All monies on clause mortgages

[scoobydoo]

Using this to post information on a clause I have not heard of before - so will just post what info I can find.

Just for awareness really.





'ALL MONIES' and 'ALL OBLIGATIONS'
In general the borrower will be liable to repay the principal sum borrowed together with interest. But in some mortgage or charge agreements the lender inserts an 'all monies' clause; sometimes this is referred to as an 'all moneys' clause. This clause seeks to cause the security to cover not merely the principal sum and interest, but also any other amounts which the court will allow the mortgagee to add into the principal.
Thus an 'all monies' clause expands the sum due by the mortgagor to the mortgagee by adding into the principal any money expended by the mortgagee in relation to the mortgage. In most cases, the borrower will have no control over this expenditure by the mortgagee and often will not know it has happened, or is possible. The purpose of this clause is described:
From the commercial viewpoint, ... to provide protection to a mortgagee in respect of all moneys which the mortgagee has paid, or becomes liable to pay, for or on account of the mortgagor. Smith v ANZ Banking Group [1995] CA 40392/95.
Clearly it is a clause for the benefit of the mortgagee.
The mortgagor might be faced with paying sums which he considers are inappropriate to be included in the amount owing. He will then have to approach a court to decide the matter. Courts are not unified on the effect of such clauses. Some courts say that if the mortgage is between commercial parties there is no need for the court to intervene because these parties are of equal bargaining power. This means the court interprets the words in their ordinary meaning without considering questions of 'fairness, unequal bargaining power or sympathy for the borrowers' vulnerability': Rudd and Son Ltd: Re Fosters and Rudd Limited [1986] 2 BCC 98.
The other interpretation is often used where the mortgagor is not a commercial entity. It maintains that the clause should be 'read down' to cover only those sums which would ordinarily be in the mind of the mortgagor as part of the mortgage debt. Thus the intention of the parties is relevant in considering the operation of the clause. If the court finds that the mortgage was to cover only a pre-existing debt created at the time of the mortgage, then no other sums will be included in the debt.
The 'all obligations' clause is much broader because it refers not only to adding sums to the principal sum, but also to adding other obligations. For example, the lender has not secured the debt by a mortgage or charge. The borrower owes money to a third party who has secured the debt by a mortgage over the borrower's land. The lender can buy the third party's mortgage, add the unsecured debt to the amount owing under the mortgage, and combine the two to expand the amount due but more importantly to give himself a secured interest.

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HOMEOWNERS RISK PROPERTY WITH MORTGAGE LENDER’S UNSECURED LOANS – CHECK FOR ‘ALL MONIES CHARGE’ BEFORE SIGNING, WARNS MONEYNET.CO.UK

• Little known ‘All Monies Charge’ locks mortgage to further borrowing
• Read small print before agreeing to additional unsecured loan or overdraft with mortgage lender
• Ask lender to remove clause – or look elsewhere for funds

A LITTLE known clause in some major lenders’ mortgage agreements could lead to homeowners losing their property should they default on any additional borrowing, warns personal finance data comparison site Moneynet.co.uk.
Far from being an unsecured loan, further borrowing or an overdraft with their mortgage lender could in fact be secured against their property if the original mortgage agreement included an ‘All Monies Charge’ clause.
“It’s shocking that borrowers who believe their additional borrowing is safely separated from their mortgage are actually agreeing to risk the security of their home – something many people would never consider doing,” says Moneynet.co.uk chief executive Richard Brown.
The ‘All Monies Charge’ clause in the mortgage agreement documents issued by some lenders means the lender secures all debt against the mortgaged property, including any additional borrowing such as personal loans or overdrafts. This means they are entitled to repossess the property should the borrower default.
“People may think better the devil they know when deciding which lender to choose for an unsecured loan – but unless they read all the small print they could be unaware that they are to all intents and purposes signing up for a secured loan rather than unsecured,” he says.
In a year which could be a challenge to many homeowners as the economy faces turbulent times, awareness of this silent but deadly clause could make the difference between losing and keeping their homes.
“Anyone in the process of taking out a mortgage should ask their solicitor to find out if the lender applies an ‘All Monies Charge’,” adds Brown. “If they do, it’s worth asking the lender to remove the offending clause.”
Mark Beaton, Head of Residential Conveyancing and a partner with East Anglian firm Ashton Graham, said: "This issue is not always investigated by a borrower and can come as a surprise at a later date. I would therefore advise clients to raise the question with their mortgage broker or potential mortgage company at an early stage."
Brown concludes: “If the lender refuses to remove the clause I would recommend finding a lender that does not include this exacting requirement. If this isn’t feasible, at least borrowers will know that any additional borrowing must be sourced elsewhere in order to protect the security of their home.”
* BBA/BSA data, April 2007
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2000 No. 2632

IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND

CHANCERY DIVISION

--------

Between

NORTHERN BANK LIMITED

Plaintiff;

AND

1. THOMAS JOHN STERLING McKINSTRY
2. LINDA PATRICIA McKINSTRY
Defendants.

--------

GIRVAN J


Introduction

This application raises a question of some importance in the field of mortgage law namely whether a bank’s “all monies mortgage” gives the bank a security over the premises subject to the mortgage in respect of monies due under a regulated consumer credit agreement governed by the Consumer Credit Act 1974 which is not in itself a secured debt but breach of which has led the bank to obtain a judgment for the debt due under the agreement.

The background to the application

By a mortgage dated 1 August 1996 the defendants mortgaged in favour of the plaintiff (“the Bank”) the premises known as 34 Brae Park Road, Ballyclare, County Antrim (“the premises”) as security for the repayment to the plaintiff of all and every the sum or sums of money then or at anytime thereafter owing to the Bank. The mortgage was made in consideration of the Bank making or continuing advances or otherwise giving credit or affording banking facilities for as long as the Bank might think fit to the defendants and any other person or firm or company for the liabilities of which the defendant might thereafter become surety.
Clause 10 of the mortgage provided:
“This security shall not cover any sum or sums of money arising under a regulated consumer credit agreement failing within Part V of the Consumer Credit Act 1974 unless specifically agreed between the Mortgagor and the Bank.”

The mortgage was subject to standard terms conferring a power of sale at any time after demand made as therein provided and notwithstanding that the notice required by section 20 of the Act had not been given for either of the defaults therein mentioned. The mortgage contained a proviso that the monies due thereunder should be deemed to become due within the meaning of section 19 of the Conveyancing and Law Property Act 1881 and Section 4 of the Conveyancing and Law Property Act 1911 immediately on demand for payment being made.
The plaintiff operated for the defendants a current account and a house mortgage account. This latter account was opened on 11 July 1996 when the plaintiff advanced to the defendants the sum of £30,480 to be repaid over 19 years 8 months by monthly instalments. At the date of issue of the originating summons the defendants had defaulted in the payment of four monthly payments. By letter of 24 July 2000 the Bank called in the debts. As of the date of the affidavit grounding the originating summons (19 September 2000) the sum claimed due on foot of the mortgage was £31,453.41.
In a subsequent affidavit the relevant bank official claimed that the defendants were also liable to the Bank on foot of a personal loan account which had not been secured by the mortgage but which had become the subject matter of a judgment. The Bank accepted that that agreement was a regulated and unsecured agreement for the purposes of the Consumer Credit Act 1974 and was not covered by the mortgage. The defendants having defaulted under the agreement on 4 October 2000 the Bank obtained a judgment for £8,180.13 inclusive of costs against the defendants. The Bank argued that the all monies mortgage now covered the judgment debt which was of a different nature from the debt due under the regulated agreement.

The Master’s approach

The Master considered that the mortgage did not provide security for the judgment debt. The mortgage deed expressly provided that the security did not cover monies arising under a regulated agreement. The Master directed that a letter be sent by the Chancery Office to the defendants putting them on notice of the relisting of the matter on 15 December, informing them that his view (which was presently the subject of an appeal in another case) was that the judgment debt, if it related to monies arising under a regulated agreement as defined in the 1974 Act, was not secured by the mortgage in favour of the plaintiff and pointing out that it was open to the defendants to attend the hearing on 15 December 2000 if they had any representations or evidence they wish to put before the court. The Master had a concern that on reading the Bank’s affidavits the defendants might have been misled into the belief that the total amounts secured were so large that they could not put forward reasonable proposals to discharge the arrears within a reasonable period.
When a mortgagee is seeking possession of a dwelling house on foot of his rights under a mortgage since the court is required by section 36 of the Administration of Justice Act 1970 (as amended) to exercise the statutory discretion therein set out, it is incumbent on the mortgagee to put before the court details of the sums claimed to be due by the mortgagor. In its initial affidavit the Bank did not seek to rely on the monies due under the regulated agreement and did not put forward any evidence about those monies. It subsequently sought to adduce evidence that the mortgage did secure the judgment debt obtained after the issue of the originating summons as a result of the default under the regulated agreement.
The Bank should have sought leave to adduce the additional evidence and since it was seeking determination of a discreet issue as to whether the mortgage covered the judgment debt it should have been put in terms that it should amend the summons to seek either a declaration that the mortgage secured the monies due under the judgment or alternatively determination of the question whether the mortgage covered that judgment debt. At the hearing before this court Mr Devlin sought and was given leave to make an amendment to the summons to seek a declaration that the mortgage did secure the judgment debt. Since the Bank should have sought leave to adduce the additional affidavit and to amend the summons the court could and should have put the Bank on terms that it re-serve the amended summons on the defendants. This would then have made clear to the defendants that a separate issue arose as to whether the mortgage covered the judgment debt. While the Master’s concern that the defendants might have been misled as to the extent of the debt as a result of the Bank’s new affidavit was not unjustified, his decision to direct a letter to be sent by the court to the defendants in the terms in which it was sent unnecessarily appeared to draw the Master into the arena and was liable to give the impression that the Master was not acting in a fully dispassionate way. If he was concerned about the matter, as he was, it would have been within his powers as a condition of granting leave to amend and to adduce the additional evidence to require the Bank, when re-serving the originating summons, to deliver to the defendants a letter indicating that the Master wished to hear argument on the question whether the security covered the judgment debt.

Determination of the question whether the judgment debt was secured

There are two grounds for holding that the judgment debt is not secured by the mortgage, one based on a narrow point of construction of the mortgage and one based on a wider principle under the Consumer Credit Act 1974.
As already noted the mortgage provided that it did not cover any sum “arising” under a regulated consumer credit agreement without specific agreement. Mr Devlin strenuously argued that once the Bank had obtained a judgment debt in respect of the monies due under the agreement the debt merged in the judgment debt which was of a higher and different order from the debt due under the agreement. While the doctrine of merger in judgment is clearly established by the authorities, it is pointed out by Templeman LJ in London Borough of Ealing v El Isaac [1980] 2 All ER 548 that merger does not apply where there is an independent covenant nor does it apply to a security as distinct from a contract. He referred to Economic Life Assurance Society v Osborne [1902] AC 147. There there was a mortgage with a covenant to pay interest half-yearly on so much of the principal as should remain unpaid. The mortgagors defaulted and the mortgagees recovered judgment against them for principal and interest. It was held that:
“… though the personal remedy on a covenant to pay a debt merges in a judgment and a judgment carries only 4% interest, yet upon the true construction of this mortgage deed the mortgagees were entitled to retain their security until they were paid the principal sum and interest at 5%.”

Lord Davey at 152 referring to preceding authorities said that the question to be considered is whether the covenant for the payment of interest was an independent covenant or a covenant which was merely ancillary to the payment of principal money and the conclusion was that it was an independent covenant which was not merged in or extinguished by the judgment obtained upon the principal covenant.
In El Isaac Templeman LJ at 552 went on to say:
“It appears, therefore, that merger has a very restricted operation. It does not, as appears from the Osborne case which I have just cited, apply to a security. It does not apply to what is said to be an independent covenant and in most mortgages and deeds of borrowing these days care is taken to make the covenant an independent covenant.”

While the security authorities there discussed establish that interest secured by a mortgage at a higher rate will continue to be payable notwithstanding the obtaining of a judgment debt which would carry interest at a lower rate and while the issue in those cases is different from the issue in this case, nevertheless they do make clear that a question of construction of a security will arise in determining what effect is to be given to a judgment.
In this case the judgment related to a debt which had fallen due under a regulated agreement and clause 10 in my view is clear in providing that the security does not cover that sum. While the money is now due as a judgment the debt “arose” out of the regulated agreement. A judgment debt cannot be looked at in total isolation from the underlying legal basis giving rise to the judgment.
The wider ground for holding that the mortgage does not cover the judgment debt lies in the proposition also established in London Borough Council v El Isaac namely that the doctrine of merger cannot be allowed to contradict a statute.
The Consumer Credit Act 1974 in Part VIII sets out the statutory provisions which must be complied with to create a valid security in relation to a regulated agreement. Regulations made thereunder prescribe the form and content of documents, those regulations to be made in compliance with section 105. Section 105(9) provides that regulations shall include provision requiring documents embodying regulated agreements also to embody any security provided in relation to a regulated agreement by the debtor. The regulated agreement in this case was a unsecured agreement. If it was the intention of the Bank to make it secured at some point such as after obtaining judgment for the debt then the agreement was not in the proper statutory form. Section 173(1) provides that a term contained in a regulated agreement or linked transaction or in any other agreement relating to a regulated agreement or a linked transaction is void if and to the extent that it is inconsistent with the provisions of the Act. To hold that the separate all monies mortgage provided a security for the debt on a judgment arising from the regulated agreement would run quite contrary to the spirit and intent of the provisions of the 1974 Act. As already noted the mere fact that a judgment is obtained does not mean that the money due on foot of the judgment did not arise under the regulated agreement.
The Master was properly satisfied that by reason of the defendants’ defaults an order for possession should be made in respect of the premises and I uphold his decision in that regard. He properly disallowed the costs of the affidavit of 13 November 2000. I declare that the Bank does not have security for the judgment debt. Since the Bank’s appeal was unsuccessful the Bank is not entitled to add the costs of this appeal to its security.
In practical terms the consequences of this decision are that when the Bank effects the sale of the premises after discharging prior incumbrances (if any) and then the monies properly due to the Bank the balance will be payable to subsequent incumbrancers (if any) and thereafter to the defendants. In order to enforce its judgment the Bank would be entitled to apply to the Enforcement of Judgments Office for an appropriate enforcement order against the net proceeds of sale and that application and enforcement would be at the expense of the defendants. It would clearly be in the interests of the defendants to reduce the costs of enforcement to agree to the Bank retaining the judgment debt and interest thereon out of the net proceeds of sale.


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An Article on Northern Rock and the fake "all monies clause"
Northern Rock Lending Policy? We're Not Going to Tell You

It is reported to me by many Insolvency Practitioners that Northern Rock has been a real thorn in the side of consumers and Insolvency Practitioners. Basically Northern Rock is refusing all or nearly all IVA repayment proposals submitted to Northern Rock to properly consider and vote on.
Maybe it would not be so bad if they would give specific reasons for refusal but they remain silent and stoic. A little birdie with inside knowledge at Northern Rock tells me that the folks at Northern Rock are trying to find any and all reasons to bat away IVA proposals. It's almost like a game there.



This message has been received loud and clear by IPs, who now routinely refuse to waste their time preparing IVA proposals for people with substantial Northern Rock debt since they know these proposals will not receive the honest review and attention they deserve, before being sent to the landfill. This means that debtors that could have otherwise resolved their financial problems with a binding IVA in five years are now either shoved towards bankruptcy or sent to repayment limbo in a 20 year debt management plan.
Worse yet, apparently the Northern Rock voting powers are fractured among several parties and this makes a crazy situation even more chaotic. When Myvesta UK confronted Northern Rock through a client, about these unfair and unreasonable policies the response was not that they treat consumers fairly, but the they treat consumers similarly.
Debtors in the UK today that were unlucky enough to fall for Northern Rock marketing of easy credit may find themselves stuck in credit hell if they have financial problems. In cases where Northern Rock is the majority creditor, consumers are not even able to put forward a fair and reasonable repayment plan.
Don't even get me started about the useless British Bankers' Association, wink and nod Banking Codes. You know which banking codes I'm talking about right? The ones that the BBA says are "..standards for banks, building societies and other banking service providers." The Banking Codes that some creditors like Northern Rock seem to think need not to be followed. If you want to get a good laugh, read section 14 of the BBA Banking Code and then tell me how Northern Rock is abiding by the code or even the spirit of the code.
With such blatant disregard and corporate abuse of consumers it's time for you to write your government representatives and ask them to make the banking code law instead of the boy's club fake rules that they are.
Maybe Northern Rock Consumer Contracts Can be Cancelled and Voided
It seems to me that Northern Rock has now created a clear paper trail of bad IVA behaviour based on all the cold hearted rejections. Certain Insolvency Practitioners are accumulating such cases and they tell me that they want to file these in a super complaint with the Office of Fair Trading.
Northern Rock is out of step with most creditors policies when it comes to IVA acceptance and rejections. While some creditors still accept IVA proposals, others set stupid and unfriendly hurdle rates (yes HSBC, I'm talking about you), it appears the Northern Rock policy is an across the board 'NO' to as many IVAs as possible.
To make matters worse, Northern Rock is also playing unfair games with consumers that were unfortunate to get loans from Northern Rock above the equity in their home. As I understand it, Northern Rock is insisting that the portion of the loan, above that secured by the house, is not an unsecured loan and they treat is as a secured loan.
So here is what may be the weak point in the Northern Rock position that might just allow people to void their consumer credit agreements with Northern Rock and walk away from the deal all together. See what you think.
Northern Rock does not portray to the world that they will not accept or consider fair offers for repayment from Insolvency Practitioners through an IVA. Northern Rock portrays themselves to be participants in the BBA Fake Banking Code. Fake might be a bit harsh. Let's just stick with calling it the Wink and Nod Banking Code.
By claiming that Northern Rock participates in the code, but actually not honouring the relative sections of the code for debtors, Northern Rock might create several violations of European Union current and coming directives. Consider these facts.

1. Because Northern Rock fails to abide by the Banking Code and has a silent practice of routinely blocking fair and reasonable IVA proposals they have created a corporate lending practice, which is material to the consumer, but not disclosed in the agreement between Northern Rock and the consumer.

If people understood, before they signed an agreement, that Northern Rock was going to disregard there pleas for help if they got into financial trouble, some consumers would not enter into that agreement. This is nothing more than an intention by Northern Rock to appreciably impair the consumer's ability to make an informed decision, thereby causing the consumer to make a transactional decision that he would not have taken.
2. Northern Rock has created a commercial practice that misleads by omission. The directives say that a practice is misleading by omission if it fails to provide the minimum information or factual information that the average consumer needs prior to purchase.
3. Furthermore a practice is misleading by commission if it gives false information or deceives or is likely to deceive the average consumer, even though the information given may be factually correct, like we are members of the BBA and subscribe to the Banking Code, even though they disregard it when you get into financial trouble.
4. Finally, under EC directives, a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

These unfair terms include: Making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realization depends on his own will; Requires any consumer who fails to fulfill his obligation to pay a disproportionately high sum in compensation; Irrevocably binds the consumer to terms with which he had no real opportunity of becoming acquainted with before the conclusion of the contract; Enables the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.

The Ultimate Northern Rock Corporate Joke
So all the IPs that are calling me and emailing me with complaints of bad behaviour by Northern Rock in its abuse of consumers would fall out of their chairs if they knew what I just discovered by accident today. Get this, Northern Rock has a charity, the Northern Rock Foundation, that actually has the nerve to claim that their mission is:
"To tackle disadvantage and to improve quality of life in North East England and Cumbria. To achieve these objectives, we invest in charitable activities that help those most disadvantaged in society, and that make our area a place for everyone to enjoy and celebrate." I've got breaking news for you, some of the most disadvantaged may be the Northern Rock customers that are not allowed to resolve financial problems with fair and reasonable IVAs.
The Northern Rock Foundation is funded with 5% of Northern Rock’s annual pre-tax profits.
So get the irony here. Northern Rock is screwing disadvantaged consumers by blocking, refusing or misleading them regarding their ability to get binding help in an IVA by Insolvency Practitioners. They then take 5% of the profit from those people and give it to their Foundation to help disadvantaged people. Sounds almost like a poor tax to me. Anybody heard of Blood Diamonds?
You can't make up this kind of stuff, nobody would believe it.
Northern Rock, I'll Be Fair and Reasonable, Even If You Won't
If Northern Rock wants to offer a response to these issues, I will gladly publish any communication I receive from them or their representatives here.
However, if I wanted to act like Northern Rock I'd claim that I subscribe to the article writers code that says I will carefully review all responses and then when they write me I'll just toss it in the trash and say that my unwritten policy is to not consider responses because the writers code is voluntary. And then I'll make them pay extra for the privilege of not posting their response.




NOT MY WORDS BY THE WAY.
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An "all monies clause" allows the lender to use your home as security against any other debts you may have with it. So if you have a mortgage with bank A and then take an unsecured loan, such as a credit card with bank A, and then default on that loan, your home could be at risk because technically that mortgage extends over to all debts you have with bank A.
"Chances are the lender will not act on this clause but technically they can," says Katherine Lane, solicitor with the Consumer Credit Legal Centre NSW.
Personally, I'm with Vanessa. Not so annoyed about the clause itself, but rather why I was paying such a high rate (pre UCCC) on my credit card?
Banks have long used the argument that the interest on credit cards is justifiably high because they are unsecured.
Well, what do you say to somebody like Vanessa? Money is still awaiting a response to that question from the Commonwealth Bank. The bank, however, did get back to us as to why Vanessa pays a high rate now: "the card is not deemed to be secured".
Lane's not too concerned with what is now an obsolete clause. She has her sights set on other unfair clauses that are alive and well in today's mortgages.
"If you have a mortgage and or credit card plus a savings account with the one institution then the lender could take funds out of the savings account to clear any arrears. In fact, you don't have to be in arrears. This does happen and is now happening more frequently," says Lane. The clause Lane is referring to is the "account combination" clause. Her best tip is that if you are experiencing financial difficulty, move your savings account elsewhere. Of course this is difficult if you have a packaged home loan, as most borrowers seem to now.

[scoobydoo]

Re: All monies on clause mortgages

INFORMATION ON RE-possessions and the above clause

http://www.cr-law.co.uk/resources/pd...ons_part_1.pdf


this is an interesting document

[Jester]

Re: All monies on clause mortgages

Amethyst asked me to post on this thread because I am actually in court on 27th July with RBS. I apparently have an 'all-monies' mortgage which I took out just over two years ago with First Active (who are a part of the RBS Group).

I've already had some information in regard to this through Amethyst from Cetelco (cheers matey). The valuable information I received is being compiled to form a defence against Cobbetts (Acting for RBS) when I appear in court. Due to my continued unemployment, I qualify for legal aid and therefore have been assigned a solicitor. I have no choice in this solicitor as I am in no position to pay for one myself due to my current circumstances.

So I am posting what is currently ongoing with my 'all-monies' mortgage in the hope of pushing this thread along, gaining a greater understanding of what an all-monies mortgage is and hopefully gain even further information to use in my defence. Whilst I am no lawyer, it seems from comments I have already had back that my solicitor has limited experience in dealing with these types of mortgages. So, with your help, maybe I can educate him !!

It's also worth noting, that when I took out this mortgage 17 months ago, I was not aware that it was an all-monies mortgage. I wouldn't have known what one was even if I had been told. As far as I was concerend, it was a standard mortgage deal.

The solicitor informed me that, on reading the court papers, the mortgage we have with First Active (RBS) is actually an 'all-monies' mortgage. These are a new type of mortgage and until February this year neither he or any of his colleagues had seen such a mortgage.

He asked me if I had been aware that I had an 'all-monies' mortgage when I signed up for it and I informed him that I wouldn't have known what it was (and the consequences) even if I had been informed at the time. However, he did admit that he thought it was new loophole that the Banks have only recently noticed and started to exploit.

For your information, an all-monies mortgage has the following properties (and I am quoting the solicitor here)

'The position with an all-monies mortgage is that once payments are missed under the terms of the mortgage, a formal demand for payment of the full balance is sent to the Defendants. There is no discretion in the mortgage to make an arrangement to pay off the arrears by instalments. Effectively, if a demand is served for full payment then full payment should be made or possession could be sought. In relation to the possession proceedings and the court hearing, the court does not in such a situation have the discretion to make what is known as a suspended possession order. Effectively the court will be duty bound to make an order for possession provided that the relevant demand had been served and the possession proceedings had been brought appropriately. The discretion available to the court in housing cases under the Administration of Justice Act does not apply in all-monies cases. It is inevitable that, at the court hearing, an order for posession would be made. The general period for possession is 28 days, but this can be extended in exceptional circumstances.'

However, after a great deal of persuasion and sheer doggedness to refuse to accept 'No' for an answer, I had previously 'almost forced' RBS into accepting a reduced payment offer of £873.87 (i.e. Interest-only payment) per month for the next 3 months (i.e. July, August September) and then to be reviewed at the end of this period. I had made this agreement after hearing from the DWP that as of 1st May I had qualified for mortgage assistance. I was advised in June by the DWP that this help would be a total of £504.97 (they only pay mortgage interest on a maximum of £100,000 - my mortgage is almost twice that). I used this figure to negotiate with RBS on reduced payments leaving us with £367 to find each month toward the mortage payments (we can't really afford this money, but to keep a roof over our head we agreed to it).

Unfortunately, I found out this month that the DWP had 'made a mistake' and that we were actually only entitled to £107 per week. Leaving us with a shortfall of more than £90 per month. I was not impressed and the solicitor also said he would be asking the DWP how they came to make such a 'catastrophic' error.

In the meantime, RBS served the court order on us anyway.

So, I now have th daunting (but not impossible) task of facing down RBS's lawyers in an attempt to keep my home (at least for the time being). What I REALLY need to do to head this off once and for all is find work, but in the current climate this is becoming increasingly difficult. But that is something that only I can deal with and resolve and I am far from finished yet.

Hope this helps on the subject of this thread and gets some good discussion going.

Cheers

[tomterm8]

Re: All monies on clause mortgages

Hm... *cough* http://fsahandbook.info/FSA/html/handbook/MCOB/13/3 .

*Snort |*

CONSUMER PROTECTION

The Unfair Terms in Consumer Contracts Regulations 1999 Unfair Terms
5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.

Jeeze, think i am comming down with a cold.

[scoobydoo]

Re: All monies on clause mortgages

Hi

A couple of things ( sorry if I have missed this)

1) as i understood from my research above there is such a thing as n "all monies clause"

so that if you had an OD or a loan with the same bank or BS as your mortgage - even if unsecured that is when they would use the clause to collect all monies at one fell swoop and all associated costs - in the method described above .

Also if you had an offsett mortgage ( I have and must check for this clause) if you went into arrears they could automatically use your savings to pay the arrears without your permission.

Do any of the above apply to you?

2) Do we think there is difference between an all money clause and an all monies
mortgage?

3) I thoght I read this type of mortgage was "banned " as the terms were unfair ? but you took this out 17 months ago?

4) Can this clause over rule the banking code that the bank is supposed to adhere to ( voluntary or not)

5) Is it also not saying the bank is putting itself above the law? As I understood normally the judge would have the final say about a re-possession order?

Would it be worth a quick call to the banking codes office to see f you could really loose your house over one months arrears?


Sorry if i have missed vital points but have been in a REALLY BORING business meeting all day and my head is spinning a bit.

[Guest]

Re: All monies on clause mortgages

For clarity, I have posted below what we have so far. Scooby, you are quite correct. In a nutshell, an all-monies mortgage means that any and all borrowings can be treated as if they are secured by the original mortgage charge. Therefore, a unsecured loan or an overdraft with the same lender can be treated as if it is secured and if a loan payment is missed, the lender can enforce the security held in the mortgage, even if no actual mortgage payments have been missed.

The following is where the notion that the courts cannot stop repossession with this type of mortgage has come from.

Section 8 of the Administration of Justice Act 1973 applies to instalment mortgages (most household mortgages) because the repayment of the balance is deferred by payment of the instalments. Repayable on demand mortgages (or all monies charges) contain no provision for early repayment. Section 8 therefore does not apply to repayable on demand mortgages because under these mortgages the monies are not repayable at all until a written demand has been made. Therefore, in order for the Court to adjourn or suspend possession, the mortgagor must show that they are able to repay the full balance outstanding on the mortgage within a reasonable period of time. The standard case referred to for repayable on demand mortgages is Habib Bank v Tailor [1982] which confirms that s.8 AJA 1973 does not apply and therefore there is no power of postponement of the debt.

Mortgages that are repayable on demand tend only to be used where the loan covers more than just a loan to purchase land, such as a loan and an overdraft.

However, that is not the end of the story.

With an "all monies" mortgage, or clause, borrowers cannot rely upon s36 AJA where a charge securing a bank overdraft provides that the sum owed shall only become payable on demand, since, in those circumstances, there is no agreement to defer payment (see Administration of Justice Act 1973 s.8 and Habib Bank Ltd v Taylor [1982])

However, many mortgages, although expressed in an “all monies” form, are also qualified by an offer letter or other side letter or agreement providing for repayment of the advance by instalments. In Governor and Company of the Bank of Scotland v Grimes [1985], it was held that in such cases the mortgage may be treated as an instalment mortgage for the purposes of the Administration of Justice Act 1970, s.36 and the Administration of Justice Act 1973, s.8. In these cases the affidavit in support should exhibit the relevant letter or side agreement and, in setting out the state of account between the mortgagor and the mortgagee, should show (inter alia) the current instalment payment (at the date of the affidavit) and the amount of instalments in arrear (at the date of issuing the originating summons and at date of the affidavit)as though there were no provision for earlier payment in the event of default.

Furthermore, for a property that is a dwelling house the court may only order the instalments that are in arrears to be paid Bank of Scotland v Grimes[1985]

This means that s.36 AJA 1970 can and does apply to certain "all monies" mortgages.

[tomterm8]

Re: All monies on clause mortgages

To be honest, I think the Plain Intelligable Language clause in the UTCCR might have some effect on these mortgages... most people do NOT understand the legal implications of these clauses IMHO. it sounds like all the case law comes from before the UTCCR came into force.

[Jester]

Re: All monies on clause mortgages

I agree about the PIL in these types of mortgages. As I stated above, I didn't know what an 'all-monies' mortgage was and it would have meant nothing to me even if I had been made aware of it at the time I took out the mortgage.

I have a few other things to deal with today firstly, but I will be looking for the original documents I signed later today. When I find them, I'll post some of the relevant bits on here for digest. Then we can see if what they are claiming has any actual basis in legal fact and whether these can be legally challenged.

Thanks for the replies so far. I have just under two weeks before I cross swords with RBS so the more ammunition I have to use in court, the better.

[scoobydoo]

Re: All monies on clause mortgages

To be honest, I think the Plain Intelligable Language clause in the UTCCR might have some effect on these mortgages... most people do NOT understand the legal implications of these clauses IMHO. it sounds like all the case law comes from before the UTCCR came into force.

that is why I chose to post about the article on Northern Rock - as although it is about IVA rather than an all monies clause I thought the principle of the writers argument about the PIL and banking code may be applicable.


"If people understood, before they signed an agreement, that Northern Rock was going to disregard there pleas for help if they got into financial trouble, some consumers would not enter into that agreement. This is nothing more than an intention by Northern Rock to appreciably impair the consumer's ability to make an informed decision, thereby causing the consumer to make a transactional decision that he would not have taken."

[Sapphire]

Re: All monies on clause mortgages

Hi Jester,

I can't really add much to this I'm afraid, except to say you are in excellent hands here hun, and I'll be supporting you along the way.
((((((((((((((((Hugs))))))))))))))))

[Jester]

Re: All monies on clause mortgages

Well, having spoken to my solicitor this morning, it seems as though he still believes that the court case next week is cut and dried and that the court will grant RBS a repossession order.

So, I have this morning just emailed him a lot of what everyone has contributed above (cut and pasted so he has no idea where I got it from or who told me this stuff) and also some case law I found elsewhere (including the now infamous Northern Ireland court case).

He's not responded yet, but I think I have certainly given him something to think about.

I'll let you know what he says when he replies

[scoobydoo]

Re: All monies on clause mortgages

Fingers and everything else crossed for you

Scooby

[Jester]

Re: Jester Vs First Direct

First of all, I would like to thank everyone who has contributed the valuable information in regard to 'all-monies' mortgages. The time is very nearly upon me now as at 12.30pm tomorrow (29th July 2008), my wife and I will be entering Swansea County Court to fight against Cobbetts (acting for RBS) for the right to stop them repossessing our home.

The solicitor I have seems to have already conceded defeat in this matter. However, it is not his home that is being threatened and if he offers no resistance at Court tomorrow, then I am going to ask the Judge is I may make a representation on our behalf.

I've never done such a thing in a court of law and therefore have no idea as to the protocol involved should my request be granted. However, based on the facts surrounding my case and fantastic information and reference material given to me on this thread, I have drafted my first pass at what I will be presenting to the Judge.

This will obviously change the more I think about it and tidy it up, but I present below roughly what I intend to say in court and invite comment by all in regard to things that I should add or take away, or even the way I have worded it.

The next 24 hours are going to be a very big, scary, and testing time. However, hopefully this presentation will mean that come tomorrow night I will have successfully blocked RBS attempts to seize possession of what has been my home for the last 5 years.

The papers to which I refer in the presentation that I will be giving to the Judge can be found here

http://www.cr-law.co.uk/resources/pd...ons_part_1.pdf

and here

Judgment

Once again, please excuse the formatting as Word documents do not seem to cut and paste very well into this forum.

Thank You All.






Your Honour,

In response to the claims made by Cobbetts on behalf of their client, the RBS Group, I would like to make the following points:

Cobbetts state that ‘Letters of demand and correspondence sent to the Defendants have failed to produce a satisfactory response.’
I cannot understand how they justify this statement as we have been on constant contact by telephone with First Active (and latterly RBS Collections Services) from the first moment I became unemployed in August 2007. They have been fully aware of our situation all along and I only recently made an agreement with RBS Collections Service to make interest-only payments each month. The lady I corresponded with on this matter is named Chi Armstrong and I also have in my possession WRITTEN CONFIRMATION of this being the case.

Cobbetts also claim in the court papers that ‘No current and/or relevant information is known about the Defendant’s circumstances’
This assertion again is inherently untrue. As already stated, we have been in constant contact with First Active/RBS since I first became unemployed, calling them at regular intervals and making payments when we had the funds to do so. Considering that I have been unemployed for 11 months, I think we have shown remarkable resilience and effort in keeping to the agreed payment schedule against a background of severe financial difficulty. At the time the court papers were served upon us, we were but one month in arrears on our payments.

On points of law, I would like to make the following contentions to the court:

The Unfair Terms in Consumer Contract Regulations of 1999, states:

5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.

I believe that the above act applies to our situation as we were unaware, at the time of signing the contract, that what we were signing for was an ‘all-monies’ mortgage account. At no time did the RBS Group make us aware of this fact. Had we been informed of the true facts of this contract at the time of signing, we would have asked that it be removed or would simply have not taken on this agreement. The agreement we signed with the RBS Group was not individually negotiated as it is a standard policy that the RBS Group operates. Therefore, I contend that the agreement falls foul of the Unfair Terms in Consumer Contract Regulations of 1999.

Furthermore, I would like to bring to the courts attention some substantiated case law that has been established in regard to whether a court has any influence over the proceedings in regard to ‘all-monies’ mortgages.

Section 8 of the Administration of Justice Act 1973 applies to instalment mortgages (most household mortgages) because the repayment of the balance is deferred by payment of the instalments. Repayable on demand mortgages (or all monies charges) contain no provision for early repayment. Section 8 therefore does not apply to repayable on demand mortgages because under these mortgages the monies are not repayable at all until a written demand has been made. Therefore, in order for the Court to adjourn or suspend possession, the mortgagor must show that they are able to repay the full balance outstanding on the mortgage within a reasonable period of time. The standard case referred to for repayable on demand mortgages is Habib Bank v Tailor [1982] which confirms that s.8 AJA 1973 does not apply and therefore there is no power of postponement of the debt.

Mortgages that are repayable on demand tend only to be used where the loan covers more than just a loan to purchase land, such as a loan and an overdraft.

However, that is not the end of the story.

With an "all monies" mortgage, or clause, borrowers cannot rely upon s36 AJA where a charge securing a bank overdraft provides that the sum owed shall only become payable on demand, since, in those circumstances, there is no agreement to defer payment (see Administration of Justice Act 1973 s.8 and Habib Bank Ltd v Taylor [1982])

However, many mortgages, although expressed in an “all monies” form, are also qualified by an offer letter or other side letter or agreement providing for repayment of the advance by instalments. In Governor and Company of the Bank of Scotland v Grimes [1985], it was held that in such cases the mortgage may be treated as an instalment mortgage for the purposes of the Administration of Justice Act 1970, s.36 and the Administration of Justice Act 1973, s.8. In these cases the affidavit in support should exhibit the relevant letter or side agreement and, in setting out the state of account between the mortgagor and the mortgagee, should show (inter alia) the current instalment payment (at the date of the affidavit) and the amount of instalments in arrear (at the date of issuing the originating summons and at date of the affidavit)as though there were no provision for earlier payment in the event of default.

Furthermore, for a property that is a dwelling house the court may only order the instalments that are in arrears to be paid Bank of Scotland v Grimes[1985]

This means that s.36 AJA 1970 can and does apply to certain "all monies" mortgages.

I would also like to present to the court, the following court papers issued by the Northern Ireland High Court Of Justice of a case between Northern Bank Plc and Thomas John Sterling McKinstry & Linda Patricia McKinstry in 2001.

You will note from this paper that case law exists that the Judge ruled against Northern Bank’s ‘all-monies’ mortgage claim. The main contention being that it contradicted several points of law required for the ‘all-monies’ charge to be applied. Whilst the case in question does have differing points to our circumstances, I believe the same principles do still apply.

In closing, I would also like to present to the court the following publicly available paper authored by David Marsden and Lucy Berry of the Charles Russell LLP Mortgage Repossessions Team, which provides much of the basis for the above points of law.

You will see from the paper that David Marsden is a property litigator and has extensive experience in advising on progressing and presenting mortgage repossession claims for all types of lenders.

Lucy Berry is an Assistant Solicitor, called to the Bar in 2003, and has spent the last four years representing banks, building societies and lenders at court in mortgage repossession claims.

These are learned people who have seen such Mortgage Contracts from both sides of the fence. Their paper clearly states that s.36 AJA 1970 can and does apply to certain "all monies" mortgages. I believe our ‘all-monies’ mortgage is one of those to which the aforementioned act does apply.

[scottishlass]

Re: All monies on clause mortgages

Sorry Jester can't offer any advice

But you can have a (((((((((((((((((((((hug)))))))))))))))))))))))))) and i will be thinking of you and your wife tomorrow and keeping everything crossed for you both.

Good Luck

Sl xxxxxxxxxxxxx

[Amethyst]

Re: All monies on clause mortgages

Good luck Jester :hug: Be thinking of you today.

You really are giving it your best so be proud of yourself.

Oh and kick that solicitors arse too.