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Freedom of Information Request

LOBO Loans

Received: 10 December 2019

Request under Freedom of Information Act 2000
We write to you pursuant to the Freedom of Information Act 2000 (FOIA) to request certain information from you in relation to any Lender Option Borrower Option loan agreements ('LOBO Loans') which Barnet may have entered into.
LOBO Loans are typically long term fixed interest rate loans, which are initially provided at favourable rates of interest to the borrower, but also contain an option for the lender to impose on future dates, a new fixed rate of interest. The borrower has the option to accept the new interest rate, or repay the entire loan, usually with early repayment penalties. Interest rates are often increased under the LOBO loans, the effect being that the interest rate is higher than the borrower could obtain with other lenders, or the PWLB, but the substantial early repayment penalties mean the borrower has no option but to continue with the loan, at the higher rate of interest, to their detriment.
We are seeking this information as we are aware that a large number of public authorities have entered into LOBO Loans, and the method in which the LOBO Loans were advanced to the borrower, may have been unlawful and therefore unenforceable.
If the London Borough has entered into a LOBO Loan, please provide the following information:
1. How many LOBO loans has the London Borough of Barnet entered into?
2. In relation to question 1 above, in respect of each LOBO Loan:
a. On what date was the loan documentation signed?
b. Which financial institutions acted as the lenders?
c. Did you receive any financial advice before entering into the LOBO Loan, and if so, from which organisation?
d. Has the lender exercised their option under the LOBO Loan and increased the interest rate?
3. If the answer to question 2(d) above is yes, did the Borough opt to continue with the LOBO loan at the increased rate of interest, or repay the loan?
4. If the answer to question 3 above is that the Borough opted to repay the loan, were any early repayment penalties applied by the lender?
We look forward to receiving a response to this FOIA within 20 working days from the date specified in this letter, and appreciate your assistance.

Outcome / Documents

  • Response (all information to be supplied) - application/pdf - Download

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