greater than the value of the home, in these cases there has been nothing left for families and families might not become aware of something like this until a parent needs nursing home care or passes away," she comments.

A spokesperson for Bank of Ireland said that they cannot comment on individual customer accounts, however in respect of the specific product, the Life Loan enabled people to raise finance without having to trade down or move home, with no repayments until the property was sold.

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