ABU DHABI // Umm Hamdan and her husband were satisfied with their lives.
They enjoyed a comfortable life on the decent salary that Abu Hamdan made working for the Government.
But it all came crashing down when a local bank convinced them to “invest”. Now they spend sleepless nights fretting over a Dh15 million debt they say they were duped into taking on.
Their troubles began in 2008 when they were granted a plot of land.
“We went to the bank to take out the no-interest Dh1.2m housing loan for Emiratis to build their houses,” said Abu Hamdan, a father of six.
But he said the bank began to pressure them.
“As soon as we stepped into the bank they told us we had a large plot of land and instead of giving us the housing loan, they would give us a Dh5m loan to build four houses, including ours. They said we could later invest and rent out the other houses.”
Abu Hamdan was sceptical, and walked away.
“They started calling me day and night and telling me things like ‘the offer will end soon’, ‘it’s a once-in-a-lifetime opportunity’. They promised that they wouldn’t come near my salary and they would take their instalments from the rent money that the villas would generate once completed.”
He succumbed.
“I wanted to leave something behind for my children so I agreed.”
He was asked to sign documents that he says were only in English.
“I kept asking for them in Arabic but they said they didn’t have it and not to worry because they were a Government bank.”
The houses were built a few years later, but on they day they were completed the bank had a surprise. Although the couple owned the houses, the bank managed them.
“I never knew this before and was shocked,” Abu Hamdan said.
The bank deducted the loan payments from his salary, twice withdrawing the whole amount.
“They said it was a mistake in the system,” he said. “Then they deducted my salary because they said they couldn’t rent out one of the villas. How is this my fault if they are in charge of the management?”
Umm Hamdan went to the Central Bank to inquire about the loan.
“They told me that in their system it says that my loan would be paid off after 31 years which means that I had taken out a loan of Dh15 million not Dh5 million,” she said.
Abu Hamdan said: “I just wanted to build two rooms.”
He said the Government should have an authority to advise UAE nationals who want to take out loans.
“Banks keep toying with us and have wrecked the lives of so many. They are manipulative and very vague about important issues. I wish someone had just told me not to sign that contract.”
salnuwais@thenational.ae
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About this special report:
A study by McKinsey & Company in 2011 showed that 70 per cent of UAE nationals younger than 35 are in debt. Car loans are the most popular with Emiratis and unregulated banks do nothing to improve the situation by encouraging locals to take out unsecured loans up to four times their annual salaries. Non-payment of loans has led to countless arrest warrants and jail time. Last year, 3,638 Emiratis had cases filed against them in Abu Dhabi judicial courts for bounced cheques. As a result, the Emirates Foundation and the Ministry of Education have teamed up to educate young people, and tackle the problem of financial illiteracy that plagues the country.
Read more:
■ UAE debt problem to be tackled at school level
■ Case Study: Wife divorces huband over mountains of debt
■ Case Study: Despite loan relief, Emirati man still has huge debt