mikes1531
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Post by mikes1531 on Nov 12, 2014 17:26:49 GMT
On the Q&A section there is mention of an offer on the Ippy dorms of £2m, update to be provided within 48hrs. I had a bit of a panic attack when I read the above, thinking that if there had been an offer made for the property of just £2M then the would be no way the proceeds would be enough to repay the £1.96M loan, much less the accrued interest and costs/fees incurred. Upon reading the update, therefore, I was much relieved to see that the offer was an offer of finance! 
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mikes1531
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Post by mikes1531 on Nov 18, 2014 19:21:27 GMT
I'm not sure how far we can go before we have to move the discussion to the pink pages, but I'll start this here and leave it for the moderators to decide... In yesterday's Epping update, AC said... I presume this means that there's a significant difference between loan security taken on a borrower's investment property and security taken on a borrower's residence, and AC doesn't have a licence to deal with the latter. What confuses me is there's another AC loan that seems to be in this position and AFAIK it's never been suggested to be an issue. - Loan #39 (Woo******) -- The Credit Report says the security for the loan includes a "legal charge on borrowers house for £250k".
I haven't done any digging, so there may be others in this situation.
What exactly are the implications of this issue?
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fp100
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Post by fp100 on Nov 18, 2014 20:04:04 GMT
I'm no expert, but my reading is that it makes it more complicated and hence that we are likely to be in for the long(er) haul, with greater risk of a haircut. I assume that getting a reposession order on a family home is harder and takes longer than an order to sell an investment property.
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Post by mrclondon on Nov 18, 2014 20:37:34 GMT
- Loan #39 (Woo******) -- The Credit Report says the security for the loan includes a "legal charge on borrowers house for £250k".
I haven't done any digging, so there may be others in this situation. What exactly are the implications of this issue? My take on this is the difference is the purpose for which the loan is taken - and it is a fine line. Borrowing to expand a business is a "purpose" and the security is often a legal charge on the borrower's home. We are not supplying debt funding for the property itself. With Epping we were funding a bridging loan whose "purpose" was to absorb the debt funding for an investment property, and allow the borrower time to sell (or refinance onto a term loan). Only now it isn't an investment property but a residential property, the debt funding of which is regulated as a distinct category.
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mikes1531
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Post by mikes1531 on Nov 18, 2014 21:04:53 GMT
Only now it isn't an investment property but a residential property, the debt funding of which is regulated as a distinct category. Might that make it easier for the borrower to refinance? There seem to be a lot of low-interest loans available these days that can't be used for investment property. Perhaps by moving into the property the borrower would be able to qualify for one of those. Wouldn't that do wonders for his cash flow? Or is that just wishful thinking?
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kermie
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Post by kermie on Nov 18, 2014 22:24:10 GMT
Might that make it easier for the borrower to refinance? There seem to be a lot of low-interest loans available these days that can't be used for investment property. Perhaps by moving into the property the borrower would be able to qualify for one of those. Wouldn't that do wonders for his cash flow? Or is that just wishful thinking? Oh that was my initial reaction - that the borrower had moved back into Eppy in order to refinance through a residential mortgage (and hence at a lower rate that might make it possible for him to keep hold of Eppy and maybe even service some loan on Ippy too). A residential mortgage at 90% LTV could also allow a cash injection to help refinance Ippy too. Speculation of course, but I take away the positive: it means he's pretty committed to getting out of this mess without resorting to receivers and/or losing control (even if he's hanging in there by the skin of his teeth!)
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Post by brummiefred on Nov 18, 2014 22:33:27 GMT
I think it's more the fact that the loan is against a business property, ie LTL, and not a domestic residence. Although
in the W*** situation it is the back up security that is a residential and not the primary business.
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sqh
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Post by sqh on Nov 18, 2014 22:45:49 GMT
- Loan #39 (Woo******) -- The Credit Report says the security for the loan includes a "legal charge on borrowers house for £250k".
I haven't done any digging, so there may be others in this situation. What exactly are the implications of this issue? My take on this is the difference is the purpose for which the loan is taken - and it is a fine line. Borrowing to expand a business is a "purpose" and the security is often a legal charge on the borrower's home. We are not supplying debt funding for the property itself. With Epping we were funding a bridging loan whose "purpose" was to absorb the debt funding for an investment property, and allow the borrower time to sell (or refinance onto a term loan). Only now it isn't an investment property but a residential property, the debt funding of which is regulated as a distinct category. I also think there could be a significance for any lender who has invested through a SIPP. Investment property is classed as a Business Loan which is SIPP compliant. If the loan is for a residential property, and the property has to be sold to repay the loan, then there are tax implications. There are other people on the forum who have a better understanding of this.
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Post by Ton ⓉⓞⓃ on Nov 18, 2014 23:06:26 GMT
Might that make it easier for the borrower to refinance? There seem to be a lot of low-interest loans available these days that can't be used for investment property. Perhaps by moving into the property the borrower would be able to qualify for one of those. Wouldn't that do wonders for his cash flow? Or is that just wishful thinking? Oh that was my initial reaction - that the borrower had moved back into Eppy in order to refinance through a residential mortgage (and hence at a lower rate that might make it possible for him to keep hold of Eppy and maybe even service some loan on Ippy too). A residential mortgage at 90% LTV could also allow a cash injection to help refinance Ippy too. Speculation of course, but I take away the positive: it means he's pretty committed to getting out of this mess without resorting to receivers and/or losing control (even if he's hanging in there by the skin of his teeth!) The family home was at Waltham Abbey(?), if he's trying to sell that rather than Eppy, then there's might be some sense to that, it's not our original agreement. But why are AC left in the dark? Why doesn't the Borrower just come out plainly and say where he's hoping to take this? It does look like a stalling tactic but one which might be a possible solution too. But this could also be damaging to our relationship with him, fait completes don't go down too well.
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mikes1531
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Post by mikes1531 on Nov 19, 2014 2:06:38 GMT
But why are AC left in the dark? Why doesn't the Borrower just come out plainly and say where he's hoping to take this? It does look like a staling tactic but one which might be a possible solution too. But this could also be damaging to our relationship with him, fait completes don't go down too well. Not to mention that seeming not to cooperate is bound to mean a receiver is brought in sooner rather than later, and that will mean incurring significant fees that will be charged to the borrower, making matters even worse for them. Have they thought about that?
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Post by davidricketts1 on Nov 19, 2014 8:55:58 GMT
All
The main difference here is between First & Second (or subsequent) Legal Charges.
A second charge doesn't (currently) fall in the regulated mortgage category. That is where loan 39 differs from this one. Loan 39 is a third charge whereas this one is a first.
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mikes1531
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Post by mikes1531 on Nov 19, 2014 21:02:26 GMT
The main difference here is between First & Second (or subsequent) Legal Charges.
A second charge doesn't (currently) fall in the regulated mortgage category. That is where loan 39 differs from this one. Loan 39 is a third charge whereas this one is a first. : Thanks for the explanation. It strikes me as a rather artificial differentiation, though. If the holder of the second (or third) charge needs to enforce their security, that's going to trigger the sale of the property, isn't it? So does that mean that the first charge holder has to take the lead in the recovery because they're the one with the appropriate regulatory/licence authorisation? If the payments on the first charge are up to date, does that suggest that the lower-ranking charge holders might have trouble convincing the first charge holder to initiate a foreclosure? If so, then it would appear to make security of a second charge rather difficult to enforce.
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Post by jevans4949 on Nov 20, 2014 2:31:14 GMT
One wonders in hindsight whether it would not have been better to have had one loan made out covering both the properties, possibly with the provision for a partial repayment when one of them was sold.
In the circumstances where the sale of Ipswich didn't realise the money now owing, we would have to move on Epping anyway, which would then mean two engagements of the receiver, which would probably be more costly. And if in that circumstance the sale of Epping failed to raise the amount of the first charge, would Ipswich loan holders still have to meet the costs of the Epping receivership?
I guess we just have to hope this doesn't happen.
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mikes1531
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Post by mikes1531 on Nov 20, 2014 19:10:38 GMT
In the circumstances where the sale of Ipswich didn't realise the money now owing, we would have to move on Epping anyway, which would then mean two engagements of the receiver, which would probably be more costly. And if in that circumstance the sale of Epping failed to raise the amount of the first charge, would Ipswich loan holders still have to meet the costs of the Epping receivership? I guess we just have to hope this doesn't happen. Inasmuch as Epping also has missed the deadline for making significant progress towards a sale or refinance, I suspect that a vote whether or not to appoint receivers would have been called shortly even without the Ipswich complication. With the interlinking, I don't think AC can do much without a vote, so I expect we'll be having a poll very soon. As jevans4949 pointed out, if either of the sales/auctions don't produce enough proceeds to cover fully the outstanding debt, accrued interest and fees, then allocating the proceeds among the two loans could turn into a bit of a nightmare for AC.
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Post by chielamangus on Dec 8, 2014 16:33:04 GMT
Suddenly nearly £2m of available units on these two have disappeared. Has someone wealthy decided these give a juicy return, or has AC stepped in in some way?
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