It has come to light that my parents signed up for a Shared Appreciation Mortgage (SAM) with Royal Bank of Scotland in 1997. Value of property £60K; Life mortgage £15K. My father became ill nearly 12 months ago and is now weakening quite rapidly. He has always dealt with my parents joint financial matters; I do not wish to trouble my mother, who is caring for him and I am very reluctant to involve him because of the potential distress which could arise. Last week was the first time my mother had looked at a Mortgage statement from RBS and she said simply: “But we don’t have a Mortgage, we don’t owe anything on this flat!” We then read a letter my father had written to go with his Will. It informs my mother that £15K was borrowed in 1997 (she must have signed at the time as joint owner) but that no interest will be due in their lifetimes; their home is safe and the debt will be repaid after they both die. My father states the amount the bank will take will be 25% of the value of their home. I contacted RBS Friday 23 Jan 2009 from parents home but I was told something very different. It was explained to me that the amount due to be repaid will be the original sum borrowed (£15K) plus 75% of the increase in the value of their home. According to the RBS adviser the figure will be £15K (original sum borrowed) plus approx £75K, using an estimated valuation of £160K (increase in value of £100K) = £90K! By my father’s calculation on his understanding it would amount to £40K*. This is a huge difference! £50,000! For £15K to increase to £90K in 12 years is equivalent to charging very high interest rates. This seems unethical and definitely not worthy of the general understanding of what a “Mortgage” is. My father’s letter explains the plan he had for the £15K loan - £12K was invested for mother guessing she would outlive him by 12 years and would need some savings to supplement her pension; the balance went on a better vehicle and a couple of special holidays. Bad Advice!! This could have been achieved another way, it wasn’t necessary for him to take equity from the home, only to keep most of it as a nest egg in cash, but there are reasons why he (and maybe others of similar age) would want to do this, and not seek funding elsewhere (eg. from family). This has gone wrong for many who sought Equity Release by this method in the late 1990s and that it would be shameful if the banks / financial institutions stick to the strict letter of these agreements in the circumstances. This type of Plan would not be allowed now. It is of great concern to me and other family members, as mother is also 87 and although presently in good health, she may wish to move nearer to family (nearest family are 150 miles away) and/or into other/sheltered accommodation. It could prove impossible for her to move at all and maintain her independence. Issues here: Misunderstanding? Unfair Selling? The Equity Release market was new? it is better regulated now. The bank must either guarantee a much lower percentage than 75% of the increase in value; or recalculate the amount due on a fixed rate of interest basis (as most Equity Release schemes do now). So far I have found out: - there is a Group Action by a firm of solicitors in Reading, asking for £5K up front to make claims since a change in 2006 to Consumer Credit Act, details on their website - these solicitors say there is a 12 year limitation, so claim is now urgent - FSA suggest writing to RBS, time limit for their reply, if not happy, complain to FSA Ombudsman, they say there is a 15 year limitation! - RBS said on the phone to "Write with proposals" although SAM is non-negotiable - spokesperson at solicitor in Reading said the Banks had acted as Agents for other investors I cannot find (yet) the original documents, I would like to see the Sales pitch my Dad receievd! they live 150 miles away, so can't pop round I'm not concerned with "inheritance" prospects (there are 3 of us), I thought they'd done several equity releases anyway! my attitude was "Yes, go for it, use your equity to live!" so although this doesn't seem right or fair, as they didn't get very much! my main concern is Mum & Dad Anybody else out there who have or whose parents have a SAM? eliza