IP saying we have to remortgage despite the fact that we should not be required to remortgage ?

[Jim.j]

We are currently in month 59 of a 60 month term of an IVA and we have just been advised that we will now have to make 12 additional monthly payments to reflect the release of equity in our property. We are completely baffled. The property is valued at £174,000. The outstanding mortgage amount is £149,000. Having read the equity clause in the IVA protocol and the examples shown in annex 6, we were under the impression that we would not be required to remortgage as our equity is below the deminimis level of £5,000 i.e. Taking 85% of the property value, £174000 x 85% = £147,900. Borrowings = £149,000, therefore negative equity available for release. On this basis we should not be required to remortgage. Our current LTV is 85.6% based simply on mortgage against property valuation, so how can we be expected to remortgage when the IVA clearly states that 'the remortgage amount will be a maximum of 85% (LTV)' Could you please offer some advise as our IP is adamant that we do have equity and therefore will be required to remortgage and as they said that we will not be able to remortgage given that we are on an iva, we will have to make 12 additional payments. Surely it isn't that we can't remortgage but more that we are not required to remortgage?

[Shining]

Hi and welcome to the forum. We do have some expert posters who I'm sure will comment very soon on your post. Who completed the valuation of your property?

[Michael Peoples]

This sounds wrong and based on what you say the IVA should cease now. However there may be modifications or other wording which means an extension is necessary but based on basic protocol the IVA should complete.

[Adam Davies]

Hi
The wording of your IVA clearly states 85% LTV [is this in your actual Chairman's report following your initial creditors meeting ?] so you do need to question this again with your actual IP

Regards

[Foggy]

I would ask the IP ( has it been the IP you have been speaking to?) for a detailed calculation of how they have worked out this "equity".

There have been a few instances recently where both DFD and Payplan have used this approach, incorrectly in my opinion. Who are you with, might I ask ?

[vlc1507]

We are having the same problem at the moment with Gt. House value 225000 mortgage 181901.39. At 85%ltv we have £9320 equity joint iva so below deminimis clause. Yet they calculate 29,940.07 as equity!
Awaiting a detailed calculation to see how they arrived at this figure.

[Jim.j]

We have just had an email back from GT to say that they were in the wrong. They had calculated it based on property value less mortgage less selling fees and then had taken 85% of this figure to produce our share of the interest in the equity. We referred them to our IVA document and they now accept that we have no equity!!

[Foggy]

Excellent news -- this seems to be becoming a common error -- probably down to poorly trained staff over reaching their level of expertise !

Maybe we should go work for them !

[vlc1507]

Thats great news. I am hopeful they will reconsider our calculation. How long did it take to get a response from Gt?

[Jim.j]

After numerous phone calls with them yesterday and basically being made to feel very stupid, I sent a very long email to them last night, attaching a copy of my IVA document and the IVA protocol. They came back to me this evening!Good luck vlc1507 and thank you to everyone else for all your support.

[relieved33]

Glad that sanity prevailed! Feel sorry for people who don't have support of this forum who could just accept these things and pay a year unnecessarily.

[Til]

Because of the wording in our chairmans report we almost had this issue.

Our troublesome clause read as follows:

"If the amount of equity available in the property is under 5k, it is De-minimus and does not have to be released via remortgage. However the IVA should be extended by a maximum of 12 monthly additional contributions, or until contributions have equaled the estimated available equity, whichever is the sooner"

This effectively meant ANY equity - even a few pounds would have had to be paid in!

You can see how it worked out for us here:

http://www.iva.co.uk/forum/topic.asp?TO ... hichpage=1

We were with DFD and luckily it became irrelevant in the end as we proved we were in fact in negative equity. However it is well worth noting for anyone just starting out never to accept ambiguous wording in the chairmans report.

I would hope if DFD are now using the latest protocol that this clause won't appear any more but wise to avoid it if it does.

[Michael Peoples]

Glad this worked for you Jim and credit to GT for putting their hands up. Unfortunately others who did not come to the forum may not be so lucky.

[Adam Davies]

Hi

It does make you wonder if there are people who have not had the benefit of advice from this forum and have been given the wrong info regarding remortgage by their IVA company and who have gone ahead with an extension that should not have really happened

Regards

[lifenoteasy]

Please don't take this the wrong way but I have noticed that a good IP has to be a little "bullish" at times because they have to force decisions to meet everyone's needs.

That can extend to the attitude of staff who might not realise the consequence of what they are deciding.

With this forum knowledge is king and it seems at times as if forum members know more than the staff administering IVA's.

We recognised also early on that staff in the company who handled us might change on a regular basis so it was up to us to keep track on what was going on.