Mortgage Lending Crunch Time

2Pack · October 28, 2007, 11:27am

At least 2 major lenders, or so I hear, have stopped issuing mortgage cheques as they re-assess their ‘internal procedures’ in the wake of the solicitors debacle in the past few weeks.

This will have a profound effect on the market if it continues , a technical ( and TOTAL) credit crunch if you will. They are 100% illiquid for the moment.

thepost.ie/post/pages/p/stor … qqqx=1.asp

As they open their purses agin they will be a lot more restrictive. A lot of the fault is that of the incompetent and slow Land Registry. If the government really wants to prop up the housing market today it would be wise to fix the Land Registry rather than dabble with Stamp Duty

Further analysis in todays Post of the undertaking mess .

thepost.ie/post/pages/p/stor … qqqx=1.asp

The undertakings in question allow solicitors to close a property deal without producing title records to the lender and to draw down loans without immediately registering the bank’s security. Because of this, solicitors were in a unique position to secure multiple borrowings on the same property.

In the short term, banks have told their staff to conduct thorough checks on every property transaction with the Land Registry and the Registry of Deeds. In the longer term, it is expected that banks will implement a range of new guidelines in an effort to shore up their defences.

One item on the agenda is ending the practice whereby a solicitor can act on his or her own behalf. A number of banks currently do not insist that a solicitor employ an external law firm if buying property on their own behalf.

Bank of Ireland is one exception, and this is one of the main reasons why it has a negligible exposure in the Lynn and Byrne cases. Lynn, for example, simply told the banks that the title deeds of the various properties were not in question and they took him at his word because of his status as a solicitor.

But the boss can bully the junior in his office !!

HouseBuyer · October 28, 2007, 11:32am

Well, the banks were already tightening up on their mortgage offerings. This whole mess will only serve to compound that.

Does anyone think that over-stretched developers might be the next to feel the pinch?

Green_Bear · October 28, 2007, 11:39am

Failure by the legal profession to implement proposals for electronic property conveyancing made possible the unfolding scandal involving solicitors suspected of racking up tens of millions of euro in mortgage debt on the same properties, according to leading figures in the banking industry.
Senior banking sources say that Law Reform Commission (LRC) recommendations from April 2006 to move conveyancing of property deeds and solicitors’ undertakings onto an electronic basis might have prevented solicitors Michael Lynn and Thomas Byrne from racking up millions in mortgage debt without their lenders knowing.
Lynn is understood to owe at least 52m to six banks, but that figure is expected to grow as four other banks who are believed to have lent to him have yet to make final determinations of their liabilities. Thomas Byrne is estimated to owe a similar amount to five banks, although the full extent of the borrowings won’t be known for up to three weeks, when the banks are expected to finish their audits and information sharing.
Lynn and Byrne were able to secretly remortgage properties multiple times with different banks by giving misleading undertakings (as solicitors) that the homes were unencumbered by other mortgages. Such undertakings are routinely taken on trust by banks where the production of relevant documents would slow the process but the system leaves no easy way for bankers to guard against fraud, since undertakings are not officially registered as mortgages are. E-conveyancing would, however, provide banks with easily accessible electronic records of all mortgages against a property.

E-conveyancing may have prevented multimillion mortgage debt scandals
tribune.ie/article.tvt?_scop … e/Business