Financial question not sure if anyone can help

[Sweetsheep]

Quick back story.

7 years ago my SIL and her husband got my MIL to take am interest only mortgage out against her property, in her name and they took the money for their personal use. For the past 7 years they have paid the interest. The loan is due end of 2017 6 months from now. We only found out by accident.

My MIL lives with us but it is becoming very evident that she is going to need to either go into care home in the next 12 months due to very fast regression.

If the loan is not paid back the property will need to be sold to pay the bank back or the bank will repossess the property. And it turns out they can't pay it back.

We have now found out that my SIL and her husband are planning on taking my MIL to the bank on her next respite visit to them, to extend the loan or get another loan set up to cover the loan they originally took out. She is very confused and her Alzheimer's has regressed to a point where she no longer makes any sense. She won't have a clue what she is signing or what they are doing.

We are furious firstly that they have put her home at risk and secondly that they seem to think they can loan more money on her behalf.

I guess my question is, does anyone know if the bank would easily loan my MIL more money? Will they allow my SIL to loan the money on her behalf? How do we protect her money from being taken for their benefit?

My husband and SIL hold joint POA.

This whole business is so ugly and I fear it is going to cause a major rift in our family. My husband is very upset and obviously this is causing us so much stress on top of the usual things we are going through living with my MIL.

Anyone got any advice or been through anything similar?

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[Margaret59]

Quick back story.

7 years ago my SIL and her husband got my MIL to take am interest only mortgage out against her property, in her name and they took the money for their personal use. For the past 7 years they have paid the interest. The loan is due end of 2017 6 months from now. We only found out by accident.

My MIL lives with us but it is becoming very evident that she is going to need to either go into care home in the next 12 months due to very fast regression.

If the loan is not paid back the property will need to be sold to pay the bank back or the bank will repossess the property. And it turns out they can't pay it back.

We have now found out that my SIL and her husband are planning on taking my MIL to the bank on her next respite visit to them, to extend the loan or get another loan set up to cover the loan they originally took out. She is very confused and her Alzheimer's has regressed to a point where she no longer makes any sense. She won't have a clue what she is signing or what they are doing.

We are furious firstly that they have put her home at risk and secondly that they seem to think they can loan more money on her behalf.

I guess my question is, does anyone know if the bank would easily loan my MIL more money? Will they allow my SIL to loan the money on her behalf? How do we protect her money from being taken for their benefit?

My husband and SIL hold joint POA.

This whole business is so ugly and I fear it is going to cause a major rift in our family. My husband is very upset and obviously this is causing us so much stress on top of the usual things we are going through living with my MIL.

Anyone got any advice or been through anything similar?

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Hi Sweetsheep.
Your SIL and husband were granted POA on the understanding that they are responsible people and act in your MILs best interest.
Obviously your husband is doing right by what you have said but SIL doesn't appear to be.
If you read all the information online about what the role of POA is you will also find an address telling you where you can contact in the event that you feel the POA is been abused. As in you do not feel the POA given to your SIL is been used correctly, she is using it for her own gain.
You must give them as much information as you can about your concerns and they will investigate the situation. As far as I know they won't tell your SIL where they got the information from.
Basically if something underhand is taking place they CAN revoke the POA that your SIL has.
Also as there is joint POA between your husband and your SIL they must BOTH agree on any matters relating to what is done on your MILs behalf. Therefore your SIL should not be doing anything without informing your husband and also getting his consent.
I think the bank would be rather stupid to agree to extending or arranging a further loan but I honestly don't know the answer to that.
Margaret x

 

[Margaret59]

Hi Sweetsheep.
Just remembered, sorry ----- when you said joint POA it can also mean that one or the other POA can make decisions on your MILs behave if this is the way it was set up. Do you know what the POA states?
My father's solicitor was against myself and my brother holding joint POA as we had a conflict of interest in relation to what we felt my fathers needs would be in the future. Needless to say my father then made the choice to have my eldest daughter as his POA as he knew that whatever decisions had to be made in the future she, like myself, would have his best interests at heart.
Margaret x

 

[Pickles53]

When the original loan was taken out, was the POA already registered and actively being used? As Margaret says, if it's a joint POA then both attorneys' signatures would required for any contract to be legal. Unfortunately if this happened before MIL had lost capacity I don't think there's any way to undo that decision.

However it is clear that it would not be in her best interests to take a further loan, as she needs all her assets for her own care. You could inform her own bank but if it's a joint and several POA the only way to stop this is to report to the OPG. I wouldn't hang around either.

 

[Delphie]

Let's assume that MiL had capacity 7 years ago, so she agreed to the loan, thinking it would be paid back. She lacks capacity now, so a further loan in her name is out of the question.

So the question is, what's in her best interest now.

The original loan needs to be paid back, so the options are to sell her house or to have SiL pay it off somehow, as per the original agreement.

Given that SiL doesn't have the lump sum her options are to get a further loan in her own name or to enter into some kind of agreement with you guys to pay the money back over time. The interest payments (possibly quite low) will be finishing so that should, in theory at least, create a disposable regular amount.

Obviously if SiL did agree to pay the money off over time, the question of how the original loan is to be paid off remains unanswered. Might it be a pragmatic idea to take a deep breath and sell the house anyway, given that residential care and paying for it seems to be not too far away?

Not ideal, I know, but it could be a way to salvage the situation and prevent a family rift. If SiL acknowledged that she acted badly and agreed to put things right over time, then what's left looks very much like how things would have been regardless of the loan, and that's mum in law going into care and her house being used to fund it.

I'm making several assumptions there I know, and I can imagine how cross you all are with them, but maybe what I've suggested is something of a way out of the mess they've made.

 

[Sweetsheep]

Hi Sweetsheep.
Just remembered, sorry ----- when you said joint POA it can also mean that one or the other POA can make decisions on your MILs behave if this is the way it was set up. Do you know what the POA states?
My father's solicitor was against myself and my brother holding joint POA as we had a conflict of interest in relation to what we felt my fathers needs would be in the future. Needless to say my father then made the choice to have my eldest daughter as his POA as he knew that whatever decisions had to be made in the future she, like myself, would have his best interests at heart.
Margaret x

Hi Margaret,

Thank you for your reply. I will need to check how the POA is set up with my husband. To be fair, I get the sense that they just went along with the process as it's what needs to be done, but I don't think either of them fully understood the full responsibility that comes with having POA. It's a long story but basically everyone has fallen into the world of Alzeimers in the last 8 months and have been fumbling around trying to come to terms with everything that has happened and probably still in shock that their Mum hid her illness away for many many years.

My husband is going to set up a family meeting next week to speak face to face. Until then I think you are right about highlighting what they have essentially signed up for with the POA.



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[arielsmelody]

One thing that isn't clear - you said in your first post that your MIL lives with you. Who is living in the property which she owns and which has the loan against it?

Also, if your MIL went into residential care, does she have enough savings/income to be self-funding?

I think you need to talk to a solicitor as soon as possible - if your husband has POA he has an obligation to protect your mum's financial position, and now that you have found out about this loan you can't ignore it. In a divorce, I know it is possible to register a restriction against the house to prevent the other party selling it without your agreement, and I wonder if that might be possible here.

 

[LilyJ]

Do both your husband & SIL have their POA registered with the bank in question. Because they can only deal with their mother's banking affairs if they have. Having POA doesn't mean that you automatically have access to the bank accounts of the PWD.
Both my husband & our son have POA for my M-in-L but only my husband has registered it at the bank as she moved here soon after POA was set up and our son lives 300 miles away & is due to move abroad soon.
I would contact the COPG pdq.

 

[Sweetsheep]

Let's assume that MiL had capacity 7 years ago, so she agreed to the loan, thinking it would be paid back. She lacks capacity now, so a further loan in her name is out of the question.

So the question is, what's in her best interest now.

The original loan needs to be paid back, so the options are to sell her house or to have SiL pay it off somehow, as per the original agreement.

Given that SiL doesn't have the lump sum her options are to get a further loan in her own name or to enter into some kind of agreement with you guys to pay the money back over time. The interest payments (possibly quite low) will be finishing so that should, in theory at least, create a disposable regular amount.

Obviously if SiL did agree to pay the money off over time, the question of how the original loan is to be paid off remains unanswered. Might it be a pragmatic idea to take a deep breath and sell the house anyway, given that residential care and paying for it seems to be not too far away?

Not ideal, I know, but it could be a way to salvage the situation and prevent a family rift. If SiL acknowledged that she acted badly and agreed to put things right over time, then what's left looks very much like how things would have been regardless of the loan, and that's mum in law going into care and her house being used to fund it.

I'm making several assumptions there I know, and I can imagine how cross you all are with them, but maybe what I've suggested is something of a way out of the mess they've made.

Hi Delphie,

Thank you for your very thought provoking response.

Yes I would assume my MIL had capacity 7 years ago (although seeing her as she is now, i am wondering if she was much easier to manipulate, even back then) and I am assuming that they agreed to have the loan paid back by the required date as the money was meant to be used to set up a business for my BIL (absolutely no paperwork anywhere about this arrangement). The business in question doesn't exist anymore and I get the sense that the current business isn't doing well either, hence them not able to pay the loan back, but also not able to secure their own finance to take the loan over.

If we sell her (very tiny but high value London studio flat) we will not earn any rental income to fund her current care (we use the money to sub the current rent to accommodate her with us). And this money will be used for future care until her savings run out.

So it is in her best interest to hang onto the property as long as she can. To be honest after reading your post, if we want to avoid the property being repossed, we will have to allow them to take further finance out against it, to pay back the loan back and protect the property. They certainly cannot raise the finance themselves as they are in financial trouble. But I doubt the bank will issue another loan. My MIL is almost 70, and seriously does not have capacity to make any decisions. I guess in her best interest they as POA allow it to happen. And hope they can keep up the repayments. What other choice do we have. The whole issue seriously stinks!

However, I think, what is really causing most of the pain here is that my husband lost his job around the same time his sister loaned the money and we basically lost everything we had 7 years ago. I think he is angry (to be honest I am fuming) that we have struggled for so many years to try and get back on our feet, and they were in there like Flint, loaning money while living a very extravagant lifestyle.

Now that the truth has come out ( and believe me the information was not volunteered either) it has caused us both to feel a little resentful that we have been struggling to get back on our feet for so many years now, and then almost forced to take MIL in, as they wouldn't do it. And they were keeping the whole torrid affair secret and hoping we would never find out. Just to add insult to the injury, I seriously doubt they were going to tell us about it, and I guess hope she would absorb the loan.

Effectively I feel that if they need to take a loan now, to pay back the money, it is after the fact and to be honest they should not be "gaining" financially because to be fair, we could never do the same thing without it being considered "deprivation of assets".

To make matters even worse, my SIL wanted nothing to do with caring for her Mum. Something which I have struggled with, as I lost my Mum 3 years ago. We have had to move house. Again. To rent a property we cannot afford, to accommodate MIL. The lease is in our name, and should at anytime, a crises hit, we are going to be in another financial mess. Again we have taken a huge risk. Not to mention the fact that our lives have been turned upside down as we never knew how bad MIL was, until she was moved in. Our lives have become a daily nightmare to say the least. But that is a completely different post altogether.

I don't know, maybe I am way too bitter over everything that has transpired over the last few years. Maybe the fact that we have had no choice but to put our marriage and lives on the line (which let me add has done damage) and the fact that I have given up my career to care for MIL or that I watch them going on several overseas holidays and driving fancy cars and being the social darlings of our family. Maybe the fact that my husband and I were too good a people to swoop in and take money when we needed it, maybe the fact that we will never see a penny of benefit to buy our own home, all makes me a very unhappy person about this whole situation. Maybe I need to get mature and say hey, life sucks sometimes and the ruthless just seem to always get what they want and get away with it.

Maybe I care way way too much about my MIL and the fact that her daughter has to be text to call her, or begged to visit or worst off, emailed facts about Alzeimers and what it means or the details of her regression. To be told, "I don't want to know".

I don't know, this last year is making me become a pretty bitter and ****ty person.

Maybe I just needed to vent the fact that life sucks and my MIL doesn't even know it any more. Maybe I just posted this because I am just fed up to the back teeth of the whole stinking affair.

At the end of the day I have lost complete respect for my SIL and doubt that will ever recover. The rift is already very evident, even though my husband hopes things will stay "normal".

Thanks once again for the post. Lots to consider in the next few weeks.
















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[Rosnpton]

It may be worth having Hubble talk to cab about the league implications. Also,with an interest only mortgage, the lender would ask how the original sum I'd to be repaid at the time of the loan. Ie. The old endowments policies,and investment maturing etc. They wouldn't normally authorise an interest only mortgage without knowing how the capital will be repaid . You say there is no paperwork to be found re sil/bil repaying etc,but the bank in question should be able to provide you with copies of original application details etc,also if it was at branch in person ( the member of staff would have to have consider that at the time mil was if sound mind and not being coerced ) ,on line etc etc
Ros

 

[cragmaid]

Basically what you are saying is that Mum owns a flat which is rented out, and upon which a loan or mortgage was secured. Was mum still living the the flat when the loan was approved? Are the lenders aware that the flat is let? Most lenders are tightening up on secured funding for rental properties. They will be much more likely to ask searching questions.

If MIL is to need residential care, her funding will depend on either being able to raise a deferred payment loan ( unlikely if there is already a secured loan on the property) with family paying any top up, or the flat being sold. If the flat is sold and the loan repaid MILs assets will be OK, however if the flat is sold, and the loan unpaid from the proceeds, then the loan will be called in. This may well cause the OPG to see that the POA has not been used to protect MILs assets.

I cannot believe that they would be granted a further loan by a lender who was aware of the true picture, and if they succeed in getting a loan, any lender learning of the true purpose would be entitled to recall the funding immediately.

 

[Kevinl]

I cannot believe that they would be granted a further loan by a lender who was aware of the true picture, and if they succeed in getting a loan, any lender learning of the true purpose would be entitled to recall the funding immediately.

I don't know that you can get an interest only mortgage these days they've become such a hot issue. I may be you have to get a loan secured on it but that would require repayments be made, alternatively you could do equity release but that can be a louse deal too.
If the bank suspect she's being manipulated or lacks capacity they may not be willing to enter into any kind of a deal at all.
K

 

[Margaret59]

Hi Sweetsheep
I really feel for you as it seems to be a very messy situation. But as I pointed out initially and everyone else who has replied has also re-iterated, the POA is not been used in your MILs best interest. It is put in place so that when a person becomes incapable of making decisions of there own the POAs do it for them. BUT not for their own financial gain!!
Your husband really should seek advice about this and definitely report his concerns.
At the end of the day the only people who appear to be gaining from this are your SIL and BIL.
They surely will fall on their faces when your MILs property has to be sold to fund her care. I hope you don't mind me saying all this. My brother tried everything in his power to have control of my father's finances, property, infact he wanted it all.
I doubt any bank would allow another loan to be taken out though. Maybe you have to be cruel to be kind and say that you can no longer look after your MIL.
Believe me when I say that the bitterness it has created in you will eat away at you and I am speaking from experience here.
The pressure you are under is obviously causing a strain on your relationship, is it worth it? You and your husband need and deserve to live your lives too.
Please don't get me wrong, your MIL is very special to you but you shouldn't be forced to have her with you because your in law's can't be bothered.
Take care
Margaret xx

 

[User]

Quick back story.

7 years ago my SIL and her husband got my MIL to take am interest only mortgage out against her property, in her name and they took the money for their personal use. For the past 7 years they have paid the interest. The loan is due end of 2017 6 months from now. We only found out by accident.
...
If the loan is not paid back the property will need to be sold to pay the bank back or the bank will repossess the property. And it turns out they can't pay it back.

Very iffy. It all depends on what arrangement was made.

Your MIL took out a loan and gave the money to your SIL to use. Your SIL has been paying interest on the loan. The loan is now due to be paid back to the bank. Your SIL cannot pay.

In the absence of any agreement, it is difficult to see what if anything can be done.

I would look into speaking to a solicitor specialising in family law, and make sure you get an experienced one who commands a good fee. You are much more likely to get a "cheaper" result that way, as the time expended by that person will be less due to expertise. Make sure you have any relevant information to hand, i.e. dates, amounts, agreements with various parties/banks if any.

 

[Amy in the US]

I think you need professional legal advice, ASAP. Whatever it costs, will be well worth the peace of mind of knowing you will get this matter straightened out, and be looking after MIL's best interests (including her finances).

Good luck and best wishes to you.

 

[Kevinl]

I think you need professional legal advice, ASAP. Whatever it costs, will be well worth the peace of mind of knowing you will get this matter straightened out.

It's a fair point Amy and I didn't tell her to get legal advise in my post. But in the UK the first resort isn't always to go to a lawyer and financial abuse of the elderly is often viewed as a civil matter not a criminal matter so the police don't want to know.
Rushing to law may be the obvious solution but if the people involved have no money and the house could be lost all you do is pay the lawyers for nothing.
Probably in this case going to law is the best option but you'd have to prove that someone who now may lack capacity didn't have capacity 7 years ago when they took out the mortgage and didn't want to give the money away.
Really it's about damage limitation to make sure it doesn't happen again but at the same time making sure she doesn't lose her home.
Advise on here is informal and pretty much unqualified that said should be treated as such, however, it does give you some thoughts to take to a solicitor as a basis for why you think there is an issue.
You could end most threads on here by saying "get legal advise" but what it does do is give you something to think about and draw the legal advises' attention to.
K