BOL, they should not only be making it clear to debtors that re-mortgaging is a possibility but should be also making it very clear at the outset that any such mortgage is likely to be sub-prime onerous interest rates that they may be stuck with for the rest of their mortgage term, which ultimately may mean paying back significantly more than they originally owed.
I completely agree with managing clients expectations better as nasty surprises down the line is not what anyone needs. As well as ensuring the dividend to creditors is maximised where possible IPs also have a duty to adhere to the proposal put forward and ensure clients are in full knowledge of the facts. They act as broker between the two parties at the end of the day and I dont think with any good IP the needs of the debtor fall into second place.
Keep us posted Steve.dw I am very interested to know how things work out for you.
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.
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Prior to entering into my IVA I had a profitable business which allowed me to obtain a large mortgage on an interest only basis (base rate +0.5%). Due to the down turn in the construction market my income is far lower than previously so there is no way any mortgage company could offer me a re mortgage of the size needed due to my lower income - to be honest we can only afford to pay it as it is interest only..
When we had our first meeting with a CCCS agent he told us that due to our circumstances there would be no way we could ever get a re mortgage and the extra 12 month would kick in and to basically allow for having a 6 year IVA, this we were happy to do.
Had we been told that some form of high interest 15 year loan would appear at the 5 year mark we really would have thought about other options..
Ultimately the CCCS agent could have told us anything as they sold our case on to GT for £800 so didn't have to worry about any backlash..
I think the secured loan option may become more common as the months roll on. I think we have all been lulled into a false sense of security in assuming that IVAs will automatically extend by 12 months instead of any equity release.
To a certain extent you can understand creditors wanting a slice of equity if they are about to write off x thousands pounds whilst leaving the debtor with several times that in equity.
I think, as Tina states, it is all about setting clients expectations at the start and the clients understanding the equity release clause fully.
Recently we have been reviewing our IVA paperwork and one of the clauses relates to the terms and conditions and it basically says that the IP's standard terms and conditions applicable at the time of any dispute take precedence... At the time I had no real understanding as to what half of the contract meant but this looks like the IP can change their terms and conditions and you are stuck with whatever they want to enforce, I assume this means they can push for loans over re mortgage if they want.
Not sure how any of this really stacks up contractually as I was always of the understanding that the contract you sign up to is the contract that is enforceable not that a contract had variable conditions.........
If anyone with a greater knowledge could enlighten me it would be appreciated )
The equity clause for us was the elephant in the room.
We tried to keep our IVA secret apart from Mrs H`s parents (mine are long gone), but fair enough they are very old and have their own financial issues, and probably didn`t realise the implications of how important an F&F was, let alone changing their will during the IVA.
It was tough but we made a decision to ask other members of my family, and we were very lucky to get a backer.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by mole
I wouldn't worry about that nickjohn, they cannot supersede what is written in your proposal.
I am not going to hold my breathe on that one.
The IVA Protocol has had a few changes since it started and there are now the R3 t's and c's yet we are told that even though we signed up to a 2008 protocol compliant IVA there are changes taking place that we must now comply with..
We are also told that the IP has certain obligations to the creditors for the running of the IVA, I for one have never seen what their original obligations were or seen what the changes are, but we all have to comply with the new obligations even though we don't know what they are..
Last edited by nickjohn on Tue May 07, 2013 10:28 pm, edited 1 time in total.
Nickjohn, I remember vividly being "told off", a couple of years ago, for suggesting that goalposts had been moved. I was told in no uncertain terms that goalposts do not move! Lucky I didn't put any money on that one!
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I do not think IPs are moving the goalposts. We have clients entering an IVA stating they will remortgage and introduce equity in year 5 but they have no intention of doing so. First of all posters wanted to hold on to the word 'remortgage' to avoid releasing equity by way of a secured loan, and now, posters do not want to remortgage because the rates are penal.
Many posters here state they would have looked at other options had they known they would have to release equity but what about those options? Bankruptcy and possibly lose your home or a DMP means unending payments, no legal protection, secured charges and possibly losing your home.
If you have to release equity to fund the IVA, the maximum loan to value is 70-75% meaning you retain at least a quarter of the equity in your home. In a DMP or bankruptcy you could end up with none. Try the other options by all means and see where it goes but I do not think it is IPs or creditors who are moving the goalposts.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Foggy
Nickjohn, I remember vividly being "told off", a couple of years ago, for suggesting that goalposts had been moved. I was told in no uncertain terms that goalposts do not move! Lucky I didn't put any money on that one!
) I know what you mean I have a few "discussions" over which T's & C's actually apply and I am still waiting for an answer.
I have scoured the 2008 Protocol and the associated terms and have tried hard to see how they relate to the current view of asset disposal and can't quite correlate the two.. I appreciate that the asset disposal currently being aggressively pursued was not foreseen at the time but we all signed up to a contract which had no allowance for it but we are all told thats tough and still have to do things we never signed up to..
Likewise with the re mortgage / secured loan issue. At the start of the IVA trail I assumed a re mortgage would be available in 5 / 6 years time but now this looks bleak and yes a secured loan may offer a cheaper interest rate but it was not part of the original agreement so why must we now accept it..
I have no problem with full filling my contractual obligations and I am on target for paying back some 94 p/£ what I do not agree with is being bulldozer'd into agreeing to things which were not initially envisaged or discussed....
Contracts / agreements evolve as time goes on and some at the start have better, or worse, terms its just the way life is.
Thanks Michael and I agree I do not see any moving of the goalposts. It just the weight of anecdotal evidence from people on here saying the clause was not properly explained at the outset.
There is almost 3 posts a week from newbies saying "What is this equity clause?" or "I have been told I need to extend?". There may be some who either didnt listen or didnt care but surely most where not provided the full details at the start.
The Remortgage v Secured Loan argument is likely to run and run, and if forced into releasing equity this way the best approach is likely be down to individual circumstances.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Michael Peoples
"First of all posters wanted to hold on to the word 'remortgage' to avoid releasing equity by way of a secured loan, and now, posters do not want to remortgage because the rates are penal".
Hi Michael,
When I first discussed my IVA it was the IP who mentioned re mortgage facility for releasing funds at the end of year 5 it was not me. To be fair I had no preconception of how an IVA worked, was given very little advice or information and did not opt for re mortgage over secured loan, I just wanted to stop the phone calls chasing me each day, probably the same as many other "posters" on the site.
I also feel the IP was very naive in thinking I would be able to secure a re mortgage when they knew my income, they knew my mortgage and knew I could never ever borrow the same level of mortgage again let alone an increased one yet they still included the re mortgage clause.
So the IP does have to accept some responsibility over this issue..
Basically property is a sound investment. My father was a master builder with his own business, he went through peaks and troughs, I remember it well.
The IVA is 5 years, and while we are in the midst of a deep recession now, what if property suddenly becomes valuable?
Property used to double in value every 10 years, I have built houses, bought and sold houses and made a nice profit, however, the main driver for house price rises is the ability to fund the purchase. If those at the bottom of the ladder cannot get a mortgage the whole thing stagnates, we hear the old story about supply and demand and houses will go up because there are less on the market but personally I think that is rubbish.
Ultimately the banks have restricted borrowings and increased deposits so fewer can afford to buy at a young age and we shall probably fall in line with other countries where you save for a house and buy when in your 30's and not your 20's.
Lets be fair the average house price is some £180,000 ( nearer £200,000 where I live) and 2 people of £25k a year each will never get an >75% mortgage...
I think the IP's have fallen into the same trap that they assumed house prices would keep climbing and re mortgages were easy to get but the recession has knocked all that for six..
Last edited by nickjohn on Tue May 07, 2013 11:27 pm, edited 1 time in total.
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