Second Charge?

holly_hobby

It can be prevented IF there is title restriction against the charge (which I am assuming from your comments Halifax didn't place, or the processing centre wasn't aware of this ?) - otherwise no the 1st chargee can not prohibit registration of any 2nd charges by LR - although as I say, even in that case, the 2nd chargee can't take action (ie force sale) without the agreement of the 1st chargee (which is poss why Halifax didn't bother with restricted title in the first place) - notwithstanding the issues already discussed re associated costs and issues resulting from any possession order - rather lax from their side though !

Hope this helps

Holly

Thrugelmir

holly_hobby wrote: »

I don't for a minute dispute that this may be (or have been pre LLoyds) Halifax's stance, but it does surprise me given in my experience that the above is a general decision tree used by lenders - to take the attitude we have first charge so don't care about who comes next, is rather surprising given the above paramaters that can affect their security on forced sale.

Holly x

Given the way that HBOS ran its retail banking division for a number of years. Hardly a surprise. As risk was not considered much of priority when money was lent.

opinions4u

Thrugelmir wrote: »

Given the way that HBOS ran its retail banking division for a number of years. Hardly a surprise. As risk was not considered much of priority when money was lent.

Odd, that even as the Credit Crunch hit and Bank of Scotland Corporate / International lent the firm into oblivion that the HBOS retail bank, even with TMB included, continued to trade at a profit.

Thrugelmir wrote: »

Second charge cannot be granted without permission of first. As ranking of charges needs to be agreed upon.

By the nature of it being called a second charge, the ranking is self-evident.

Geoffrey Robinson placed a second charge on Mandelson's Notting Hill property after mortgage completion. That in itself was perfectly legitimate. Mandelson's failure to declare where his £373k deposit had come from was, however, patently fraudulent.

As for the OP, my comment in my post above comes from experience of working for one lender - and I've been employed elsewhere for a few years now. Others on the thread may have a more current working knowledge than mine.

Thrugelmir

opinions4u wrote: »

By the nature of it being called a second charge, the ranking is self-evident.

By its very nature a charge placed after another will be known as 1st, 2nd, 3rd, 4th etc when listed.

However this does not bestow automatic rights on the 1st charge holder.

What's required between the charge holders is a deed of postponement. Without this then equity would most likely be shared on a pro rata basis to the debt outstanding i.e. pence in the £.

holly_hobby

Thrugelmir wrote: »

By its very nature a charge placed after another will be known as 1st, 2nd, 3rd, 4th etc when listed.

However this does not bestow automatic rights on the 1st charge holder.

What's required between the charge holders is a deed of postponement. Without this then equity would most likely be shared on a pro rata basis to the debt outstanding i.e. pence in the £.

No thats not correct.

Charging positions are not agreed upon between creditors, as their ranking/registration is in strict date order (unless a DOP is exercised ... see below)

Mge lender as 1st chargee gets first dibs on their debt in its entirety, and will exhaust all equity if thats what it takes, leaving little or nothing for other chargee's or the debtor. If there is any surplus left after sale then that will then be distributed to other lower ranking creditors (2nd, 3rd charge etc) again in strict order, and until either all secured debts are settled OR the availalbe funds are exahusted ... to which any remaining residue will revert to the mortgagor/debtor (if there are pennies left in the pot of course !)

A Deed Of Postponement is nothing to do with allocation of debt on possession, but refers to the regs regarding Sucession Of Charges (and usually reqd in remortgage situations, where there is a 2nd (or more) charge(s) that won't be simultaneously repaid at the same time as the existing 1st charge, with the existing lender releasing their interest and position at that time.

Under a DOP, instead of normal progression under succession of charges applying (which operate in strict chronological date order), ie - the 2nd charge moving up to 1st position, the other chargee(s) instead agree via a DOP, to maintain their 2nd chargee position (and postponement of claim), with the new lender upon completion assuming 1st chargee position. You will find that unless the other chargee(s) agree to a DOP, the new mge lender will refuse the remortgage application, as 1st charge title position is a pre-requisite of traditional residential mge lending (ie which secondary secured personal loans dont demand)

Strictly speaking there is no law against registering 2nd charges, and IF there is no title restriction, the 1st chargee can not actually prevent this nor is their agreement reqd. However, as I say most lenders do inc title restriction (and in any event most secured loan firms seek permission/advise of interest regardless to the absence of any restriction, just as a matter of prof courtesy).


Hope this helps

Holly

Thrugelmir

holly_hobby wrote: »

No thats not correct.

Date order has no particular bearing.

A deed of postponement is a document that is necessary under law if one wishes to delay a charge to a bank or to another financial institution behind the first mortgage. It is an agreement in which a second mortgagee postpones the priority of its mortgage in favour of a further charge taken by the first mortgagee.

holly_hobby

Thrugelmir wrote: »

Date order has no particular bearing.

No ..... charges and their placement of priority (1st, 2nd, 3rd etc) are registered in strict chronological (date) order i.e first come first served, and all move up the priorty ladder when a preceeding charge is removed (eg - redeemed) ... that is unless they or any other chargees have entered into a deed of postponement with fellow chargee's (ie this is where the creditor agrees to postpone their interest in favour of a fellow creditor) - and a mge lender will never enter into any agreement to postpone 1st charge, ever.

Hope this helps

Holly

PS - just dug this out from a quick google ....

Although clearly aimed at the layman, should clear understanding for you T - http://moneyfacts.co.uk/guides/mortgages/mortgage-terminology--glossary-and-jargon-buster131211/

Deed of Postponement

If you want to remortgage and have both a mortgage and a secured loan on the property, your new mortgage lender will insist on you getting a Deed of Postponement from your existing secured loan provider. This is because your mortgage lender wants to have first legal charge (or claim) on your property in the event you can't repay your debts and your house has to be repossessed. Because financial charges or claims normally take precedence in order of the date they are registered, the secured loan provider will need to postpone their claim until after the new mortgage lender – that's what a Deed of Postponement does."

Goldiegirl

Thrugelmir wrote: »

Given the way that HBOS ran its retail banking division for a number of years. Hardly a surprise. As risk was not considered much of priority when money was lent.

Even though I no longer work for them, my colleagues and I did everything we could to promote good quality lending.

At my centre, the underwriters were VERY cautious, and as none of my colleagues received any sort of commission, we were always on the look out for cases where branch advisors were
trying to bend the rules.

We also realised as early as 2007 that HBOS was heading for a fall, due to the sheer amount of money that they were lending, but we could not have imagined how big it would be.

Personally, I put the blame on Andy Hornby, but locally we did everything we could to be behave in a responsible manner
.

Re second charges ..... I've learnt something today.

opinions4u

Goldiegirl wrote: »

Even though I no longer work for them, my colleagues and I did everything we could to promote good quality lending.

At my centre, the underwriters were VERY cautious, and as none of my colleagues received any sort of commission, we were always on the look out for cases where branch advisors were
trying to bend the rules.

As I posted above, the HBOS retail bank remained profitable throughout. The losses were elsewhere in the business.

We also realised as early as 2007 that HBOS was heading for a fall, due to the sheer amount of money that they were lending, but we could not have imagined how big it would be.

They made a mess of their mortgage strategy in 2007 and lending fell sharply. Stupidly they carried on with 97% lending throughout most of 2008 to try and recover market share.

Re second charges ..... I've learnt something today.

Me too!

holly_hobby

GG .... majority of the industry were no different to HBOS .... its just a shame that the staff ulitmately paid the price of (in some cases) lax lending, in losing their jobs ... by the 1000's as it turns out in our industry.

The peeps at the top constructing the business models and practices were to blame, not those trying to do their jobs with the tools and mandate they were handed.

Holly xx