UAE mortgage lenders may be reluctant to lend to British expatriates, with some considering demanding power of attorney so they can foreclose on defaulters’ properties, after an Abu Dhabi bank failed in its attempt to extradite a British woman who had defaulted on her mortgage and absconded to the UK.
The UAE initiated extradition procedures against former UAE resident Amanda Allen, who defaulted on an AED2.38m (US$647,989) mortgage with Abu Dhabi Commercial Bank (ADCB).
Allen took out the mortgage in May 2008 but ran into difficulty making repayments in 2009. ADCB attempted to draw down an undated security cheque Allen had supplied when she took out the mortgage. When this bounced, she was later convicted in her absence and sentenced to three years in jail for cheque fraud.
The UAE government’s extradition request was passed by the UK Home Office but was thrown out by the magistrate court. An appeal by the UAE government in the High Court was dismissed in June 2012, but some financial experts have said this may set a precedent for other UAE lenders to be reluctant to offer mortgages to British expatriates.
“[The banks] may become more reluctant to make loans to people who would be able to depart to a jurisdiction from which they would not be plucked back,” Craig Shepherd, of London-based law firm Herbert Smith LLP, told The Telegraph newspaper.
Some lenders may also look for heightened levels of security in order to protect themselves against defaulters.
“I think the banks will start doing more innovative things,” Omar Rahman of Noor Investment Group was quoted as saying in the report. “We are considering getting the expat to provide us with a power of attorney so that we can take immediate steps to at least foreclose on the property,” he added.
However, Emirates NBD, the UAE”s largest lender, dismissed these claims and said the case would not have any impact on lending policies.
“Cases like this are rare, and do not affect credit underwriting policies of retail banks in the UAE… We do not differentiate our credit underwriting standards by nationality, and do not intend to do so,” a spokesman reportedly said.
The Allen case is one of a handful of extradition cases which the UAE government has filed with the UK’s Home Office in recent months. However, the majority of the cases have been rejected and a London-based solicitor who worked on a similar case said this was likely to dissuade UAE authorities pursuing more of such cases against UK expatriates who absconded and defaulted on loans in the UAE.