Banks asking for Top Ups..

[isaaclim]

Please ignore those craps.

If you need some advice, you can provide some more info about your loans or email me at [email protected]

[DW]

Pls enlighten me which rule and law in singapore enpower the host bank to settle the loan in this manner...?

I do not think the Banking Act specifically provide for this to be enforce as an legislative right of the bank. The right of set off is a contractual right (i.e. under Contract Law, common law) to which most banks would put in their standard terms and conditions governing the accounts being set up with them.

I just did a quick search on the internet and am using HSBC purely as an example.

http://www.hsbc.com.sg/1/PA_1_4_S5/c...ts/pdf/gen.pdf

The above link is to the standard terms and conditions of a certain type of deposit account with HSBC. The right of set off by banks against balance amounts of their customer is very standard in banking. Of course, you can also chose to contest the bank's right to do so, but you would have to contest the bank's right of set off under equity - you will have to pursue the case under equity, which is much harder.

Refer to clause 21. For your convenience

"In addition to any agreed lien, the Bank is entitled without any notice to the Accountholder to settle the Accountholder’s indebtedness to the Bank whether such liabilities be actual or contingent, primary or collateral and several or joint (including without limitation, the Accountholder’s liability arising from any indemnity given herein) on any account by combining or consolidating the outstanding balance on the Account (including without limitation, any PowerVantage Account and/or Premier Account) with any other account which the Accountholder maintains with the Bank in Singapore or elsewhere and set-off or transfer any monies standing to the credit of such other accounts in or towards satisfaction of any of the Accountholder's liabilities to the Bank in Singapore or elsewhere. This is notwithstanding that the balance in such other account is in a currency different from the sum demanded or held at a branch in a different jurisdiction or is held by the Accountholder jointly with another person(s) or held on time deposit. For such purpose, the Bank shall be entitled to convert the balance in such other account into the required currency in accordance with its normal practice at the then prevailing exchange rates and/or terminate such time deposit. The Bank's rights hereunder shall not be affected by the Accountholder's death, insanity, bankruptcy, or any form of legal incapacity."

[i12buyhouse]

OIC , now u show you real objective.

Please ignore those craps.

If you need some advice, you can provide some more info about your loans or email me at [email protected]

[J-Dog]

Wow, I really appriciate so many responses and ppl trying to help and give me some insights on this situation. Actually , I am not desperate at all , all my other properties under normal loans with far more then positive cash flows and mostly under corporate leases with big companies . Moreover , I have spare cash elsewhere for some emergency situations. So I am just fine .. It's just that I will not be able to buy an extra property at the market bottom .. a pity really .. The other thing I do not understand why the government will not intervene seing the whole nation going into buncrupcy ?? Every business owner I spoke to from different industries winding up their business and surrender the rent of offices/ wharehouses, shops e.t.c This Panic just creates a bigger wave of tsunami which is still yet to come as everyone digging a whole to hide in it and scared to spend a cent.

[J-Dog]

Oh, I think I mentioned before all of my other properties are with different banks where I am cash flow positive, my monthly paycheck is around 20-30k + some rentals from my overseas properties ..
The only bank giving me problems is this one , they know I am very financially sound and stable and can weather even worther time they saying it is some formula which is does not come right in their calculations .. Though to me my outstanding is only 2.8m where their valuation is 3m and even having 700k inside the account it makes it 2.1m outstanding . I offered them to switch into interest + principal repayments though they still keep saying . top up, top up to bring to 70% out of valuation .. I toped up a bit though still have feeling they will call me back again after the market will slide further .. so weird ..

[Zeng Han Jun]

yipee! firesale!

J-dog
If you want to let go 1-2 of your property, let me know.
But given what you earlier advice on the mkt conditions, i will only buy at probably 50-65% haircut. And dont be a stubborn seller like those D15 ones, okie? Things might just get worse!!

LOL! Damn funny, but I think J Dog is out of your range bro! LOL

[Property_Owner]

Please ignore those craps.

[quote=JIf you need some advice, you can provide some more info about your loans or email me at [EMAIL="[email protected]"][email protected][/EMAIL]

Wow, I really appriciate so many responses and ppl trying to help and give me some insights on this situation. Actually , I am not desperate at all , all my other properties under normal loans with far more then positive cash flows and mostly under corporate leases with big companies . Moreover , I have spare cash elsewhere for some emergency situations. So I am just fine .. It's just that I will not be able to buy an extra property at the market bottom .. a pity really .. The other thing I do not understand why the government will not intervene seing the whole nation going into buncrupcy ?? Every business owner I spoke to from different industries winding up their business and surrender the rent of offices/ wharehouses, shops e.t.c This Panic just creates a bigger wave of tsunami which is still yet to come as everyone digging a whole to hide in it and scared to spend a cent.

Bro, these 2 are trying to help you too

[unregistered_user]

Oh well ... as always, only trying our best to help...

Might be at a steep discount - but hey! I am scared shitless with J-dog and you guys talk about a deflationary mkt!

LOL! Damn funny, but I think J Dog is out of your range bro! LOL

[J-Dog]

))) LOL , Once again thanks to all !!

[pweesng]

1) Set off
The set off rule is covered by one of the MAS directive. Basically the bank can only set off with funds you have in the same back. If your loan is with HSBC, and your deposits is in HSBC, then HSBC can use the set off rules.

However, this cannot be done at their whimp and fancy... they need to serve you notice on DEFAULT first. They also cannot earmark your funds outside of HSBC for loan set off!

2) Topping up of Home Loan
Any housing bank loan will have a clause that allows the bank to do a valuation on your property and require you to top up to maintain security margin. This is a standard clause. However, will the bank to it or not, it is a different issue. The main thing to remember is that banks will always have the right to do so.

Usually there is also a fix time period that banks can do such actions. For a normal TL, usually upon interest fixing date.

In your case, a revolving loan with interest repayment, it is usually at every interest repayment period.

In your case, what i would suggest you to do is to meet up with the bank officers, talk to them. Show them your liquidity and your income sources.

Give them some comfort that you can and will continue to service the loan. If need be, offer a small pay down, but bargain for zero penalty.

Banks these days, don't like to call on loan, because that would means they have to write down. That is what they are trying to avoid.

That is also why the syndicate banks have yet to call a default on Goldman Sach for Caltex house and hitachi tower yet....

[DW]

Set off is contract law. That is provided for under your accounts contract with the bank and not a directive of MAS. The banks' right to exercise set off is one of contractual power rather than statutory guidelines or legislation.

1) Set off
The set off rule is covered by one of the MAS directive. Basically the bank can only set off with funds you have in the same back. If your loan is with HSBC, and your deposits is in HSBC, then HSBC can use the set off rules.

However, this cannot be done at their whimp and fancy... they need to serve you notice on DEFAULT first. They also cannot earmark your funds outside of HSBC for loan set off!

2) Topping up of Home Loan
Any housing bank loan will have a clause that allows the bank to do a valuation on your property and require you to top up to maintain security margin. This is a standard clause. However, will the bank to it or not, it is a different issue. The main thing to remember is that banks will always have the right to do so.

Usually there is also a fix time period that banks can do such actions. For a normal TL, usually upon interest fixing date.

In your case, a revolving loan with interest repayment, it is usually at every interest repayment period.

In your case, what i would suggest you to do is to meet up with the bank officers, talk to them. Show them your liquidity and your income sources.

Give them some comfort that you can and will continue to service the loan. If need be, offer a small pay down, but bargain for zero penalty.

Banks these days, don't like to call on loan, because that would means they have to write down. That is what they are trying to avoid.

That is also why the syndicate banks have yet to call a default on Goldman Sach for Caltex house and hitachi tower yet....

[vin002]

Set off is contract law. That is provided for under your accounts contract with the bank and not a directive of MAS. The banks' right to exercise set off is one of contractual power rather than statutory guidelines or legislation.

I agree and I think this should be a standard clause with all banks loans. It is only a matter if they are enforcing the clause or not. Under normal circumstances, usually no banks will do that. As J-Dog has mentioned earlier, due to the fact that this is a interest servicing account, therefore, they are more particular with the drop in the valuation. So the rule of thumb, do not keep huge cash in the deposit account with the bank you are servicing your loan with.

[pweesng]

Nope... i am pretty sure it is directed by MAS in one of their policy document. I will try to fish it out.

The banks / financial institutions just took it one step further and include it in all their loan doc because it is part of the APML standard template.

In another words, in the unlikely event that the bank forgot to include this, don't be too happy, because they can still rely on the MAS ruling to recover money by setting off your bank account with them.

my 2 cents worth

[DW]

The part on directive - I am not sure but I thought that is not quite relevant here. If it is a directive imposed by MAS onto the banks to include it in their contractual rights in their agreements, AND if banks fails to include such provisions in their contracts with the customers - it is hard to argue, notwithstanding the failure on the part of the bank to comply (if it is mandatory for banks to do so under that directive) such requirements, that the customer will be judged on that basis.

Would be interesting to see how such a judgement can be passed and on what specific principle of legal analysis.

Unless its part of statutory or legislative requirement (i.e. not just a directive) , I do not see how it can have the force of the law to impose and enforce against their customer. APLMA or LMA is mainly for corporate loans (of all sorts, investment grade, non-recourse, syndicated loans, multi-currency loans...etc) and there is not really one for home mortgage loans. Using APLMA as a basis to talk to your customer, will not hold much water for a strong argument (though I also recognise, because of the inbalance of negotiation position between banks and individual customers, banks can pretty much force most of the terms to customers as well).

Without the force of the law, the next best thing banks do is to rely on contract to do so (Note: Statutory and legislative requirement ranks higher priority than contract). For that matter, if the bank fails to include such provisions (assuming your presumption of it being required of banks to do is true, under certain MAS directive), I would argue for the case that the banks have failed in their duties, and to some extent fiduciary duties towards their client (of course, establishing the duty can be interpreted in many ways and is a separate discussion altogether)!!

Nope... i am pretty sure it is directed by MAS in one of their policy document. I will try to fish it out.

The banks / financial institutions just took it one step further and include it in all their loan doc because it is part of the APML standard template.

In another words, in the unlikely event that the bank forgot to include this, don't be too happy, because they can still rely on the MAS ruling to recover money by setting off your bank account with them.

my 2 cents worth

[pweesng]

DW,

I do see where you are coming from. I have to apologise. The directive from MAS is that Banks are allowed under a certain act to set off loans against cash deposits. Not a directive to ask banks to include that clause in the loan docs.

Which is why i was saying, it doesn't matter whether the loan doc has that clause, because banks would be able to exert their set off based on what MAS has allowed them to do.

And as you rightly pointed out... loan docs are not superior to statutory rights.

cheers