Somo investors praise company after court victory
Somo’s investors have praised the property lender following a recent court victory against two “unscrupulous” borrowers.
Somo, an award-winning lending platform which secures loans against UK property, had spent the past three years working to resolve the case in a way that protected investor capital.
The case related to a married couple – Mr and Mrs R – who took out a loan with Somo in August 2020 for £421,600 repayable within 12 months. The borrowers offered their main residence as security, and agreed a repayment plan which involved selling the security property and other land assets that they owned before the loan term ended.
However, when they failed to meet the terms of this repayment plan, Somo was forced to commence default proceedings.
In November 2021, Somo appointed an LPA receiver in respect of the property and placed the borrower company into administration. In January 2022, legal proceedings were started.
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The case was immediately complicated by the fact that the couple chose to be represented separately, while Mrs R argued that she had been the victim of undue influence from Mr R. This raised the possibility that Somo may only be able to claim half of the security, if Mrs R’s share of the loan was found to have been the result of illegal coercion.
As the case proceeded, further details of alleged fraudulent activities were uncovered by the court and bankruptcy proceedings were eventually commenced against Mr R.
Somo approached the couple a number of times to engage in a settlement offer, but the case eventually went to trial in February 2024.
The court ultimately found that the loan was legally binding, and that Mrs R had not been unlawfully and unduly influenced by Mr R when signing the legal charge documentations.
“At Somo, trust and transparency are at the core of everything we do,” said Louis Alexander, founder and chief executive of Somo, which recently celebrated its 10th year in business.
“Somo always insists on receiving a signed declaration that all named borrowers were provided with independent legal advice including an explanation of their obligations under the legal charge and the risks associated with a breach of the loan terms.”
Following the admission of evidence, the judge found that Mrs R was not to not be treated as a credible witness when it came to the matter of being unduly influenced by her husband.
“Our robust documentation, diligent and accurate underwriting, loan origination process and loan management processes protected both Somo and its investors against a particularly calculated and disingenuous attack from an unscrupulous borrower,” added Alexander.
“These borrowers challenged our documentation, our underwriting and our document execution processes. Compounding this, they were not restricted by the truth in their attempts to avoid repaying their debt and they displayed a total disregard for our investors who committed their hard-earned capital to assist the borrowers by funding their loan.”
After the hearing, the judge ruled that the defendants must give Somo possession of the security property within 90 days. The defendants’ counterclaims and right to appeal were also dismissed.
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The judge also ruled that the ‘fairness of the arrangement’ stating the terms of the loan, were not deemed excessive or outside market norms, and that the agreement was fair.
“The judge was satisfied that the defendants had received and understood the independent legal advice, that the documentation had been appropriately witnessed by a solicitor and that that Somo’s loan documentation and legal documentation was correct from a legal and regulatory standpoint,” said Alexander.
“I commend the entire Somo team for their dedication and extend our gratitude to our investors for their patience throughout this process,” he added.
“Lending inherently carries risks, and occasionally, the resolution of a loan may take several years, especially when contested in court.”
Following the ruling, was inundated with messages of support from its investors, in a testament to the platform’s popularity and strength.
“Keep up the good work!” said one investor. “My family and I hope to be investors with you for many years to come.”
Another said: “Well done. I will now look at increasing our investment over the next few days. You have given me confidence.”
Yet another investor reached out to the Alexander to say: “Somo stands for detailed knowledge, meticulous preparation, persistence, and the patience of a saint. Keep up the good work, thank you.”
“In a highly legal environment with regulatory considerations, it is crucial to ensure all aspects of lending are meticulously handled from the outset,” added Alexander.
“This diligence in loan origination documentation and processes provides the necessary foundation for recourse if a loan defaults.
“While anyone can lend money, the true challenge lies in securing its repayment.”
All Somo loans are secured over UK property, and the platform has reported zero capital losses to date. This means that all investors have received 100 per cent of their capital investment since the company was launched 10 years ago.
Since its launch, Somo has lent more than £330m across more than 1,500 loans.
The company has been consistently rated five stars by its investors on Feefo. It has also maintained its prestigious 4thWay +++ (excellent) rating for a second year, and was awarded no.1 for financial health by the ratings agency.
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