Banks will no longer be allowed to warehouse part of a mortgage when a formal debt deal is put in place for a homeowner.
This is because Ms Justice Marie Baker ruled in the High Court that banks could not include a split mortgage as part of a Personal Insolvency Arrangement.
This will limit what banks can do when they agree to a formal debt deal.
The issue involves personal insolvency arrangements (PIAs) that also include split mortgages.
A PIA is the restructuring of mortgage and other debts, up to 3m, with a lower repayment made over a six-year period. Sometimes debts are written off.
Often a split mortgage is agreed as part of the PIA.
A split mortgage involves warehousing part of the mortgage amount, usually for more th…
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