# cross collateral of mortgages



## sillygirl (27 May 2010)

i have a family home mortgage and 3 other mortgages with a certain building society. We did an equity release to buy 2 of the properties. Now my solicitor is advising me that the bank require a cross collateral charge over each of the properties as well as the last property just registered. We bought the last property nearly 3 years ago. Now i am really struggling to keep the repayments on all the mortgages. 2 mortgages ,my home and another property i pay c&I repayments the 2 properties i pay interest only. The last 2 properties are in negative equity. I am trying to negotiate somethng with the bank in relation to a payment break. I lost my job over a year ago and only my wife works. We have 4 kids to provide for, That left aside my main concern is losing the family home....in fact I haven't slept since i got the letter. My solicitor says i signed the letter of offer which included all properties as security. I didn't know that at the time. Thought it meant that the bank had security over the other properties, not that they could take my family home. The bank can take all my IHL's i dont care at this stage but not my family home. Our parents put alot f money into our house when we built it.

Can I refuse to sign these documents. The bank are putting pressure on him to get the doc's signed as he should have done this when we took out the last mortgage. He wrote in his letter that they were 'ancillary documentation;

Thanks
Out of my mind with worry here!!!


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## sillygirl (27 May 2010)

In relation to my post forgot to mention that the solicitor also wants Eur800 for the fee to put the cross collateral in place. Cant see why I should have to pay for this now especially as we are struggling when this wasn't taken with the original fees and stamp duty.....
Thanks to anyone who can help me with this....


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## j26 (27 May 2010)

I can see why you're stressed over this, but the thing is not to worry too much yet.

The first thing to do is to get copies of the mortgage documentation and read it carefully to see if you did in fact sign a commitment to do this.  If you did, unfortunately you have to follow through with your promise.

As for the solicitor charging you, I don't see how you can be made pay for something the building society wants to do if it's a new thing they want.  If it should have been done at the time the last mortgage was taken out, the solicitor should have got you to sign at the time and there's no way he should be making you pay for his error. I'd strongly contest the charge with the solicitor.


As an aside, you mention that 2 of the properties are in negative equity. That means that your home and one of the properties is positive.  Would there be sufficient equity in the positive one to sell it and pay down the mortgages on the others sufficiently to make a difference?  At the very least you'd be able to go into the society with an offer of a chunk of cash in return for a restructuring deal.


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## sillygirl (27 May 2010)

Thanks for  your advise J26
My family home mtg=220k 
IHL mtg 100k probably get Eur150k 
IHL mtg 165k value Eur140k
IHL mtg 180k value Eur130k

I went to the auctioneers in the town and everyone told me the same. Not worth putting up the for sale sign as they haven't sold any property in the estate in months, waste of time was their exact words..If I insist they put them up for sale i'm now afraid the tenents will move out and then I wont even have tenents. Lord if I could sell the other properties or just hand them over I would. Just cant loose my family home. What if I ignore the solicitor and dont sign the documents sure the secuirty wouldn't be in order if anything was to happen. Would they sell all the properties on me? Surely if I didn't understand exactly what we were signing in relation to the cross collateral how can I agree now to do it. Surely they 'the bank' should have made sure all this was dont before the mortgages was drawndown. Would I not be hanging myself now to give them a cross security? Sorry for all the querying but as I said in my previous post cant lose my home and will not be able to make 2 of the mortgage repayments again next month..
Thanks


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## j26 (27 May 2010)

If you just don't sign, the society and you are contractually obliged to, the society may take legal action to compel you.  The costs of that would rack up swiftly, and you'd have to pay them.  That would make a bad situation worse.  It's never a good idea not to face up to financial problems.

If you have tenants that are covering the rent you'd be okay, but it sounds like you're either not getting enough (missing payments) or using the rental income to support your lifestyle (bad idea)

Run the numbers
Are you making enough in rent to pay the investment mortgages?
Can you live (and pay the family home mortgage) from current income (wifes salary plus any benefits you may get)
Are there any state benefits you may be entitled to that you aren't claiming.

Do consider whether that 50k equity in the first property would buy you a lot of leeway - even if you saved it, it would cover mortgage payments for a long time, surely enough time to enable you to find alternative employment.


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## Sunny (27 May 2010)

I know you say that the mortgage is €220k but what is your family home worth? You did an equity release for two of the other properties so it much be worth a fair bit. You might not want to but you will have to at least consider if you can afford to keep it or if you would be better selling it, clearing some debt and moving into one of the other cheaper properties you have. 

You can't bury your head in the sand and just ignore the docs. Sounds like you signed the loan offer with the cross collateral condition and it was administrative error that you didn't sign the full docs. The bank would probably have a good acse against you. Not sure why your solictor thinks €800 for getting you to sign docs that should have been signed in the first place is a fair price.


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## Howitzer (27 May 2010)

Sell the investment property that you're paying capital and interest on. This has the highest repayments and is the least tax efficient. Also this is most likely to be in positive equity (I don't think you've explicitly stated). 

Ideally you'd put this interest only to reduce your outgoings but by the sounds of things the bank is unlikely to facilitate you in this regard without signing the documentation. 

I can't comment on the legal documents and their repercussions but you need to reduce your risk and outgoings.


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## number7 (4 Jun 2010)

Sign nothing without getting unbiased legal advice, I do not like the sound of this at all.

Cross secured properties would seriously limit your potential for a satisfactory outcome to your situation.

You dont mention the rental situation, are your RIPS rented at present and are the rents meeting the repayments (both the c & i and the io). If they are then you are in a decent position to ride out a couple of years and wait for some type of market to return and also hopefully to get back into decent employment.

As it stands you are in neg eq of 25k on the RIPS and it sounds like you also have equity in your home so overall your position is one of equity not neg eq. 

I would gather all rental income and prioritise the repayments.

1. home
2. rip with equity
3. most valuable and least neg eq of remaining rips
4 last rip

Pay the home mortgage first then devide the balance between the other 3 weighted in favour of the list above. Dont take any crap from the banks you tell them what you are doing and let them make counter offers, they will get an unsympathic audience from any judge if they move agaisnt you and you can show consistant repayments and offers even if these amounts have been unnacceptable to the bank.

Finally make sure you get another opinion on the cross security, these guys are snakes and are desperately trying to back fill the shoddy paperwork that characterised the boom years.


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## Marietta (5 Jun 2010)

Surely you have got to take some level of personal responsibility here, you are struggling to keep your family home and at the same time manage three investment properties, 2 of them interest only mortgages. Have you even thought about how you are  going to begin to pay off the capital in these two interest payment only mortgages?. 

Maybe I am a bit critical here but I feel that the practice of releasing equity from family homes through out the celtic tiger years to buy other investment properties was very ill advised and fraught with risk.

The end results are very evident in this thread.


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## Brendan Burgess (5 Jun 2010)

It's important to remember, that if you borrowed money, you have to pay it back. The money you owe in the investment properties is owed by you. You can't just hand back the investment properties in negative equity and walk away from what you owe. 

If you agreed to give your family home as security, then you should honour your agreement. 

You should talk to the bank. It seems that two of your mortgages are interest and capital. Try to get the bank to change them to interest only until your financial situation improves. 

You are way too exposed to property and you should look at reducing your exposure. It seems that you are in positive equity overall. If prices fall further, you may end up in negative equity.

You should look at putting all four properties on the market. If your family home sells first, then sell it and move into one of the other properties. 

If you treat your tenants well, they should stay with you, especially if you explain to them that you are just testing the market. 

Consider approaching the tenants and asking them if they would like to buy. 

It's important to face up the the problems. It's important to deal fairly with your bank. You can expect them to treat you fairly in return.


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## number7 (6 Jun 2010)

Marietta said:


> Surely you have got to take some level of personal responsibility here, you are struggling to keep your family home and at the same time manage three investment properties, 2 of them interest only mortgages. Have you even thought about how you are going to begin to pay off the capital in these two interest payment only mortgages?.
> 
> Maybe I am a bit critical here but I feel that the practice of releasing equity from family homes through out the celtic tiger years to buy other investment properties was very ill advised and fraught with risk.
> 
> The end results are very evident in this thread.


 
Marietta 
you are not taking into account the unemployment element of the problem. If we assess everyones debt situations based on "why did you do that then" we wont be of a lot of help to people.

It appears to me that the issue here is reduced income primarily and secondly the downturn in the market value of the properties.

Nearly everyone in this country who is suffering from negitive equity or serious debt issues could be accused of making poor financial decisions over the past 10 years. 

In fact nearly all decisions made by the country in the last 10 years are as bad.


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