house mortgaged without permission of spouse

Fred Swanson

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Pro Hoc Vice

The Family Home Protection Act 1976.

Fred Swanson

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Pro Hoc Vice

Fred Swanson wrote: »

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I doubt it, all cases I have heard about, if the spouse was not informed then no order.

BOI v Purcell 1987,

December2012

The Court will not ignore the law.

Fred Swanson

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Pro Hoc Vice

Fred Swanson wrote: »

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I not sure it would be criminal, but I suppose in certain circumstances it could be fraud.

johnnyskeleton

Fred Swanson wrote: »

Would there be any criminal sanctions sought against the spouse that signed?

It would be the banks own fault if they didn't ask, it could potentially be fraud if they did ask and the person said they weren't married. It would be a false instrument if the spouses signature was forged.

But the debt doesn't just go away, they can get a judgment, enter a judgement mortgage against the borrowers part of the house and try to sell the property via the partition act.

amen

what happens if the house was purchased say in 1960 (before the 1976 act) by one individual who then later married.

The spouses details were never added to the house deeds. Could the original owner then not mortgage the house without the spouses permission ?

Pro Hoc Vice

amen wrote: »

what happens if the house was purchased say in 1960 (before the 1976 act) by one individual who then later married.

The spouses details were never added to the house deeds. Could the original owner then not mortgage the house without the spouses permission ?

BOI v Purcell 1987, answers that question, "Held that the defendant was entitled to a declaration that no security for the repayment of advances made by the plaintiff after the passing of the Act of 1976 was provided by the deposit of title deeds in relation to the family home of the defendant"

There was a loan before 1976, and the lodgement of deeds for all monies advanced past and future. The Court held all monies advanced after 1976 are covered by the Act.

Lbeard

johnnyskeleton wrote: »

But the debt doesn't just go away, they can get a judgment, enter a judgement mortgage against the borrowers part of the house and try to sell the property via the partition act.

How can they? Without consent from all named parties, how is the loan secured? It would seem the bank has been negligent, and their loan is secured against nothing.

Fred Swanson

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Lbeard

Fred Swanson wrote: »

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Not in Ireland. You don't understand the culture here. You're a quare fella if you don't lie. Someone who cannot be trusted.

That isn't even a joke. If the law against fraudulently banking practices was enforced, the prisons would be swelled to the gills with both borrower and lender.




It's no secret that a conscience can sometimes be a pest
It's no secret ambition bites the nails of success
Every artist is a cannibal, every poet is a thief
All kill their inspiration and sing about their grief
Oh love...

Carawaystick

Fred Swanson wrote: »

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Are Marriage records public? could a bank double check a borower's marriage status that way?

johnnyskeleton

Lbeard wrote: »

How can they? Without consent from all named parties, how is the loan secured? It would seem the bank has been negligent, and their loan is secured against nothing.

The only parties to the loan are Mr. Bloggs and the bank. There is no security against the property. However, as with every unsecured debt if it is not paid a judgment can be obtained in court and if that judgment is not satisfied, then it can be registered as a judgment mortgage against Mr. Blogg's interest in the property only.

Whether a court will grant an order for sale in those circumstances will depend, but if there is a sale then Mr. Blogg's portion of the sale proceeds will be covered by the judgment.

Lbeard

johnnyskeleton wrote: »

The only parties to the loan are Mr. Bloggs and the bank. There is no security against the property. However, as with every unsecured debt if it is not paid a judgment can be obtained in court and if that judgment is not satisfied, then it can be registered as a judgment mortgage against Mr. Blogg's interest in the property only.

It just sounds so strange the bank can move the goal posts like that. It looks like a serious moral hazard - if they're not punished for not doing adequate due diligence.

I know in America (at least in some states), people in trouble with their mortgages, one legal tactic is to examine all the documentation. If the bank hasn't dotted all the i's an crossed all the t's (which at the height of sub prime they weren't), then the judge can decide that not only is the debt not secured against the house, but that it's not even unsecured debt. In some instances, because of all the chopping and bundling of mortgages into mortgage back securities, they can't locate any of the original documentation.

Can an Irish judge, tell the lender that they failed to do due diligence, and just strike out the debt?

234

Just because a loan is not secured doesn't mean that the borrower is not liable to repay it; it just means that there is no security (i.e. an additional means of recovering the monies advances should the borrowed be unable to repay).

As other posters have flagged, if the security fails the personal liability survives. I'm not entirely familiar with the US way of doing things but from your description it doesn't seem that the borrowers are being absolved of personal liability to repay, it's just likely that they would not be worth pursuing.

In Ireland if the borrower is unable to repay then the lender can secure a judgment against the borrower where there is default and a judgment mortgage could then be registered against the lender's property. However, considering how stagnant the housing market is outside Dublin then this of itself may be of little value.

Lbeard

234 wrote: »

I'm not entirely familiar with the US way of doing things but from your description it doesn't seem that the borrowers are being absolved of personal liability to repay, it's just likely that they would not be worth pursuing.

What happened in the US was there was a lot of fraud, misselling, and sharp practices. Lenders, and mortgage resellers were behaving like bucket shops. A lot of the mortgage resellers were very shady 'fly by nights', the senior debt holders like Lehmann brothers didn't mind. Once Lehmanns had the mortgage documents - or at least when their agent would tell them they had the documents, they would create their mortgage backed derivatives. Which they would sell, and borrow more money and finance more mortgages. Since they didn't give a damn once they got their commissions, they were very sloppy - often filling the documents themselves, and then just shafting them into crates for storage. So the documents were lost, or incomplete, or all over the place.

A lot of people were not as stupid, as it seems. The interest rates were at record low, so for anyone with a mortgage it made sense to re-mortgage. They may have re-mortgaged over the phone - and if the agent was really shifty, they would not have sent them the documents to sign, as they would have shown that the low rate the borrower was initially getting was only an introductory arm, and then the full rate was ruinous.

The first some people would have found out about the higher rate is when the bank in charge of collecting their mortgage started drawing down the higher amount from their accounts. If the borrower cannot pay this, then they're in default. The next step is for the bank to foreclose.

And this is where challenging the bank to show the documents comes in. If the bank can get all the documents out of storage and if they're all correct, then they can foreclose. But they may not have them. They may only have documents that allow them to collect the mortgage on behalf of whoever owns the derivative. Their documentation could be a pure shambles. They may not be able to present any documents that prove they have a claim to the house, or that the borrower owes them any money, or had agreed to the terms of the mortgage. In that case the occupier of the house becomes the owner, and is debt free.

Documentation shambles are not just the result of carelessness, it's often to cover fraud. People in America were coming home to find their possessions cleared out of their houses and padlocks on their doors, after banks foreclosed on their houses, in instances where they had never taken out the mortgage the bank was foreclosing under, and they had never been informed.

Just because a loan is not secured doesn't mean that the borrower is not liable to repay it; it just means that there is no security (i.e. an additional means of recovering the monies advances should the borrowed be unable to repay).

As other posters have flagged, if the security fails the personal liability survives.

Yes. I know this is the case. But it's still moving the goal posts. If a lender lends an unsecured loan to a borrower, with the anticipation they can secure the debt against an asset the borrower has an interest in, should the borrower default, then essentially the lender is considering their debt to be secured.

Skin-in-the-game, remember the term David Drumm, CEO of Ireland's largest bucket shop. Drumm meant it in terms of fraud. A fraudulent tactic used by the likes of Kevin McGeever. Get a small deposit from the mark, and in the sense Drumm meant Skin-in-the-game, you return later to the mark demanding more funds or their initial investment is forfeited. And that's how McGeever swindled millions.

Skin-in-the-game in the game, where both parties have something at stake - when it's balanced, in theory good faith and good practice will follow. The lender will not make loans they should not, and the borrower will not receive loans they cannot pay back. Both the lender, borrower and the public* are protected. Credit card companies were able to operate profitably with huge defaults, because they priced the delinquency into their interest rates.

Non recourse mortgages are another 'skin-in-the-game'. Banks will be discouraged from over lending.

Otherwise, you'll have people speculating or even just spending, borrowed money they've secured against their mother's house. Banks do encourage that kind of thing. What if the mother isn't dead by the time it comes to pay the piper - does a teller sneak into her bedroom and smother her with a pillow.

In Ireland if the borrower is unable to repay then the lender can secure a judgment against the borrower where there is default and a judgment mortgage could then be registered against the lender's property. However, considering how stagnant the housing market is outside Dublin then this of itself may be of little value.

Yes, but it's all connected. Bad lending practices led to the current situation. And the market is not stagnant.

The current property boom in London is being driven by bad lending practices. The foreign investors are virtually non existent (except*), it's being fueled nearly completely by people in the 50s and 60s, speculating, and instead of using a deposited, the mortgages are being secured against their own homes. Once it goes bang, and it will in less than 2 years, the whole market will crash and the properties the loans are secured against will only be worth a fraction of the loan value.

*Protecting the public. Even though during the boom years, when I was not speculating on property, and the spud munchers in their tweed jackets and flat caps were, I knew the loans were being secured against me, though I had never given any consent or signed any documents.

*Except. Foreign investors in the London property market. I have a terrible suspicion, that Irish banks have been funding that bubble (since there's nothing to fund here). That the Irish people - me - are secured up to our balls in London junk.

Addle

Carawaystick wrote: »

Are Marriage records public? could a bank double check a borower's marriage status that way?

How would one prove that they're not married?
Don't you just tick a box on a form?

Marcusm

Lbeard wrote: »

It just sounds so strange the bank can move the goal posts like that. It looks like a serious moral hazard - if they're not punished for not doing adequate due diligence.


Can an Irish judge, tell the lender that they failed to do due diligence, and just strike out the debt?

Leaving the American stuff aside; in advancing the money the bank was duped rather than duplicitous is the instance you describe. It's not for them to challenge every assertion made by the borrower although clearly they should not accept those they know to be false. The solicitor, presumably, was also unaware of the spouse. Failing to get the correct security first time out is not a one shot deal for the lender and not should it ever be. It's simply that if they fail to get it perfected the first time they are at risk of being trumped by someone else including someone who hasn't lent against the property - say the unpaid butcher who obtains a judgement and registers it as a charge against the person's interstate in the property. The Lynn and Byrne solicitor cases prove the difficulties of multiple charges and undertakings/misreps. In the Lynn case at least I have no sympathy from the banks - accepting an undertaking from the borrower is little different from no security undertaking at all.
When Liam Carroll's empire faltered there was interesting obiter from the judge about lax security practices in the commercial world.

Having carried out a number of very high value (200m +) lending projects, being careful upfront about the security structure and it's implementation is key. That said, later remedial action should not be precluded.

234

I'm aware of the practices you describe in both the US and Ireland, but they are really a peripheral issue. For one thing, even if the mortgage document was such a mess that it could not be shown that a mortgage existed the lender would still have a restitutionary claim against the borrower. While this would be more difficult to prove, one it was and a judgment obtained for payment then you could still go down the usual default and judgment mortgage route.

You talk about moving the goalposts, and while this is to some extent true, consider that the borrower should have always expected to have to repay the loan. Even if his home was destroyed by a natural disaster he would know that he is still liable to repay. The fact that a security fails doesn't absolve him of liability; and if any borrower thought that their mortgage was so linked with their home that their obligation to repay was totally dependent on the property then they should not be rewarded for their own stupidity.

Lbeard

234 wrote: »

I even if the mortgage document was such a mess that it could not be shown that a mortgage existed the lender would still have a restitutionary claim against the borrower. While this would be more difficult to prove, one it was and a judgment obtained for payment then you could still go down the usual default and judgment mortgage route.

Yes, they can try. But if it's an incredible mess, they have little chance of collecting any money. This is a reason people have even gone into strategic default. Mortgage secutarisation sounds very slick, but the reality was, and is, bucket shop on top of bucket shop. The mortgage servicing agent may not give a damn you've stopped paying your mortgage, the security holder may not care either - the securities are still traded even though the creditor has ceased paying, they may not want to see their loss crystalised - and neither may the next dope who buys the security. They may go past the debt recovery limitation period without instigating action.

In the case of a non-recourse loan, which is the cover in several American states, although we don't have it here, once the keys are handed back to the security holder, that is the end of the story for the borrower.

You talk about moving the goalposts, and while this is to some extent true, consider that the borrower should have always expected to have to repay the loan.

Even if at the time of writing the loan the loan agent told them not to expect to pay it back if things went wrong?

Although past performance is no indication of future results, before 2005 of the hundreds of thousands of mortgages, repossessions were in the low tens. If you ignored the possibility of a systemic catastrophe, then the risk was 1: 0.0003 or something like that, in other words close to zero, that you would lose your shirt.

Even if his home was destroyed by a natural disaster he would know that he is still liable to repay. The fact that a security fails doesn't absolve him of liability;

If it's non-recourse the borrower is absolved. And this kind of thing works. American banks will not speculate on property in places called Twister Alley, etc. Though the houses in Twister Alley are very cheap to buy. Under normal circumstances risks are costed into the pricing.

and if any borrower thought that their mortgage was so linked with their home that their obligation to repay was totally dependent on the property then they should not be rewarded for their own stupidity.

People are rewarded for their stupidity. People love stupidity. Look how many stupid government ministers we have who thought their "investments" were non recourse? Our bank managers are cut from the same cloth.

Fred Swanson

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Addle

Fred Swanson wrote: »

What would happen if the spouse walked into court and produced the marriage cert? Would that be enough to halt the process?

Would that depend on whether the property is the family home or not?

Marcusm

Fred Swanson wrote: »

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Would the spouse not be better off sending it to the lender and/or its legal advisers as they would likely be loathe to have a hearing in light of such a fundamental discovery.

Fred Swanson

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Marcusm

Fred Swanson wrote: »

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Simply to record the false declaration by the other spouse or to some positive end?

Fred Swanson

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Marcusm

Fred Swanson wrote: »

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Surely the bank would withdraw the application if they knew and then the "fraud" or whatever it should be called wouldn't be pled in court and any other implications could be avoided.

Pro Hoc Vice

Marcusm wrote: »

Surely the bank would withdraw the application if they knew and then the "fraud" or whatever it should be called wouldn't be pled in court and any other implications could be avoided.

You don't really get how banks,or civil servants or in fact any large business work. The bank have what they believe is valid security, they will fight to the end.

Marcusm

infosys wrote: »

You don't really get how banks,or civil servants or in fact any large business work. The bank have what they believe is valid security, they will fight to the end.

You're absolutely right; the last 20 years spent in financial advisory or senior banking roles (incl the last 3 spent running a group making EUR400m per annum of profit substantially from lending) has taught me nothing.

A lender will aggressively seek to enforce perfect security, they will take views on questionable security but where it is clearly unenforceable they, and their barrister who has a duty to the court as well as his client, will likely apply for an adjournment.

There are very few possession proceedings in Ireland in relation to private residential property and, especially in the light of the Dunne judgment, the lenders will not want to be knocked back and would be loathe to press hard and give more ammunition to New Beggings, the Kilkenny Trust and their ilk. Cases taken forward will likely be stage managed by central group legal resources and cases of questionable validity will not be prioritised.

This is why I have suggested this practical course of action to forestall matters and perhaps reduce the undoubted stress the OP and/or family/friends are enduring.

Fred Swanson

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Marcusm

Presumably it will depend on whether the existence of the spouse was denied or whether a false consent was provided.

The latter would presumably be s26 "using a false instrument" (10 years).
http://www.irishstatutebook.ie/2001/en/act/pub/0050/sec0026.html#sec26


Is the other obtaining property or services by deception? I don't know as presumably there was an intent to repay so may not have intended to cause a loss.

Lbeard

Marcusm wrote: »

Presumably it will depend on whether the existence of the spouse was denied or whether a false consent was provided.

The latter would presumably be s26 "using a false instrument" (10 years).
http://www.irishstatutebook.ie/2001/en/act/pub/0050/sec0026.html#sec26

It would seem, that the omission, is covered under several sections - Suppression of documents and False accounting.

Is the other obtaining property or services by deception? I don't know as presumably there was an intent to repay so may not have intended to cause a loss.

From my reading of the act, it would appear that obtaining property, services or money by deception is an offense in itself. And there doesn't need to be an intention to cause loss.

Intention to cause loss would seem to be an offense in itself. Simply put, if someone approaches a bank looking to mortgage a property they do not own, and attempts to deceive the bank. If the bank rumbles them before funding them, then as they have not made a loss, does not mean the fraudsters have not committed a crime.

Or another way to put it, if someone attempts to cash a stolen or forged check. If the teller refuses to cash it, the person can still be prosecuted. Because they had the intention to cause a loss, even though they didn't.

If someone opens a bank account, and gets a cheque book, for a business they wrongly assume they have a secure interest in. (family business with eejit son shenanigans). Neither the bank nor the individual is consciously committing fraud. Who has the liability?

You would be surprised how stupid some people can be - or how they'll do things they don't even realise are fraudulently or against the law - and when they get away with it they think it was legal. Felix Dennis, who is worth hundreds of millions - from publishing. In his book on how to become rich, he advises kitting to convince your bank manager you have a better cash flow than you have. He advises to find a friend in another business and kite each others bank accounts.

Yes, and it's just struck me, that the managers of our bucket shop national banks kited each other's accounts too - passing around the "green jersey".