Alpha Bank, restructuring loan?

[Tjay_01]

Hello,

I have recently agreed to restructure my housing loan with the Alpha Bank (excluding any discount or changing currency - that's for another topic!).

However, when presented with their formal proposal (documents ready to sign), they have inserted a condition that I must sign an assignment agreement, to re-assign my contract of sale into their name (Alpha Bank).

Has anyone else been presented with this? Is this normal? Is this insane? What are the risks for me &/or the bank?

Note: The bank already have a mortgage lodged at land registry, I am 10 years into a 15 year term and fully serviced instalments at the time of applying. When I initially rejected the above condition, the bank offered to cover all the expenses (stamp duty etc).

Any comments or recommendation, suggested contacts would be appreciated.

Thank you.

[Nigel Howarth]

Hi Tj,

When acquiring a property through a mortgage facility with a Cyprus bank, the bank will require a number of securities.

In the case of the Bank of Cyprus, these are:

• 1) Assignment of the rights of the sales contract, deposited at the Cyprus Land Registry, duly signed and stamped.
  
  2) Developer’s guarantee for the period until the issuance of title deed. The property will then be mortgaged in favour of the Bank until full settlement of the facility.
  
  3) Personal guarantee of customer’s spouse (if applicable).
  
  4) Assignment of customer’s Life Insurance policy covering loan amount and period.
  
  5) Assignment of fire policy insurance over the immovable property in the Bank’s favour.

I don't have specific details for the Alpha Bank, but I would expect them to be the same.

Regards,

[Pantheman]

Hi Tj,

When acquiring a property through a mortgage facility with a Cyprus bank, the bank will require a number of securities.

In the case of the Bank of Cyprus, these are:

• 1) Assignment of the rights of the sales contract, deposited at the Cyprus Land Registry, duly signed and stamped.
  
  2) Developer’s guarantee for the period until the issuance of title deed. The property will then be mortgaged in favour of the Bank until full settlement of the facility.
  
  3) Personal guarantee of customer’s spouse (if applicable).
  
  4) Assignment of customer’s Life Insurance policy covering loan amount and period.
  
  5) Assignment of fire policy insurance over the immovable property in the Bank’s favour.

I don't have specific details for the Alpha Bank, but I would expect them to be the same.

Regards,

Yes, but, by signing an Assignment contract means that he is handling over his house to the bank and the bank could demand it back without any court intervention. I would be very very nervous about doing this and would certainly seek legal advice before doing this.

In my book, this is blackmail, don't fall for this, no wonder they agreed to cover the expenses, after all you are giving them your house. 10 years into a 15 year mortgage, not on your nelly, tell them to sod off and seek further legal advice.

[Tjay_01]

Hi,

Thank you both for the replies.

Nigel, appreciate the list of the banks securities, which I understand is 'normal' and surely expected when taking out the loan initially. However the bank already have a developers guarantee, life cover & house insurance with bank stipulated and a mortgage recorded at land registry for the original loan of Cy£80,000.

Have you heard of people actually proceeding with an assignment agreement, placing the contract of sale into the banks name, in similar cases, re-structuring 2/3rd's into a loan term?

I've made changes to UK mortgages previously in one phone call, you get a letter to confirm and it's done, simple!

Pantheman echoes my own thoughts and concerns! Given all banks recent handling [removal] of people's life savings, I'm not excited about transferring my house into their name...

The bank can not give me any logical reason or justification why on earth I would proceed with this.

My lawyer is currently on annual leave, so will be taking advice in due course, but curious if anyone else had similar experience, issues or resolutions with the bank. Do you know which law office(s), Cyprus or UK, which have handled cases against Alpha Bank?

Thanks all & regards.

[nd299]

Just to add my 2cents.

From my understanding, the practice of assigning the property purchase contract to the bank, is a normal practice of banks, when doing restructuring of delinquent loans with doubful possibility of recovery.

The reason banks like it is that if the loan becomes again delinquent in the future, and can't be saved or restructured, then the bank can re-possess the property easier (less legal procedures) if they also have assigned contract, as opposed to if they only have a registered mortgage.

However I'm not sure if it is actually normal practice in cases where the Title has not yet been created (don't know if this is your case).

All that being said, I wouldn't dismiss it out of hand if:
1. you are confident of not becoming delinquent in the future
2. you have a good relationship with the bank
3. they are giving you better terms on the loan

Regards
Nick

[Pantheman]

Just to add my 2cents.

From my understanding, the practice of assigning the property purchase contract to the bank, is a normal practice of banks, when doing restructuring of delinquent loans with doubful possibility of recovery.

The reason banks like it is that if the loan becomes again delinquent in the future, and can't be saved or restructured, then the bank can re-possess the property easier (less legal procedures) if they also have assigned contract, as opposed to if they only have a registered mortgage.

However I'm not sure if it is actually normal practice in cases where the Title has not yet been created (don't know if this is your case).

All that being said, I wouldn't dismiss it out of hand if:
1. you are confident of not becoming delinquent in the future
2. you have a good relationship with the bank
3. they are giving you better terms on the loan

Regards
Nick

Good points, BUT, As the bank already have a registered interest in the property, then there should be no need for the assignment, like I said you are giving away the property rights, before you even get into any further trouble.

Hell, let them sue you for it if it came to that. Buys you more time.

Don't be too eager to do this, seek proper legal advice first.