Equity release- interlocking IVA

[Lou74]

Hi,
I have just had my property valued by a local agent at £245k. My outstanding mortgage is £201k.
We have interlocking ivas, which both talk about equity on the proposal in terms of if "MY share of the equity is less than £5k it is deminus"
Based on 85%ltv, I make the equity just over £7k. Is this right, and should my property be excluded if we both have £5k "allowance"?
Also, we are with CF. I would be interested to hear of anyone that has gone through equity release with CF as an ex PJG client, and how they handled the equity, especially if it was interlocking.
Thanks. Getting so close to the end hopefully!!

[Foggy]

Generally, with a few exceptions, IP's use the £5k de minimus as coming off each share. CF seem to be doing the "right" thing in operating IVA's and I would hope they see it as others do.

Value £245,000
85% LTV ceiling £208,250
Outstanding mortgage £201,000

Equity £7,250

50% share £3625 -- De minimis.

Some IP's do work it out differently !!

Value £245,000
Mortgage £ 201,000

Equity £44,000
85% of which is £37,400

A badly drafted proposal can leave them able to do this, though most don't.

[Michael Peoples]

I agree with Foggy that you need to read the proposal and any modifications proposed by creditors. Hopefully you are fine and the de minimis applies but if not ask your IP for a full breakdown of how they calculate the equity and on what basis. Firms do make mistakes but an unnecessary extension would be an expensive mistake.

[marathonman]

Hi Lou
I'm an ex PJG now CF .. though mine isn't interlocking.
CF originally tried to work out my equity based on the whole value however I emailed pointing out that my IVA clearly stated that it was a 2010 protocol compliant IVA and they replied and agreed that equity was worked out using 85% LTV. Infact one of my creditors submitted a modification in my proposal which said "The equity should be dealt with in line with PCIVA guidelines"
My reading of it would suggest you would get the £5k De Minimis each.
Is it worth trying to get a valuation done of £240,000 as that would solve the problem of sharing the 'De Minimis' anyway?

[Michael Peoples]

It would be an option but an unnecessary expense. The proposal and modifications are clear so stand your ground if they try and extend.

[Lou74]

Thanks for your replies. My proposal (written by Mels team) is 2010 protocol compliant I believe, and none of the accepted modifications are related to the equity release clause at all. The working out of equity release was always explained to me in terms of 85% lTV, and there is an illustration of this included in my proposal, so fingers crossed.
I did ask for a forced sale valuation, and she told me the £245K was what it was expected to to actually sell for, but it would be marketed higher than that. I'm going to get a couple more agents round I think. Having stressed myself out about them coming round, it actually wasn't too bad! I think as I explained I had no intention of selling, there was no hard sell and she was in and out in about 10 minutes.
Thanks again for your advice.

[Lou74]

Thanks michael, that makes me feel more confident. I didn't end up paying for the valuation, which surprised me. I was honest and told them why I needed it too. When I phoned round, some did ask for payments and others seemed happy to do it for free.

[marathonman]

Hi Lou
Mine would have been written about the same time as yours by Mel's Team so is likely to be the same.
The front page of my original proposal headed "In The xx County Court" says it's Protocol Compliant so sure yours will be then same.
KPMG on behalf of MBNA added the equity modification requirement though they were the only one to do that.
Hope it all goes smoothly ... if you get other valuations nudge them on the right direction!

[thisusernameistaken]

I hope this works out for you Lou.

On a side note, it does seem unfair to people like myself who are sole mortgage borrower - I still only get the £5k de minimis, whereas you get to have £5k per person in an interlocking IVA, as far as I can tell?

This effectively allows you to have twice as much allowance as me which seems somewhat disadvantageous.

[JED]

I have just gone through equity release with CF and it was a bit of a rollercoaster ride. I sent in all my paperwork including an evaluation before I was asked for it.
I had a phone call last week stating that they had valued the house (higher than I had submitted but for me still below the magic figure) and that I had equity and therefore have to extend my IVA by another year (queue near heart attack!)
I asked how it was worked out and as Foggy said they had used 85% of the equity not 85% LVT. I then quoted the paragraph in my chairman’s report (14) and also that I had an example given to me from PJG when I started my IVA stating that it was given so no ambiguity could be caused in month 54 !
They then pulled my file up and read through the part regarding equity release and also checked if any clauses were added which there wasn’t. We then went step by step working out my equity and they agreed that I was right and they were wrong. The phone call ended with them promising to contact me in a couple of days to confirm.
To be fair I ran them a couple of days later and was put through to closures. They immediately apologised for the mistake and also on review, had over valued my house.
This then left me with no equity and the IVA will end in 5 months’ time . I was emailed the confirmation as I spoke to them so am now a very happy bunny.
I think you definitely need to stand your ground with CF, as soon as I did they couldn’t have been more apologetic and everything was sorted and agreed in 2 days.
Good luck

[marathonman]

I had exactly the same with them last month and emailed them with a copy of the same paragraph and they relented. It seems they're trying it with everyone ... I pointed out that any ex PJG would have a pretty similar if not the same proposal but they'll keep trying in the hope that some people might be none the wiser and pay more which I guess will make them some more money.

[Michael Peoples]

There were aboiut a thousand cases transferred from PJG to CF of which only a handful are on this forum. I wonder how many people just accept the extension without querying and end up paying an extra year unnecessarily. I would hope any mistakes would be picked up by the regulators when the files are inspected but maybe not.

[Lou74]

Thanks ever so much for sharing your experiences. Its true, that without everything I've learned on here, I might have just accepted things put to me without question. Having come on here, I do feel better equipped to deal with any issues, and feel confident to stand my ground.
I definitely have the words "protocol compliant IVA, presented in accordance with the 2010 protocol" on the front of my proposal.
Paragraph 14 says "if that valuation shows that 85% of my interest in the property (after deducting my share of the mortgage and/or secured loans) is less than £5000 (net of all costs to take out a new mortgage) then I need contribute no more to the arrangement in respect of the property"
I am concerned that it is where they could argue that its not based on 85% LTV, however I do have the same clause as you Jed, where it says "my nominee has provided me with an illustration detailing the method and calculation of such sums which I have understood" (this illustration is based on 85% LTV and In paragraph 16, which says "the remortgage amount will be a maximum of 85% of my LTV"
I am hoping this will persuade them that its 85% LTV should they question it, and also that we have the £5k de minimus each?
I do have another valuation booked in next week, once I've submitted everything to CF, I will let you know how I get on!

[JED]

Lou sorry I cant help on the deminus figure as I was in negative equity using 85% LTV.
CF were adamant I was correct when I quoted paragraph 14 and they had made a mistake. So hopefully the £5000 each will be correct too.
Power to the forum I say [}:)]

[JED]

Sorry I meant to have said if you need a copy of the illustration I can scan it and post it here!