Removing Security Charge From Toxic Loan

Removing Security Charge From Toxic Loan

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uber

Original Poster:

855 posts

170 months

Saturday 21st January 2017
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A couple of family members had various loans with a high street bank and my sister stupidly put up her house and a commercial property for security. After many failed payments, deals with the bank etc they have now started paying back the bank at a consistent rate with the commercial property alone covering the outstanding debt.

As the current setup is based on yet another deal they made which is made up of a bunch of loans the bank has just kept the security rolling.

is it possible to use any regulation to try and remove the residential from the security, I know I should ask the lawyer but she only just brought it up again this morning and it would be nice to hear if anyone else has had a like for like experience.

PurpleMoonlight

22,362 posts

157 months

Saturday 21st January 2017
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As far as I am aware, only the charge holder or a Court can authorise the removal.

If the security is not longer required and they refuse to do so register a formal complaint, if they still refuse escalate that complaint to the financial ombudsman.

williaa68

1,528 posts

166 months

Saturday 21st January 2017
quotequote all
It is basically a matter of contract law - if the current facility letter that contains the terms of the loan says that the loan is supported by the security which includes the residential property then there really isn't very much that you can do other than renegotiate the terms. When you ask the bank to renegotiate the terms they will take into account two things-the cash flow of the business and the security. If you are asking them to release the security and rely upon the cash flow they will likely charge a significantly higher rate.

The only real alternative is to demonstrate that the security was granted I'm properly in the first place - for example that somebody forged signatures on the charge deed or exercised undue influence etc. That would likely be a rather difficult and expensive process

uber

Original Poster:

855 posts

170 months

Saturday 21st January 2017
quotequote all
williaa68 said:
It is basically a matter of contract law - if the current facility letter that contains the terms of the loan says that the loan is supported by the security which includes the residential property then there really isn't very much that you can do other than renegotiate the terms. When you ask the bank to renegotiate the terms they will take into account two things-the cash flow of the business and the security. If you are asking them to release the security and rely upon the cash flow they will likely charge a significantly higher rate.

The only real alternative is to demonstrate that the security was granted I'm properly in the first place - for example that somebody forged signatures on the charge deed or exercised undue influence etc. That would likely be a rather difficult and expensive process
The issue is they are making a single payment to cover a number of loans which all range in value, length and security. There is no contract in place covering this arrangement just an agreement with the bank that they would pay a fixed 6k a month until its repaid.



Chrisgr31

13,474 posts

255 months

Sunday 22nd January 2017
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Has your sister been involved in each renegotiation?

uber

Original Poster:

855 posts

170 months

Sunday 22nd January 2017
quotequote all
Chrisgr31 said:
Has your sister been involved in each renegotiation?
Not really,the issue is communication is thing to say the least

DSLiverpool

14,743 posts

202 months

Monday 23rd January 2017
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Lee any valuation on the commercial will be at the "fire sale" price band so ensure it does cover it.

Chrisgr31

13,474 posts

255 months

Monday 23rd January 2017
quotequote all
uber said:
Not really,the issue is communication is thing to say the least
What does not really mean? She either was or wasn't. Of course was might include she was told but didn't get involved.

I asked because I would be surprised if the terms of a guaranteed loan could be changed without the guarantor being involved.

JQ

5,743 posts

179 months

Monday 23rd January 2017
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DSLiverpool said:
Lee any valuation on the commercial will be at the "fire sale" price band so ensure it does cover it.
It won't, it will be at Market Value, which assumes a reasonable marketing period which the valuer deems to be appropriate.

DSLiverpool

14,743 posts

202 months

Monday 23rd January 2017
quotequote all
JQ said:
DSLiverpool said:
Lee any valuation on the commercial will be at the "fire sale" price band so ensure it does cover it.
It won't, it will be at Market Value, which assumes a reasonable marketing period which the valuer deems to be appropriate.
Speaking from experience with Nat West - commercial warehouse had 2 valuations of £240k and £200k reflecting marketing time (Nat West used £200k) within 18 months the premises sold at £295k and I had no choice of valuer it had to be the bank appointed one.

JQ

5,743 posts

179 months

Monday 23rd January 2017
quotequote all
DSLiverpool said:
JQ said:
DSLiverpool said:
Lee any valuation on the commercial will be at the "fire sale" price band so ensure it does cover it.
It won't, it will be at Market Value, which assumes a reasonable marketing period which the valuer deems to be appropriate.
Speaking from experience with Nat West - commercial warehouse had 2 valuations of £240k and £200k reflecting marketing time (Nat West used £200k) within 18 months the premises sold at £295k and I had no choice of valuer it had to be the bank appointed one.
Speaking as someone who's valued commercial property for banks for the last 20 years I can assure you the industry standard is most definitely Market Value.

The reason banks appoint their own valuers is because of people like this : https://www.ft.com/content/2ce4fcc4-3292-11e4-a5a2...