'Mortgage-trap' victims forfeit $10m

Sophie Hui

A dozen victims of "breathing space mortgage plans" from buying homes at The Vertex in Cheung Sha Wan have gone to the Consumer Council after a total of HK$10 million of their 5 percent deposit was forfeited.

Accompanied by lawmakers Bill Tang Ka-piu and Doreen Kong Yuk-foon, the victims met with the watchdog's representatives yesterday, demanding an investigation and possible legal aid from the Consumer Legal Action Fund.

They said they had fallen into the trap of "breathing mortgage plans" where the developer - originally mainland developer Evergrande Group - had promised to offer guaranteed mortgages of 90 percent when buyers first signed the contract in 2020.

The 33-story residential project on Tonkin Street was eventually transferred to VMS Group as Evergrande suffered a debt crisis, while some residents started to move in last month.

But VMS has changed its offer to 80 percent mortgage for buyers. Eventually, at least 20 buyers who could not pay another 10 percent of down payment and interest saw their first down payment of 5 percent forfeited.

VMS told buyers in April that it had found two finance companies - one offering 80 percent mortgages and the other offering 10 percent mortgages - but the interest rate was different and buyers might have a higher repayment.

Tang said many of the victims are first-time home-buyers who made a 5 percent down payment for a HK$7 million to HK$9 million flat.

"No matter we as lawmakers, or the Consumer Council, approached the developer, the developer did not provide any plan to respond to the buyers' requests," Tang said.

"The developer only told us to ask the buyers to contact them and they can help the buyers to complete the deal, but they did not say whether they will refund the down payment if a deal cannot be reached," he said.

With no document from the developer on terminating the deal, the victims cannot get their stamp duty back, Tang added. He said VMS only promised construction of the residential properties would be completed and delivery of possession, but it would not fulfill the mortgage plan proposed to buyers at the time.

The purchase agreement also stated the 90 percent mortgage was subject to conditions, including the buyers' family condition.

"It's obvious that there's disparity between sales and implementation," Tang said.

Buyers might have to claim their money back through civil action, as the Customs and Excise Department had refused to take the case under the Trade Descriptions Ordinance, where the developer could have been involved in unfair trade practices when selling the "breathing mortgage plan" to buyers.

Tang hoped the Consumer Legal Action Fund - a trust fund to provide financial support and legal help so consumers can access legal remedies - could grant legal assistance to the affected buyers as soon as possible so buyers can have one more way to claim back their down payment.

The watchdog told the buyers they need to hold a meeting with the committee of the fund next month.

"But we hope the developer can consider these buyers' reasonable requests before they bring the matter to court," Tang said.

A buyer, Miss Chan, said she has paid more than HK$400,000 in down payment and taxes for a HK$7 million flat, and received a legal letter from the developer 20 days ago requiring her to close the deal before today or she will lose all her down payment.

Chan said she feels helpless as she could not find the developer, but she will not give up claiming her money back as she thinks the sudden change in terms is unreasonable.

In a reply to The Standard, the Consumer Council said it understands the victims' situation and will follow up requests for assistance.

Among the 20 complaints, the watchdog said nine of them have been settled while the rest have been followed up by the council.

The council also said its board of administrators of the Consumer Legal Action Fund and the management committee of the fund will review each victim's application and will make a decision later.

The watchdog reminded people to conduct sufficient research, to understand the purchase procedures and mortgage plans carefully, and to make comparisons before buying a home.

"The Consumer Council reminds consumers that purchasing a property is an important investment which involves a huge amount of money, and mortgages also involve long term home mortgage payments," the council said.