# Nama Loans Security taking lax



## dewdrop (14 Apr 2010)

There has been much adverse comment about how banks took security for their loans. It is somewhat ironic in that many years ago banks insisted in employing a solicitor to act on their behalf which meant  a borrower had to pay his/her fee as well as the costs charged by their own solicitor. There  was much criticism at what was perceived to be a double charge and after much pressure banks in some cases dispensed with employing their own solicitor and relied on the borrowers solicitor to put the security in place.  Hindsight is wonderful!


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## Brendan Burgess (14 Apr 2010)

Hi dewdrop

The security problem is not with home loans, but large property development loans. The banks did use their own solicitors on these. 

There have been some cases of a cost to the banks where the buyer's solicitor did not do things properly. But the cost has been far outweighed by the reduction in legal costs in the vast majority of cases where there has been no problem.

Brendan


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## dewdrop (14 Apr 2010)

Thankin s Brendan..I did not have in mind home mortgages and appreciate banks used their own legals for large complex borrowings. I do recall some adverse criticism from i think the Commercial Court when it transpired that banks were relying on Undertakings at point of drawdown rather than having the primary security executed at that time.


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## Sunny (14 Apr 2010)

I wonder if the law society is looking at this whole area. By the sounds of it, there was some some real dodgy legal work done by both the banks own legal teams and outside solicitors when it came to securing title. Reading yesterday how BOI are suing their own solicitor in Galway for not ensuring that BOI had first charge on properties that they lent money against. 



It seems like the law profession can join the bankers in the dock for reckless practice.


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## Towger (14 Apr 2010)

Brendan said:


> The security problem is not with home loans, but large property development loans. The banks did use their own solicitors on these.


 
There are also problems with the title on many home loans. 

Back in 2004 I was talking to my solicitor who used to work for one of the banks. She had been chatting to one of her ex-colleagues and they told her that when they did random checks they found a large number of mistakes, mainly from the 'low cost' conveyance solicitors, and the bank would be in trouble if they ever had to repossess and sell on one of these houses.

So, 6 years ago, the bank's staff knew they problems with the paper work external solicitors were submitting, but business was good and no one in management cared. Now they are in trouble and tax payer is bailing them out.


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## Mpsox (14 Apr 2010)

To me the issue here is not the work being done by external solicitors for commercial/developers lending. At the end of the day, the borrowers solicitor's duty of care lay with the borrower. not the lender, and if the lender was too incompetent/lazy/careless to get their own solicitors to check/draw up the necessary documents that it their problem, not the borrower. I work for a large multi-national, if we are entering into a multi-million dollar deal, our own legal people go through things with a fine tooth comb. From what I've read the banks don't always seem to have done this either via external solicitors hired by them or via their own in-house legal teams.

The key drivers for the banks to cut corners were ever increasing sales targets set by those on high (hence the board and senior management are culpable), the absence of any suitable governance process within the banks but also the fact that the banks sales people at a lower level were heavily incentivised to sell and thus wanted to get their bonus and commision in. Many of these were not "traditional" bankers with a background in risk management and a long term view of the customer, they were pure and simple sales people.


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## Brendan Burgess (14 Apr 2010)

Towger said:


> There are also problems with the title on many home loans.
> 
> Back in 2004 I was talking to my solicitor who used to work for one of the banks. She had been chatting to one of her ex-colleagues and they told her that when they did random checks they found a large number of mistakes, mainly from the 'low cost' conveyance solicitors, and the bank would be in trouble if they ever had to repossess and sell on one of these houses.
> 
> So, 6 years ago, the bank's staff knew they problems with the paper work external solicitors were submitting, but business was good and no one in management cared. Now they are in trouble and tax payer is bailing them out.



Hi Towger

I think it was a change in the law that forced the banks to rely on the purchaser's solicitor verifying the title correctly. If that has not been done, then the solicitor will probably be negligent and their professional indemnity insurer will compensate the bank.

We are bailing out the banks' depositors, but not because of bad soliticitors and home mortgages.


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