Solicitor highlights anomaly in Ulster Bank mortgages

[BoyRacer]

Solicitor highlights anomaly in Ulster Bank mortgages - Emma Kennedy → sbpost.ie/post/pages/p/story … qqqx=1.asp

A solicitor has highlighted an anomaly in Ulster Bank’s mortgage conditions.

In a letter to the Law Society Gazette, John Redmond of Fitzsimons Redmond solicitors in Dublin 2 pointed out that Ulster Bank’s mortgage contracts contained an unusual condition.

Redmond said the contracts stipulate that a borrower must repay the mortgage once the lender gives a month’s notice. He said this indicated that the bank could call in a loan with the required notice at any time, even if there was no default by the borrower.

He added that borrowers should be aware of this condition and ‘‘should be advised to look at alternative sources of funding where this is possible’’. But Ulster Bank told The Sunday Business Post this condition was not unusual , ‘‘although it may appear in a different form in some mortgages’’.

there is more

[September]

Would bank try to use this provision to make someone default? I do not think so. Would courts support this condition? I remember a case mention on pin where some court decided that if you can’t pay then you can’ pay - something about specific performance it was. There is nothing to worry… for now. If things get really messy, banks could be willing to force sales rather sooner than later - waiting for actual default could be not interesting option.

[fishfoodie]

@September

Would bank try to use this provision to make someone default? I do not think so. Would courts support this condition? I remember a case mention on pin where some court decided that if you can’t pay then you can’ pay - something about specific performance it was. There is nothing to worry… for now. If things get really messy, banks could be willing to force sales rather sooner than later - waiting for actual default could be not interesting option.

One could imagine a scenario where a mortgage is in arrears, or showing signs of going bad, & the bank then suspects that the person might be emigrating, or otherwise trying to escape paying off the mortgage. There are umpteen threads over on boards.ie & AAM with people suggesting exactly this.

If the bank thought this, they might very well want to force the issue before the person legs it !

[macannrb]

@fishfoodie

@September

Would bank try to use this provision to make someone default? I do not think so. Would courts support this condition? I remember a case mention on pin where some court decided that if you can’t pay then you can’ pay - something about specific performance it was. There is nothing to worry… for now. If things get really messy, banks could be willing to force sales rather sooner than later - waiting for actual default could be not interesting option.

One could imagine a scenario where a mortgage is in arrears, or showing signs of going bad, & the bank then suspects that the person might be emigrating, or otherwise trying to escape paying off the mortgage. There are umpteen threads over on boards.ie & AAM with people suggesting exactly this.

If the bank thought this, they might very well want to force the issue before the person legs it !

If the bank does this, how would it effect the person leaving? Would it automatically cancel their visa to Australia?

And by enacting this clause only very few people would be in a position to pay up, forcing bankruptancy and then the bank would have to crystalise their loss. Not really what the bank wants

But HR people have started using Facebook and forums to look at how their prospective employees are talking about, maybe banks will soon do the same.

[fishfoodie]

@macannrb

@fishfoodie

@September

Would bank try to use this provision to make someone default? I do not think so. Would courts support this condition? I remember a case mention on pin where some court decided that if you can’t pay then you can’ pay - something about specific performance it was. There is nothing to worry… for now. If things get really messy, banks could be willing to force sales rather sooner than later - waiting for actual default could be not interesting option.

One could imagine a scenario where a mortgage is in arrears, or showing signs of going bad, & the bank then suspects that the person might be emigrating, or otherwise trying to escape paying off the mortgage. There are umpteen threads over on boards.ie & AAM with people suggesting exactly this.

If the bank thought this, they might very well want to force the issue before the person legs it !
If the bank does this, how would it effect the person leaving? Would it automatically cancel their visa to Australia?

And by enacting this clause only very few people would be in a position to pay up, forcing bankruptancy and then the bank would have to crystalise their loss. Not really what the bank wants

But HR people have started using Facebook and forums to look at how their prospective employees are talking about, maybe banks will soon do the same.

A court will react very differently where there is clear evidence that the individual has no intention of making good on their debts; the whole action will probably move much faster & the judge will probably deal very harshly with them, when the final bill is decided it will probably be considerably larger as a result.

So what you say; they’ve left the country.

But the judgement will hang there for 12 years, & if they inherit some money, or come back, the judgement will still be there waiting !

[Stifster]

I have a 1996 mortgage here from First Active which has the same clause.

It is not an anomoly, it is a condition that people have been signing up to for years.

I would be interested to know whether the mortgages for the other banks contain the same condition as having noticed this clause several years ago i assumed it was standard as i am not on the conveyancing side of things.

I’m not sure it says a lot when it has taken this long for someone to spot the “anomoly”

You mean we should actually be reading the mortgages??

[redo]

You got a tracker ? Remortgage or feck off

[ewd3]

the rest of the article

She said the bank could not demand repayment of the loan immediately, ‘‘as the borrower has the protection of his common law equity of redemption and the statutory protections of the 2009 act’’.

‘‘It is not the case that a lender may call in a loan at any time simply by serving notice, as has been suggested,” Ulster Bank’s spokeswoman said. ‘‘The power set out has never been exercised in the manner which is being suggested in Mr Redmond’s letter.

An act of default must first occur, and the bank is then obliged to furnish a 28-day notice calling in the loan before taking any action. This applies to all lenders of housing loans.”

[tradtshirt]

@redo

You got a tracker ? Remortgage or feck off

+1

This will be the year the banks call in the trackers by any means possible.

[johnnyskeleton]

@ewd3

the rest of the article

She said the bank could not demand repayment of the loan immediately, ‘‘as the borrower has the protection of his common law equity of redemption and the statutory protections of the 2009 act’’.

‘‘It is not the case that a lender may call in a loan at any time simply by serving notice, as has been suggested,” Ulster Bank’s spokeswoman said. ‘‘The power set out has never been exercised in the manner which is being suggested in Mr Redmond’s letter.

An act of default must first occur

, and the bank is then obliged to furnish a 28-day notice calling in the loan before taking any action. This applies to all lenders of housing loans.”

Much of our mortgage law doesn’t make sense. For example, many mortgages have short redemption dates e.g. 3 months or 6 months. But the term for repayment of the loan could be 20 years. So even though you’ve agreed to borrow for 20 years, you are legally required to repay the money after 3 months.

The equity of redemption means that the strict legal entitlements under a mortgage agreement will not be enforced by a court, so long as there is a reasonable prospect of the money being repaid within the 20 year period. So yes, the bank could call for repossession at any time. The same is true for all mortgages. But repossession would not be granted if there is a possibility of the loan being repaid within the time period.

Free advertising for the solicitor’s firm, all the same.