Loan Consolidation Application

That can be more complicated than you might think as debt is often oversubscribed to new believers so they might not have the same name you recall. Do you also want to call your debtors to just ask what the precise, actual amount of your debt is, since interest may have been added since your last bill.

As soon as you are clear about the amount you need to complete the transaction, you can request a loan of your choosing. Once you are authorized, you can use the loan to repay your debt! It' s unbelievably important that you disburse this loan.

Appeals Tribunal dismisses the application of the old consolidation theory to an inter-security agreement.

The AIB Mortgage Bank (the Bank) provided the borrower with a loan collateralised on a number of Carlow real estate premises (the first loan). Then the bank granted the borrower and its sister a second loan collateralised on a number of other real estate assets (the second loan). The first loan was not in default, but the second loan was in arrears.

This bank acted as a debtor to the borrower and its sister in connection with the second loan. Then the bank serviced a claim against the borrower in connection with the first loan because of the borrower's failure in connection with the second loan. Borrower then concluded a sale agreement for certain real estate covered by the first loan.

In the course of the transaction, the borrower's lawyers asked the bank for a take-back note stating the amounts owed by the lenders to redeem the mortgages on the real estate to be sold. However, the Bank's take-back notice stipulated that, upon receiving a certain amount, the fee recorded for each real estate object would be cancelled.

However, the withdrawal notice did not incorrectly cover the sums due under the second loan. Borrower transferred the sales revenue to the bank and the bank transferred the excess from the sales to borrower. Only at this point did the bank recognise the mistake in the take-back notice and the bank applied for injunctions to restrict the disposal of the remainder of the collateralised property.

Borrower arguments were that the fair consolidation principle prevailed and that if the bank was unable to meet the stringent conditions of the principle, it could not reconsolidate the first loan and the second loan. Consolidation is a very old theory that dates back to 1684 and provides that if the same borrower provides a borrower with a hypothec over two different characteristics and tries to repay only one of the hypothec, then the borrower may demand from the borrower to repurchase both them.

Consolidation is a fair right linked to a number of requirements, including: the statutory deadlines for repaying the mortgage must have expired; the security must exist at the date on which consolidation is exercised. Borrower argument was made that Requirement 2 was not fulfilled since the borrower had concluded the second loan with its sister and therefore the mortgage debtor in both loan was not the same technical person.

It disputes the application of the theory of consolidation and tries to base itself on the explicit conditions of credit contracts and collateral. That court also dealt with the promise of payment, which related to all the money and all the mortgagee's liabilities to the bank. According to the Court, the wording of both the loan documents and the mortgages documents made it sufficiently clear that the second loan was backed by the first loan on a cruciform basis.

When the Court found that the second loan was guaranteed by the first loan, it examined whether the consolidation theory could apply to the case. He noted that the consolidation Doctrine should not be mistaken for cross-securitisation. As the Court held, the consolidation theory was not relevant to the present case since it was not open to one-sided creditors to force the bank to rely on the theory.

It found that there was sufficient proof, with an emphasis on defining'secured funds', that the borrower had explicitly and unambiguously contracted a transverse securitization when drawing on the first loan and that all real estate collateralized by the first loan was retained as collateral for the funds due under the second loan.

However, the court found that creditors could not use the theory of consolidation to avoid the implementation of the agreement reached with the bank. From the creditor's point of view, this case is to be welcomed and shows that the Court will enforce the provision on cross-securitisation by using the ordinary rule for the construction of a contract.

She recalled that the consolidation doctrine should not be mistaken for rules on cross-securitisation. The report also demonstrates the close use of consolidation theory and affirms that this can only be asserted by the mortgage creditor.