Paragon Mortgages’ decision to call in £6.9m worth of buy-to-let loans from an investor couple who fell into arrears has been vindicated in a recent High Court ruling.
The court found in favour of Paragon earlier this month, after a husband and wife team brought legal action against it on the basis that it should not have demanded repayment of the loans before three months’ arrears were outstanding.
The professional landlords, who owed £32m to Paragon at the peak of their borrowing, first fell into arrears in 2007 after their business ran into difficulty.
By August 2008 their arrears totalled £282,645 and the following month they failed to make a payment of £50,000 to Paragon by an agreed date and time.
At the end of September 2008 Paragon appointed two receivers and made an application for administrative orders.
It made a formal demand for payment of outstanding balances total-ling £6.9m in May 2009.
The borrowers argued that they had been given repeated assurances by Paragon that no enforcement action would be taken until they were three months in arrears.
The landlords claimed that the portfolio was 2.8 months in arrears when the lender appointed the receivers.
Paragon denied it gave any such assurance and the judge ruled that he accepted the evidence of the lender’s witnesses that no assurance was given.
A spokesman for Paragon says: “We do not comment on individual cases. But in those rare cases when we are obliged to resolve a matter with a buy-to-let borrower through the courts it is reassuring to have our position upheld as unequivocally as it was in this case.”